As Medicare’s Annual Election Period rapidly approaches, employers should take note: Notices of Creditable Coverage must be sent by October 15. These notices must be sent to all employees over age 65, and any other employee or their dependent who is eligible for Medicare.

Creditable coverage means that a healthcare plan is expected to pay, on average, as much as the standard Medicare Part D plan toward a beneficiary’s prescription medications. The plan is equivalent in coverage to what a Part D plan would offer.

A notice of creditable coverage tells the covered individual that the prescription drug policy offered by their healthcare plan qualifies as “creditable coverage”.

These notices must be sent prior to October 15 each year, allowing the covered individual time to make decisions regarding his or her Medicare enrollment before the Annual Election Period. Employers must send a notice of creditable coverage to all Medicare-eligible employees, COBRA-covered individuals, and retirees covered by their group healthcare plan. Additionally, all dependents of these individuals must also receive a notice.

Why does this matter to the employee? Under the Medicare Modernization Act, individuals who do not maintain prescription drug coverage for 63 days or longer, following their initial date of Medicare eligibility, will be charged a late enrollment penalty.

However, if the individual has creditable coverage through a group healthcare plan, they are not required to enroll in Part D or face the late enrollment penalty.

But if the individual’s coverage is not creditable, they should evaluate whether enrolling in Medicare Part D would be a wise choice for them.

So, the notice of creditable coverage gives these individuals the information they need to make responsible decisions regarding their Medicare prescription drug coverage.

Notices must be filed with Medicare as well. In addition to the individual notices, employers must file an online disclosure with Medicare, certifying creditable coverage of their group healthcare plan. This disclosure must be filed

• Within 60 days of the beginning of the plan’s contract year
• Within 30 days of termination of a prescription drug plan
• And within 30 days of changes to the status of creditable coverage

For more information on notices of creditable coverage, contact us and we can answer your questions. We can help you evaluate your situation and ensure that your company complies with the law while protecting your employees.