Reminder – Medicare Part D Notice
due October 15th
Group health plan sponsors must provide Medicare Part D Notices by October 15th. This Notice and the related filings are often handled by third-party administrators (TPA) and insurers. However, we are seeing an increasing number of small and mid-sized plan sponsors who have moved to self-insured arrangements (whether individually, or as part of a larger pooled group or a captive arrangement) and are finding themselves responsible for one or both of these tasks. We urge you to confirm with your TPA or insurer to make sure someone is handling the Notice and relating filings for you. If not, please read below for more information on your obligations.
What is the Notice?
The Part D Notice discloses whether prescription drug coverage under your group health plan is creditable. Coverage is creditable only if its actuarial value equals or exceeds the actuarial value of standard prescription drug coverage - your insurer or third-party administrator should provide this information to you.
You can choose to use a customized form, but make sure that it contains all of the current provisions of the model form.
Who Gets The Notice?
The Notice must be provided to all Part D eligible individuals enrolled in or seeking to enroll in the coverage, including spouses and dependents if they are otherwise Part D eligible. Since this group could include current or former disabled or retired employees, spouses or dependents, the simplest approach to compliance is to provide a Notice to everyone enrolled or enrolling in your plan.
Delivering the Notice
You can deliver a single Notice to the Part D eligible employee and all of his/her Part D eligible dependents. However, if you know that a spouse or dependent who is Part D eligible resides at a different address from the employee, you must provide a separate Notice.
You have flexibility in how you provide the Notice. You may provide it separately or, if certain conditions are met, together with other information provided to participants, such as enrollment materials or summary plan descriptions (SPDs). If you provide a Notice along with other information, the Notice must be "prominent and conspicuous." This means the Notice portion of the document (or a reference to the section in the document being provided to the individual that contains the required statement) must be prominently referenced in at least 14-point font in a separate box, bolded, or offset on the first page of the other information that is being provided.
You may deliver the Notice by mail, although first-class mail is recommended, rather than certified mail with return receipt requested. You can also deliver the Notice electronically, if you follow the electronic disclosure requirements that apply to summary plan descriptions (SPDs) (found in DOL Regulation Section 2520.104b-1(c)(1)). The difficulty with these requirements is that you may only deliver electronically without individual consent to those participants with the ability to access electronic documents at their regular place of work and who can access your electronic information system on a daily basis as part of their work duties. Depending on your type of business, this requirement may be impossible to meet. The DOL's electronic disclosure requirements also require that you use appropriate and reasonable means to ensure that the system for furnishing documents results in actual receipt of transmitted information and protects the confidentiality of personal information relating to an individual's accounts and benefits. In addition, you must notify each recipient, at the time the electronic document is furnished, of the significance of the document, that a paper version of the document is available on request, and that the recipient is responsible for providing a copy of the Notice to his or her covered Medicare-eligible dependents. For those individuals who don't have daily workplace access to your electronic information systems, you can still use electronic delivery if you obtain their electronic confirmation that they have adequate access to electronic information and consent to receive information electronically, after informing them of their right to obtain a paper Notice, how to withdraw their consent, and how to update their address information, and advising them of any hardware or software requirements to access and retain the Notice. A valid email address must be provided to you. In all cases where you deliver Notices electronically, you must post the Notice (except for personalized Notices) on your website, if applicable, with a link on your home page to the disclosure Notice.
Whatever method you choose, it is important that you retain sufficient evidence of delivery (e.g., through logs or certificates of mailing) in case of audit. Hand-delivery of Notices is not generally recommended.
Penalty for Not Providing the Notice
A late enrollment penalty is imposed on Part D eligible individuals who do not maintain creditable coverage for a period of 63 days or longer following their initial enrollment period for the Medicare prescription drug benefit. The information provided in your Medicare Part D Notice is essential to an individual's decision whether to enroll in a Medicare Part D prescription drug plan.
What If My Plan Is Not Finalized?
If you have not yet finalized your 2017 offerings, you should still provide the Notice now, based on your current offerings. If the status of those offerings changes from creditable to non-creditable (or vice versa), you will need to provide an additional Notice within a reasonable period of time (maximum 60 days) after the change occurs. The original Notice should indicate that the Notice will not be updated if coverage changes but it remains creditable or non-creditable (as applicable).
Additional Notice Triggers & Filing Requirements
This is a good time to check your processes to make sure that you are providing the Medicare Part D Notice at all of the additional times as required by law:
- prior to an individual's initial enrollment period for Part D (your October 15th annual notice will be deemed to satisfy this requirement);
- prior to the effective date of coverage for any Part D eligible individual who enrolls in your prescription drug coverage;
- if you no longer offer prescription drug coverage or change it so that it is no longer creditable or becomes creditable; and
- upon request by the Part D eligible individual.
In addition, you should make sure that you, or your third-party administrator or insurer, complete the Online Disclosure to CMS Form to report the creditable coverage status of your prescription drug plan. The Online Disclosure should be completed annually no later than 60 days from the beginning of a plan year (e.g., contract year, renewal year), within 30 days after termination of a prescription drug plan, or within 30 days after any change in creditable coverage status.
Nelson Mullins Executive Compensation and Employee Benefits attorneys are ready to assist with your compensation and benefits related matters in a cost-effective and responsive manner. Please contact one of our Executive Compensation and Employee Benefits partners or the Nelson Mullins attorney with whom you work.
This Brief should not be construed as legal advice or legal opinion on any specific facts or circumstances. The contents are intended for general information purposes only, and you are urged to consult a lawyer concerning your own situation and any specific legal questions you may have.
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The articles published in this newsletter are intended only to provide general information on the subjects covered. The contents should not be construed as legal advice or a legal opinion. Readers should consult with legal counsel to obtain specific legal advice based on particular situations.