Overview

The federal Medicare laws impose upon employers the duty to provide to Medicare-eligible individuals covered under a health plan a notice regarding the "creditable" status of the plan's prescription drug coverage. The notice is required to be provided once a year. As a result of the health care reform legislation, the deadline for providing the notice each year and the notice itself have been changed.

Individuals who are enrolled in Medicare have the opportunity to receive subsidized prescription drug coverage through the Medicare Part D program. Medicare-eligible individuals who enroll after their initial eligibility period will be charged a late enrollment penalty. The penalty does not apply if the Medicare-eligible individual is covered under a group health plan that provides "creditable" prescription drug coverage. In this connection, employers are required each year to provide Medicare-eligible individuals covered under a plan with a notice advising whether the prescription drug coverage provided by their group health plan qualifies as "creditable" coverage. If so, the individual can defer enrollment in Medicare Part D without a penalty.

In years past, the annual creditable coverage disclosure notice was required to be provided no later than November 15, which was the beginning of the annual election period under Medicare Part D. The Patient Protection and Affordable Care Act moved the Medicare Part D annual enrollment period to October 15 through December 7, beginning in 2011. Under the general rules prescribed by the Centers for Medicare & Medicaid Services ("CMS"), the notice for a year is required to be provided prior to the beginning of the Medicare Part D annual election period. Consequently, the creditable coverage disclosure notice for this year will need to be provided by October 15, 2011, one month earlier than in the past.

Last week, CMS released a set of updated model creditable coverage notices. The updated model notices are for use on or after April 1, 2011. These updated notices have been posted on the CMS webpage.

An employer will wish to make note of the new notice deadline, and should review and adapt the language of the updated model when drafting its own notice to be provided later this year.

For further information or questions regarding the Medicare Part D creditable coverage disclosure rules, please contact the Schwabe attorney with whom you work or Wally Miller at 541-686-3299 or wmiller@schwabe.com.