Medicare Part D: CMS Creditable Coverage Disclosure Reminder

Employers that offer prescription drug coverage through a group health plan must report to the Centers for Medicare & Medicaid Services (CMS) each year whether that coverage is creditable or non-creditable for Medicare Part D purposes. This disclosure requirement applies when a group health plan provides prescription drug coverage to individuals who are eligible for coverage under Medicare Part D, regardless of whether the coverage is primary or secondary to Medicare.

Who Must File and When

Employers that offer outpatient prescription drug coverage to any Medicare Part D-eligible individuals (employees, retirees, dependents, or COBRA participants) must complete an online disclosure to CMS each year, regardless of the employer's size or whether the plan is fully insured or self-funded (including level-funded plans).

The disclosure must be submitted as follows:

• Within 60 days after the start of each plan year (for calendar year plans, generally by March 1)
• Within 30 days after any change in the plan’s creditable coverage status
• Within 30 days after the prescription drug plan terminates

What “Creditable Coverage” Means

A group health plan’s prescription drug coverage is considered creditable if its actuarial value equals or exceeds the actuarial value of the standard Medicare Part D prescription drug coverage. In general, this means the expected amount of plan-paid prescription drug claims under the group health plan is at least as much as the expected amount to be paid under the standard Medicare Part D prescription drug benefit. For plans with multiple options (e.g., PPO, HDHP, HMO), the creditable coverage test must be applied separately to each prescription drug benefit option. Because this determination involves complex actuarial calculations, it is typically provided by the carrier, third-party administrator (TPA), or an actuary, unless the plan qualifies for a simplified determination method.

How to Submit the Disclosure

The disclosure to CMS must be completed electronically using the CMS online disclosure form, available on the CMS creditable coverage website. CMS does not accept paper submissions, except in rare cases where the entity lacks internet access. CMS also provides detailed guidance and instructions that users may reference. They can be found on the CMS creditable coverage website.

Reach out to your Hylant representative for further information. Don’t have one? Contact us here.

The above information does not constitute advice. Always contact your employee benefits broker or trusted advisor for insurance-related questions.