The Medicare Modernization Act requires employers who provide prescription drug coverage to inform plan participants and the Centers for Medicare and Medicaid Services (CMS) of the creditable coverage status of their prescription drug plan. This article reviews the Online Disclosure requirement to CMS. For more information on the Medicare Part D notice requirement to plan participants, see our blog article.

Which employers must complete the Online Disclosure?  

Employers who sponsor group health care plans with prescription drug coverage.

What does “creditable coverage” mean?

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.” Employers are reporting to CMS whether the plans they sponsor have prescription drug coverage that is at least “as good as” Medicare Part D coverage. For more on creditable coverage, see the CMS website.

How can employers determine whether their plans are “creditable”?

Employers can inquire with their insurance carrier for any fully insured plans. For self-insured plans, employers can work with their third-party administrator (TPA) to determine their plan’s creditable status.

Sequoia Consulting Group and Sequoia Tech Program Clients Only: Employers will receive an email from their Client Service Manager with Online Disclosure instructions toward the beginning of the employer’s plan year.

When do employers need to complete the Online Disclosure?

Employers must complete the Online Disclosure:

  • annually within 60 days of the beginning of the plan year;
  • within 30 days after termination of a prescription drug plan; and
  • within 30 days after any change in creditable coverage status.

How can employers complete the Online Disclosure?

Employers can complete the Online Disclosure on the CMS website, found here.

Employer Action Items

  • Employers should ensure the Online Disclosure to CMS is completed within 60 days of the start of the plan year.
  • Once the Online Disclosure to CMS is completed, it is recommended employers take a screenshot or save the confirmation page for recordkeeping purposes.

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. © 2021 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.