Group medical plan sponsors offering prescription coverage to Medicare-eligible individuals are required to report to CMS whether their coverage is “creditable” or “non-creditable” (whether the actuarial value equals or exceeds the actuarial value of defined standard Part D coverage). The disclosure must be provided to CMS:
within 60 days after the beginning of the plan year (March 1, 2023, for calendar year plans)
within 30 days after termination of the prescription drug plan
within 30 days after any change in creditable status of the prescription drug plan
Completing the disclosure to CMS form
Reporting must be completed online through the disclosure to CMS form (opens a new window). Before completing the form, plan sponsors are encouraged to consult the instructions (opens a new window) provided by CMS. Some key areas within the instructions are:
Entities with subsidiaries: A single disclosure to CMS form can be submitted for entities with subsidiaries if the plan year is the same for all subsidiaries. If all entities are covered under the same type of coverage, use the parent company’s Federal Tax EIN.
Number of options offered: This is the total number of benefit options under the employer’s plan such as HMO, PPO, or HDHP minus any benefit options that the entity is claiming under the retiree drug subsidy program.
Creditable coverage status: If all options are either creditable or non-creditable, aggregate data may be provided for all options. If some options are creditable and others are non-creditable, the data may be divided into two groups.
Number of Part D eligible individuals: Employers must estimate how many Part D eligible individuals they expect to cover as of the first day of the plan year, excluding any retiree drug subsidy participants. This includes active employees, retirees, disabled individuals, dependents, or individuals on COBRA (Carriers, TPAs, and PBMs may be able to assist with the estimate).
Disclosure to plan participants
Part of the CMS reporting is to provide the date on which the plan sponsor distributed the Medicare Part D Creditable or Non-Creditable Notice to Medicare-eligible individuals. The purpose of this disclosure requirement is to inform plan participants that they will have to pay a higher Part D premium if they do not enroll in Part D when first eligible to do so, unless they have creditable coverage through another plan and enroll in Part D within 63 days of the loss of the creditable coverage.
The disclosure to plan participants is required at the following times:
Prior to the annual Part D enrollment window, which opens each Oct. 15
Prior to the individual’s personal initial enrollment period (IEP) for Part D
Prior to enrollment in the employer’s plan
Whenever the plan cases to provide drug coverage or the creditable nature of the coverage changes
Upon request by the Medicare-eligible individual
Lockton comment: For purposes of the first and second bullets above, a plan only needs to provide the notice once every 12 months. Lockton recommends including the creditable or non-creditable notice in the employee annual open enrollment benefit packet and new hire benefit packet. Doing so takes care of the first three bullets above. Because most plans don’t know who their Medicare-eligible members are, especially with regard to dependents, distributing the notices to all enrolling and enrolled employees and retirees is highly recommended.
Plans exempt from the filing process
Group medical plans that do not offer drug coverage to any Medicare-enrolled employee, retiree, or dependent at the beginning of the plan year are exempt from filing. Similarly, employers who qualified for the Medicare Part D retiree drug subsidy are exempt from filing with CMS, but only with respect to the individuals and plan options for which they claimed the subsidy. If an employer offers prescription drug coverage to any Medicare-enrolled retirees or dependents not claimed under the subsidy, the employer must complete an online disclosure for plan options covering such individuals.
Lockton comment: As the exemptions are limited, plan sponsors should complete the CMS filing to the best of their ability, even if they suspect, but are not sure, that their plan is exempt from filing.