March 2, 2019 is the deadline for employers with calendar year plans to disclose to the Centers for Medicare & Medicaid Services (CMS) whether the coverage they offer to Medicare eligible individuals is “creditable prescription coverage.” While the disclosure is voluntary, failing to disclose or properly notify Medicare eligible individuals can lead to an employee relations headache.
If you are like most employers, you probably included various required notices in your open enrollment packets. Think you are done until next year? Think again. As we covered in our article Understand your notice requirements during open enrollment, you need to understand the unique requirements for each notice or disclosure – and not just those that go to participants of your group health plan. Let’s examine the what, who, and when for the Disclosure to CMS Form.
It may help to start with a refresher of the Medicare Part D Creditable/Non-creditable Coverage Notice that was likely included in your open enrollment packet. That notice informs individuals whether or not your plan’s prescription drug benefit is creditable coverage, meaning the coverage offered is at least as good as the prescription drug benefit available under Medicare. This is very important information for those health plan eligible individuals who are also eligible for Medicare Part D coverage. If an individual does not sign up for Medicare Part D when they are first eligible and do not maintain other creditable prescription drug coverage, they will likely pay a penalty when they do sign up for Medicare Part D. The penalty increases for each month they have gone without creditable coverage, and the penalty applies from the time they sign up for the duration of time they have Medicare prescription drug coverage. That can add up to a hefty penalty amount!
To help your employees avoid penalty, and any employee relations fallout, it’s important you distribute the individual notice at the required times, including annually and when first eligible, and also if the creditable status changes or upon request. CMS states that the notice must be distributed prior to October 15th of each year. What if your open enrollment is in November? As long as you are distributing the notice annually, you would be meeting the annual distribution requirement.
Medicare eligible individuals aren’t the only ones that need to know this information, CMS needs to know as well. Entities that must provide a Disclosure to CMS Form include sponsors of group health plans offered by employers, union/Taft-Hartley plans, church, State and local government, and other group-sponsored plans. If an employer does not offer prescription drug benefits to any Medicare Part D eligible individuals on the first day of the plan year, then they are not required to complete the disclosure form for that plan year. However, employers may not know with certainty whether the plan they sponsor covers any Medicare Part D eligible individuals, such as a disabled child or eligible spouse covered as a dependent on the plan. For that reason, we recommend all employers provide the Disclosure to CMS Form each year by the required deadline.
A Disclosure to CMS Form should be submitted on an annual basis as well as if there is any change that affects whether the drug coverage is creditable. At a minimum, disclosure to CMS must be made at the following times:
For calendar year plans that began January 1, 2019, the Disclosure to CMS Form should be submitted by March 2, 2019.
LouAnne's specialty is managing special projects designed to assist clients with their benefit-related compliance responsibilities. LouAnne monitors the legislative and legal environments and the state and federal mandates that impact our clients.
LouAnne's specialty is managing special projects designed to assist clients with their benefit-related compliance responsibilities. LouAnne monitors the legislative and legal environments and the state and federal mandates that impact our clients. She is the former chairwoman of the Compliance Committee for Benefit Advisors Network, where she frequently served as a panelist on issues involving healthcare reform. LouAnne is also a frequently sought-after panelist (for the MN State Bar Association, Business Journal and other organizations) to lend her expertise on healthcare reform and the HR perspective. LouAnne has a Bachelor’s of Arts degree from the University of Minnesota, Minneapolis and a Masters in Human Resources from the University of St. Thomas, St. Paul.
On May 11, 2014, the governor of Minnesota signed the Women’s Economic Security Act (WESA), a bill that will require Minnesota employers to make dramatic changes to their employment policies and practices.
While WESA directly impacts employers who conduct business in Minnesota, the changes follow plans by federal and local governments to expand legal protections for women and other employees. For this reason, employers in other jurisdictions should pay close attention to these national and state law trends.
“The only thing that is constant is change.”
Turns out that dusty old Greek philosophers occasionally say profound things (Heraclitus also said that a man’s character is his destiny). And since the Greeks are considered the fathers of democracy and were responsible for no small number of laws themselves, it seems an appropriate departure point to talk about the constantly changing landscape of employment laws.
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