The Medicare Modernization Act (MMA) requires Employers with prescription drug coverage to complete two items each year regarding Medicare Part D.  The first deadline is October 15th annually, and the other is 60 days from the beginning of each new plan year.  These tasks are required regardless of whether your plan’s prescription drug coverage is considered to be creditable coverage, which means that the coverage is expected to pay, on average, as much as the standard Medicare prescription drug coverage.  

The MMA imposes a late enrollment penalty on individuals who meet two criteria:

• NOT electing Medicare Part D during their initial enrollment period for the Medicare prescription drug benefit AND 
• NOT maintaining creditable coverage from the time of the initial eligibility and when the individual ultimately elects Medicare Part D

To avoid this penalty, this creditability information is critical to a Medicare eligible individual’s decision on whether to enroll in a Medicare Part D prescription drug plan. Your job as an employer is simply to communicate the creditable status of your plan, both to participants and to the Centers for Medicare and Medicaid Services (CMS).

Here’s what you need to do:

1.  Send your plan’s creditability information to all Medicare-eligible individuals that are on the employer-sponsored health insurance plan.  

There are model notices (links below) that you can use to notify employees, one stating that a plan is creditable, and one stating that a plan is not creditable.  Although you do not have to send the notice to employees that are not on the employer health plan, we recommend that you send it to all employees who are on the healthcare plan, even if they are not Medicare-eligible.  Many employers have grown to the point where they don’t personally know all their plan participants, so it’s safest to send to all enrolled. This notice is due each year by October 15th.

2.  Certify on the CMS website whether your plan is considered creditable or not, within 60 days from the beginning of each plan year.  Employers can usually find out if their plan is creditable from the prescription drug carrier (or medical plan, if bundled).  Completion of this requirement involves filling out the disclosure form on the CMS website to certify the plan’s creditability (see the links below).

Please note that although the notice is an annual requirement in the fall, the employer also has an obligation to provide notification to a Medicare-eligible individual when they join the health plan, as well as when a Medicare-eligible individual goes onto COBRA coverage, and to any retirees from the plan.  Again, many employers simply choose to provide this to all new hires to avoid missing anyone.

Click here and scroll down to “Medicare Part D” for the CMS website instructions as well as the two model notices that you can use for your employees. This email address is being protected from spambots. You need JavaScript enabled to view it.