If you have any type of group health plan, whether it be from an employer, a union, or any other group entity, the Notice of Credible Coverage is sent to advise plan participants as to whether their prescription drug coverage is “creditable.”
What is Medicare D Creditable Coverage?
The Medicare Modernization Act of 2003 enacted a requirement that any entity offering health plans that include prescription drug coverage, had to disclose to Medicare eligible individuals whether that prescription drug coverage was “creditable”.
For the purposes of this requirement, “creditable” means that the coverage is expected to pay as much as the standard Medicare prescription drug coverage.
The 2019 parameters for what is considered “standard” under Medicare D include:
- Deductible: $415.00
- Initial coverage limit: $3,820
- Out-of-pocket threshold: $5,100
Determination of Creditable Coverage
The prescription drug plan is deemed to be creditable if it:
- Provides coverage for brand and generic prescriptions
- Provides reasonable access to retail providers and mail order coverage
- Designed to pay, on average, at least 60% of participants’ prescription drug expenses
The creditable or non-creditable coverage notice must be provided to Medicare Part D eligible individuals who are covered, or who apply for, the plan’s prescription drug coverage. This includes active, retired, disabled, and COBRA beneficiaries and dependents.
The notice must be communicated no later than October 14, 2018. The Part D Annual Election Period runs from October 15 through December 7 of 2018.
It is often difficult to determine which participants are Medicare D eligible, so the prudent solution is to send the notification to ALL plan participants prior to October 14, 2018.
There is also a requirement that entities complete the Online Disclosure to CMS Form to report the creditable coverage status of their prescription drug plan. The disclosure should be completed annually, but no later than 60 days from the beginning of a plan year, within 30 days after termination of a prescription drug plan, or within 30 days after any change in creditable coverage status.
While there are no formal penalties attached to non-conformance of the requirement, the Medicare eligible individual may incur a late enrollment penalty if notification as to non-creditable coverage exists and that individual then attempts to enroll in Medicare Part D plan.