Employer Disclosure of Creditable or Noncreditable Prescription Drug Coverage Relating to Medicare P

1
Employer Disclosure of Creditableor
Non-creditable Prescription Drug
Coverage(Relating to Medicare Prescription Drug
Coverage)

• National Association of Health Underwriters
• June 2009

2
Employers and Disclosure of Creditable Coverage

• The Medicare Modernization Act provided for a
  number of new Medicare benefits, including
  coverage for prescription drugs effective January
  1, 2006. 
• This was the first time in the history of
  Medicare that coverage for outpatient
  prescription drugs had been covered by the
  Medicare program.
• Everyone on Medicare is eligible for the new
  prescription drug program. 
• This includes those who may be covered by other
  programs, such as those covered as active
  employees or as retirees of employer-sponsored
  plans.

3
Employers and Disclosure of Creditable Coverage

• There was an initial open enrollment period for
  the prescription drug program.
• If a person was covered by a prescription drug
  plan that provided benefits that were at least as
  good as the Medicare plan, he could continue
  under that plan instead of enrolling in the
  Medicare drug program during the initial open
  enrollment period.
•  When that person is no longer covered by his
  employer plan, he can enroll in the Medicare
  prescription drug program without paying any
  penalty for late enrollment.
• If the health plan a person is enrolled in does
  not provide benefits for prescription drugs that
  are at least as good as Medicare, and he decides
  not to enroll in the Medicare prescription drug
  program during the initial open enrollment
  period, he will pay a higher premium for Medicare
  prescription drug coverage.

4
Employers and Disclosure of Creditable Coverage

• That higher premium will increase with every
  month beyond the initial enrollment period that
  they did not enroll, and this additional premium
  will be permanent.
• For this reason, it is very important that people
  who are covered by employer-sponsored plans be
  notified whether or not the coverage they have
  through their employer plan is at least as good
  as the Medicare program coverage. 
• The Centers for Medicare and Medicaid Services
  (CMS) requires that all employers provide a
  disclosure notice to their employees who are on
  Medicare to provide them this information.  The
  resources that follow will assist employers in
  meeting this requirement.

5
Creditable Coverage Requirement

• Employers and others who provide a prescription
  drug plan to those who are eligible for Medicare
  must notify those individuals as to whether or
  not the prescription drug plan they provide is at
  least as good as the Medicare program.
• If the plan is at least as good as the Medicare
  program, it is called creditable coverage.
• The meaning of creditable coverage under Medicare
  is based on the level of benefits and is
  therefore different than the period of coverage
  definition used under HIPAA.
• The Medicare definition of creditable coverage
  does NOT take the employer contribution into
  consideration.
• It also does NOT take into account whether or not
  the individual is eligible for the Medicare low
  income subsidy.

6
Creditable Coverage Requirement

• The creditable coverage requirements applies to
  a number of entities
• Group Health Plans including Employers and
  unions, MEWAs, Churches, Federal State and Local
  Governments, Department of Veterans Affairs,
  Military Coverage (TRICARE)
• Health Insurance Issuers Individual health
  coverage
• State Sponsored Plans, including Medicaid, State
  Pharmacy Assistance Programs (SPAPs), State
  High-Risk Pools and PACE Organizations
• Indian Health Services, Tribe or Tribal
  Organizations, Urban Indian Organizations
• Medicare Supplement (Medigap) Insurers
• Other Entities/Programs

7
Creditable Coverage Requirement

• General Disclosure Requirements
• Creditable coverage status of prescription plans
  offered by the entity as of January 1, 2006 must
  be disclosed by plan sponsors to all Medicare
  Part D eligible individuals, including active,
  disabled, COBRA and retirees and to CMS
• Model disclosure notice for Creditable and
  Non-creditable coverage is on CMS website (also
  on the NAHU Website in a format that can be
  reproduced by the Employer and customized)
• Medigap Notices are different

8
Creditable Coverage Requirement

• Plan sponsors may incorporate creditable coverage
  disclosure into other plan communications (Open
  enrollment materials, summary plan descriptions,
  etc.) Must be prominent and conspicuous in
  documents
• If not using the model disclosure format, then
  the disclosure statement to Part D eligible
  individuals must also include
• The fact that the coverage is or is not
  creditable prescription drug coverage
• That there are limitations on the periods in a
  year in which the individual may enroll in Part D
  plans
• What happens to your current coverage if you
  decide to join a Medicare drug plan and
• That the individual may be subject to a late
  enrollment penalty if the current plan is not
  creditable and they do not enroll during the open
  enrollment period.

9
Creditable Coverage Requirement

• Important Beneficiary Protection
• After the initial Medicare enrollment period
  ends, any break of sixty-three (63) days or
  longer in creditable coverage from another
  source will result in a higher Medicare drug
  premium (1 percent per month) when beneficiary
  enrolls in a Part D plan.
• This accumulates in addition to any other annual
  increase in premium

10
Creditable Coverage Requirement

• At a minimum, disclosure must be made at the
  following times
• Prior to the Medicare Part D Annual Coordinated
  Election Period (ACEP) beginning November 15th
  through December 31st of each year
• Prior to an individuals Initial Enrollment
  Period (IEP) for Part D
• Prior to the effective date of coverage for any
  Medicare eligible individual that joins the plan
• Whenever prescription drug coverage ends or
  changes so that it is no longer creditable or
  becomes creditable and
• Upon a beneficiarys request.
• If the creditable coverage disclosure notice is
  provided to all plan participants, CMS will
  consider items 1 and 2 to be met.

11
Creditable Coverage

• CMS Creditable Coverage Webpage
• http//www.cms.hhs.gov/creditablecoverage
• Subsequent guidance will address additional
  issues
• Medigap guidance
• Which creditable coverage notice to use
  (Medigap vs.
• General)
• Notices for subsequent years
• Providing notice to CMS

12
More Resources

• Extensive resources can be found on the NAHU
  website to explain the notification requirements
  of the Medicare Modernization Act for employers.
• http//www.nahu.org/legislative/medicare/employer.
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