The Medicare Modernization Act requires all employers to provide written notice to Medicare eligible individuals prior to October 15 each year regarding whether their prescription drug coverage is creditable or non-creditable. The prescription drug coverage is “creditable” if it is expected to pay, on average, as much as the standard Medicare prescription drug coverage (Medicare Part D); otherwise, it is “non-creditable.”
The notice must be provided to all Medicare eligible active working individuals and their dependents. Since employers may not be aware of whether a current employee has any dependents that are Medicare eligible, employers should send the notice out to all employees.
Most employers provide the notice to employees within 60 days of the beginning of the plan year, since this is when employers report the creditable coverage status with the Centers for Medicare & Medicaid Services (CMS) (see below for details). Therefore, as long as employers continue to consistently provide the notice to all new hires, employers who have already provided this notice to employees are not required to reissue the notice again during the year. However, it is recommended that employers nonetheless redistribute the notice to all employees closer to the October 15 Medicare Part D open enrollment date, as this ensures that all employees have the notice on hand and reduces any need for them to re-request it from their employer.
Action Item
Employers should ensure that their Medicare Part D Creditable or Non-Creditable Disclosure Notice has been distributed to all employees prior to October 15.
More Information
Additional information is available on the CMS Website.
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