On October 29, 2020, the US Departments of Health and Human Services, Labor, and Treasury (collectively, the Departments) issued the Transparency in Coverage final rule (the Rule), along with a fact sheet, setting forth requirements for group health plans and health insurance issuers to disclose cost-sharing information upon request to participants, as well as additional pricing information to the general public.
The Medicare Modernization Act of 2003 requires employers who offer prescription drug coverage to provide an annual notice to all Medicare Part D eligible individuals who are participants in, or eligible for, the employer’s prescription drug coverage indicating whether such coverage is creditable before October 15th of each year. “Creditable coverage” means that the prescription drug coverage offered by an employer plan is expected to pay, on average for all plan participants, as much as the standard Medicare prescription drug coverage pays. Prescription drug coverage is “non-creditable” when it is not expected to pay, on average for all plan participants, as much as the standard Medicare prescription drug coverage pays.
The notice must be furnished regardless of whether the employer plan pays primary or secondary to Medicare, and must be sent to all Part D eligible individuals including retirees, actives, COBRA beneficiaries and dependents of such individuals. The Centers for Medicare and Medicaid Services (CMS) provides Model Disclosure Notices for creditable and non-creditable coverage.
If you would like additional information about this requirement, or if you have any questions, please contact your McDermott lawyer or one of our Benefits attorneys.
Charnae Supplee, a law clerk in the Firm’s Washington, DC office, also contributed to this article.
by Susan M. Nash and Elizabeth A. Savard
Group health plans that offer prescription drug coverage are required to issue a notice of creditable or non-creditable coverage to Medicare-eligible participants and beneficiaries each year prior to the annual Medicare Part D open enrollment period. In the past, the Medicare Part D open enrollment period ran from November 15 through December 31, so the notice had to be provided by November 15. The Patient Protection and Affordable Care Act moved the Medicare Part D open enrollment period earlier, beginning in 2011, to October 15 through December 7. Therefore, this year’s notice of creditable or non-creditable coverage must be provided by October 15, 2011.
A plan’s notice of creditable or non-creditable coverage describes whether prescription drug coverage under the plan is "creditable" — i.e., expected to pay out at least as much as standard Medicare prescription drug coverage, on average for all participants. This information is designed to help Medicare-eligible individuals avoid late enrollment penalties, which can apply when an individual who does not have creditable coverage fails to enroll in Medicare Part D when first eligible.
Plan sponsors will need to update their notices of creditable or non-creditable coverage to reflect the new dates for the Medicare Part D open enrollment period. The Centers for Medicare and Medicaid Services have updated their model notices of creditable and non-creditable coverage to reflect the new dates. No other substantive changes were made to the model notices. The updated notices are available here.
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