The Medicare Modernization Act requires all employers to provide written notice to Medicare-eligible individuals to notify those individuals on whether their plan provides prescription drug coverage that is “creditable,” or “as good as,” Medicare Part D coverage. This allows individuals to make an informed decision about whether to remain on an employer plan or enroll in Medicare Part D. Employers must distribute the Notice annually by October 15th.

Compliance Snapshot

  • Employers must inform Medicare Part D eligible individuals about whether their coverage provides drug coverage as good as that provided under Medicare Part D.
  • Employers must distribute the Medicare Part D Notice to plan participants annually prior to October 15th.

Frequently Asked Questions

Who should get the Notice?

Employers must distribute the Notice to individuals eligible for Medicare. Medicare eligibility generally begins at age 65, but individuals can be eligible earlier if disabled or if they have end-stage renal disease. Eligible individuals include those entitled to Medicare Part A or enrolled in Medicare Part B, which can be an active employee, disabled employee, COBRA beneficiary, retiree, or a covered spouse or dependent.

Because it is difficult to determine who may be eligible, it is a best practice to send this Notice to all employees, COBRA participants, and expatriate employees. A single notice can be sent to plan participants on behalf of their dependents, unless an employer is aware that a spouse or dependent is Medicare Part D eligible and that they reside at a different address.

When must employers distribute the Notice?

Employers must distribute the Notice to new hires and to all plan participants at least  annually before October 15th. In addition, employers must provide the Notice when prescription drug coverage ends, when creditable coverage status changes, or upon request.

How can employers distribute the Notice?

By Mail:
Delivery of the Notice can be made on a stand-alone basis or combined with other documents; however, if combined, the Notice must be prominent and conspicuous in at least 14-point font and placed in a separate box. First class mail is preferable, and employers should document when the Notice is mailed, where it is mailed, and to whom it is mailed.

Electronic Delivery:
The Notice may be provided electronically, though only to plan participants who have access to their employers’ electronic information system on a daily basis as part of their work duties. For plan participants who do not have regular access to electronic media, employers should provide the Notice in paper format or collect signed authorizations consenting to electronic distribution. Employers should always be sure to follow the Department of Labor’s electronic disclosure rules.

Employer Action Item

Employers should ensure their Medicare Part D Creditable or Non-Creditable Disclosure Notice has been distributed to all plan participants  prior to October 15th. Employers who have already distributed the Notice do not need to distribute it again.

Sequoia Clients Only

  • Clients who have all “creditable” plans: The Notice will be located in your Legal Disclosures Packet (this can be provided by your Client Service Manager, if not already). If your Legal Disclosures Packet has already been distributed to all plan participants (including new hires and COBRA participants), no additional distribution is required.
    • If you do not yet have the Notice, Sequoia will provide a copy of the proper Medicare Part D Notice along with distribution instructions.
  • Clients that have any non-creditable plans: Clients will receive an email enclosing the requisite Medicare Part D Notice(s) with instructions on how to distribute the Notice.
  • Electronic Consent Form: Sequoia can provide an electronic consent form, as needed (available on employers’ HRX portal, in compliance resources).

Additional Resources

Disclaimer: This content is intended for informational purposes only and should not be construed as legal, medical or tax advice. It provides general information and is not intended to encompass all compliance and legal obligations that may be applicable. This information and any questions as to your specific circumstances should be reviewed with your respective legal counsel and/or tax advisor as we do not provide legal or tax advice. Please note that this information may be subject to change based on legislative changes. © 2020 Sequoia Benefits & Insurance Services, LLC. All Rights Reserved

Emerald Law – Emerald is a Client Compliance Consultant for Sequoia, where she works with our clients to optimize and streamline benefits compliance. In her free time, Emerald enjoys stand-up comedy, live music and writing non-fiction.