Notice Requirements for Employers

Employers will likely have specific obligations when it comes to providing Medicare Part D creditable coverage notices, for instance:

• Medicare-eligible employees and their dependents should receive this notice each year.

• This may be particularly important if they obtain drug coverage through an employer or union.

• The notice must be sent out annually by October 15.

• It may also be sent at other specified times as required by regulations.

Employers should also provide the Medicare Part D creditable coverage notice to Medicare-eligible individuals when they enroll in the plan. This will likely keep Medicare-eligible individuals informed about their drug coverage’s creditable status, likely aiding in their health coverage decisions.

CMS may also offer model notices that employers could use to effectively communicate the creditable status of their coverage. These notices comply with the Medicare Modernization Act guidelines, which will likely require informing Medicare-eligible individuals about their prescription drug coverage status.

Determining Creditable Coverage Status

Assessing if drug coverage might be creditable will likely involve using accepted actuarial principles and CMS guidelines. One common method has been the actuarial value equivalence test, which may compare the expected paid claims under the employer’s coverage against the standard Part D coverage, where coverage will likely equal the assessment of creditable status.

Employers should show their coverage pays at least 72% of participants’ prescription drug expenses under the revised simplified determination method to provide prescription drug coverage that meets the required standards. This simplified determination could be particularly relevant in 2026 and could potentially ensure that the coverage provided meets the required standards.

Knowing if coverage may be creditable or not will likely be crucial, as it could affect participants’ eligibility for subsidies and may help to avoid late enrollment penalties. Accurately determining and documenting the creditable status of their plans could help employers maintain compliance and effectively support their active employees.

Model Notices from CMS

CMS will likely offer model notices for both creditable and non-creditable drug coverage to help employers and other entities meet notice requirements. These notices may be available for download in both English and Spanish, likely making them accessible to a broader audience.

Entities offering Medicare Part D might customize these templates to clearly communicate the status of their drug coverage to Medicare-eligible individuals, which may include information about generic prescriptions. Using these templates could potentially ensure organizations meet regulatory requirements and provide clear, concise information about their coverage.

Timing and Delivery of Notices

Deliver creditable coverage notices to Medicare-eligible individuals annually before October 15 and at the start of their individual’s initial enrollment period. This timing likely ensures individuals have the necessary information to make informed health coverage decisions.

Acceptable methods for delivering these notices might include mail, email, and in-person delivery. Employers should choose methods that provide reasonable access to the notice and comply with federal law regulatory requirements.

Electronic delivery may be effective as of the effective date if it meets standards ensuring recipients receive and acknowledge the information.

Reporting to CMS

Employers should report the creditable coverage status of their group health plans to CMS annually. This will likely involve submitting the Online Disclosure to CMS Form, detailing the creditable coverage status of their prescription drug plans. The reporting deadline will likely be within 60 days from the start of that year.

Submit the annual report by March 31 each year to ensure CMS has current information on the status of prescription drug coverage provided by employers. Report any changes in the creditable coverage status to CMS within 30 days.

Accurate record-keeping of the delivery of the creditable coverage notice could be crucial for compliance and documentation. Employers must establish effective procedures to compile and report necessary information to CMS, ensuring regulatory compliance.

Potential Impact of the Inflation Reduction Act

The Inflation Reduction Act (IRA) might introduce several changes to Medicare Part D, such as capping cost-sharing for Part D-covered insulin products at about $35 per month. Adult vaccines recommended by the Advisory Committee on Immunization Practices may also be available to Medicare Part D members at no cost.

Additionally, the maximum out-of-pocket costs for prescription drugs under Medicare Part D may be reduced to about $2,000, possibly eliminating the coverage gap, or “donut hole.” This potential change could simplify the coverage stages, likely making it easier for beneficiaries to handle their prescription drug costs.

Possible updates regarding the Medicare prescription drug plan might include:

• Members may be able to spread their out-of-pocket drug costs into monthly payments.

• Part D sponsors should include selected drugs with a maximum fair price on their formularies.

• Plans updated before January 1, 2025, may be re-evaluated for creditable coverage status to ensure compliance with updated Medicare Part D parameters and the drug plan requirements.