Medicare Part D continues to play a crucial role in ensuring that millions of seniors and individuals with disabilities have access to the prescription medications they need. In 2023, it’s essential to stay informed about the Medicare Part D program and fulfill your notice obligations as a group health plan sponsor. In this blog, we’ll provide an overview of Medicare Part D and highlight key information you should know.
What is Medicare Part D?
Medicare Part D is a voluntary outpatient prescription drug program offered by private insurance companies approved by Medicare. It’s designed to help Medicare beneficiaries cover the costs of their prescription medications. While Original Medicare (Parts A and B) covers hospital and medical services, the prescription drug coverage was very limited. The Medicare Prescription Drug Improvement and Modernization Act of 2003 added a prescription drug benefit (Part D) to the Medicare program. Beginning in 2006, all persons eligible for and enrolled in Medicare can get Part D prescription coverage (as long as they live in a service area of a Part D plan).
Part D requires that group health plan sponsors, health insurers, and certain state-sponsored plans send a notice each year to Medicare-eligible individuals that are covered under, or apply for, the employer-sponsored prescription drug plan and a separate notice to the Centers for Medicare and Medicaid Services (CMS) both indicating whether prescription drug coverage provided by the group health plan is “creditable”. Plan prescription coverage is generally considered “creditable” if the coverage under the plan, on average, pays benefits at least equal to the standard coverage available through a Medicare prescription drug plan.
This ‘creditability’ notice must be provided to eligible plan participants at specific times, including on an annual basis prior to October 15th every year (prior to the annual election period for the Part D program). Notice must be provided to CMS annually within 60 days after the beginning date of the plan year. For example, if a plan year begins July 1st, then the online disclosure to CMS must be submitted no later than August 30th of each year.
Important Information on 2023 Medicare Part D Disclosures
The disclosure to a Medicare-eligible individuals is important, because an individual covered by an employer-sponsored prescription drug plan that opts to stay in the employer plan rather than enroll in Medicare Part D will generally not incur a late enrollment penalty for Part D. However, the employee avoids the Part D penalty only if the employer coverage is “creditable”. If the coverage is “not-creditable”, then a delay of Part D enrollment will likely cause a late-enrollment penalty on Part D premiums when the employee ultimately enrolls.
The disclosure to CMS is an entirely separate notice obligation and must be electronically completed through the CMS website. CMS requires notice within 60 days of the start of each plan year, and within 30 days after termination of the prescription drug plan or upon a change in “creditability” status.
Both disclosures are an employer requirement, but both can be fulfilled by a plan’s insurer or a third-party administrator. The disclosure notice to individuals can also be combined with other plan materials, as long as it is “prominent and conspicuous”.
Boon is here to help! If you have questions about Medicare Part D disclosure or any of your compliant benefit solutions, please reach out!
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