Health care plan sponsors whose plans contain prescription drug coverage must distribute an Annual Notice by October 15 to plan participants who are or who might be eligible for Medicare Part-D coverage or have covered family members who may be eligible. Annual notices issued to participants earlier this year will satisfy this notice requirement.
As we do each year, we also have included links to an up-to-date package of required notices to participants. Many plan sponsors distribute annual notices (other than Part D notices) along with open enrollment materials.
The Centers for Medicare and Medicaid Services (CMS) last released updated notices for use on or after April 1, 2011. Since there has been no further guidance, Plan Sponsors may rely on the 2011 notice content for compliance with their 2015 obligation. Word versions of our sample Notices are available here:
The Notice Obligation. Plan Sponsors of all health plans (regardless of the number of individuals covered by the plan) which contain prescription drug benefits inside or adjunct to that health plan must provide an annual notice regarding the creditable or non-creditable status of the prescription drug benefit. Additionally, Plan Sponsors must provide the same Medicare Part-D Notice:
Prior CMS guidance clarifies that “prior to” means that the individual must have received the Disclosure Notice within the past twelve months. So, plans that issue the Part-D Notice at the time of policy renewals usually do not need to provide another notice.
Creditable Coverage. If the plan being offered meets “creditable coverage standards”, then Medicare beneficiaries may keep the Plan Sponsor’s coverage in lieu of electing Medicare Part-D coverage. To be “creditable” the benefit must be the actuarial equivalent to or better than the standard for insured plans. Your health insurance carrier will be able to tell you if the coverage is creditable. If your plan is self-funded, you should seek the advice of a benefit professional.
Medicare Part-D Standard Benefit Design Parameters. For your reference, here are the 2016 and 2017 Medicare Part-D Standard Benefit Design Parameters:
|Standard Benefit Design Parameters||2017||2016|
|Initial Coverage Limit||$3,700||$3,310|
|Total Covered Part-D OOP Spending Including
the Coverage Gap
|Estimated Total Covered Part-D OOP Spending
Including Coverage Gap Discount (NON-LIS)
|Minimum Cost Sharing in Catastrophic Coverage Portion of the Benefits:|
|Generic Preferred Multi-Source Drug||$3.30||$2.95|
Delivering the Notice. Plan Sponsors may mail the notice as a stand-alone mailing or choose to incorporate the notice into other documents or disclosures, so long as there is prominent first-page, 14-point reference to the incorporated notice language.
Electronic Delivery. Plan Sponsors may also deliver the notice electronically to plan participants who have the ability to access the Plan Sponsor’s electronic information system on a daily basis as a part of their work duties. Plan Sponsors should inform participants that they are to share the electronic notice with all family members who are covered under the group health plan.
Recipients. Plan Sponsors should provide the notice to all health plan participants or Part-D eligible individuals who apply for the Plan’s drug coverage as well as to COBRA beneficiaries. As we stated above, Plan Sponsors need only to provide a single notice to a participant with covered dependents, unless the sponsor records contain a separate address for other family members.
Notice Content. Plan Sponsors have the option of using the sample notices or producing their own notices which contain all of the necessary elements, as described in the these model notices. CMS provides the model notices in both English and Spanish. There is no regulation requiring plan sponsors to use the Spanish versions at present.
In addition to mailing notices to plan participants, plan sponsors whose plans offer outpatient prescription drug benefits to Part-D eligible individuals must complete the online creditable coverage disclosure to CMS each year no later than 60 days after the beginning of the plan year (contract year or renewal year), within 30 days following termination of a drug plan, or within 30 days after any change in creditable coverage status. This disclosure is required whether the plan is primary or secondary to Medicare. Plan sponsors that contract directly with Medicare as a Part-D plan or that contract with a Part-D plan are exempt from the CMS online disclosure requirement for those individuals participating in the Part-D plan.
Linked below are our 2017 Annual Legal Notice packets for distribution to plan participants during open enrollment, excluding the annual Summary Annual Report (SAR) required for those groups that file a Form 5500. The 2017 packets include the Medicare Part-D Annual Notice, as well as the updated Children’s Health Insurance Program Reauthorization Act (CHIPRA) Notice. Note: These notices require employer-specific information before distribution.
You will note that a number of the notices contain plan specific information. Plan sponsors must add specific information before they distribute the notices. Many of the notices have specific delivery requirements: