Since 2005, group health plans offering prescription drug coverage have been required to provide an annual Medicare Part D notice of creditable or non-creditable coverage to each Medicare-eligible plan participant. The notice is intended to inform these individuals whether the group health plan’s prescription drug coverage is “creditable” – that is, whether it is at least as good as the prescription drug coverage provided under the Medicare Part D program (“Part D”). The annual notice must be provided by November 15 of each year. Please note that for most fully-insured plans, the insurance company provides the annual notice.

Purpose of the Notice

The annual notice assists plan participants in making informed decisions about enrolling in Part D prior to their eligibility for Medicare. The notice is especially important because Medicare beneficiaries who are not covered under creditable prescription drug coverage and who choose not to enroll in Part D before the end of their initial enrollment period must permanently pay higher premiums if they subsequently enroll in a Part D prescription drug plan. The notice provides Medicare-eligible plan participants the opportunity to decide whether to replace their current coverage with Part D coverage, add Part D coverage to their present coverage, or waive Part D coverage altogether.

Timing of the Notice

In addition to the annual November 15 deadline (which is prior to the start of the annual Part D enrollment period which runs from November 15 through December 31 of each year), notices regarding whether the group health plan’s prescription drug coverage is creditable or non-creditable must be provided:

• Prior to an individual’s initial enrollment period for Part D;
• Prior to the effective date of coverage for any Medicare-eligible individual who joins the group health plan;
• When an employer ends prescription drug coverage or changes the coverage offered so that it is no longer creditable or becomes creditable; and
• Upon an individual’s request.

CMS’ Model Notices

The Centers for Medicare & Medicaid Services has issued updated guidance and revised Medicare Part D Model Disclosure Notices for use after January 1, 2009, replacing previous guidance issued in 2007 and notices issued in 2008.

For more information on the Part D disclosure notice requirements, or for copies of CMS’ model notices, click here or contact your SGR Executive Compensation and Employee Benefits counsel.