The New Medicare Part D - Prescription Drug Benefits
EMPLOYER RESPONSIBILITIES UNDER THIS LAW
by Paul M. League, QFP, CFP® - www.LeagueFinancial.com
The Government has added a new benefit to Medicare, called
Medicare Part D Prescription Drug coverage. This became effective 1/1/2006, and
effects you as an employer "sponsor" of Rx or Prescription Drug Benefits through
your company provided Group Health Insurance, and it also effects those of your
covered employee/dependents who may be "Medicare Eligible".
As such employers have two responsibilities under this new law; namely, to learn
whether or not their sponsored group Rx benefits are "creditable" (equal to or
better than the new Medicare Part D Rx benefits) or "non-creditable", and to
then provide NOTICE to all of their covered and Medicare "eligible"
employees/dependents (a copy of the Insurance Companies "Letter of
Determination"), AND then, to go online to the CMS website and complete the
online Disclosure Notice Form (a new legal and government requirement under this
new Medicare Part D coverage law).
Pease note the following CMS (Centers for Medicare and Medicaid Services)
Disclosure Notice requirement that you must observe regarding your current
Prescription Drug/Rx Insurance benefits and/or stand alone Prescription Drug/Rx
benefits.
IMPORTANT INFORMATION:
You must take action NOW, before the first or initial deadline of March 31,
2006, to avoid any potential problems or fines.
MMA (the Medicare Modernization Act) imposes a late enrollment penalty on
individuals who do not maintain Creditable Prescription Drug Coverage for a
period of 63-days, or longer, following their initial enrollment period for the
NEW (as of 1/1/2006 onward) Medicare Part D Prescription Drug Benefit.
MMA mandates that certain "Sponsors" offering prescription drug coverage,
including employer and union group health plan sponsors, disclose to all
Medicare "eligible" or sponsor plan covered individuals (employees and
dependents), and/or those with prescription drug coverage under their
sponsorship, or other applicable plan, whether such Rx coverage is “creditable”
or not. This information is essential to an individual’s decision as to whether
to enroll in the Medicare Part D prescription drug plan or not when they become
"eligible".
Who must provide the Disclosure Notice to CMS?
-
Group health plans, including those offered ("sponsored") by
employers
-
union/Taft-Hartley plans
-
Church, Federal, State and local government and other
group-sponsored plans
-
Governmental sponsored plans including: Medicaid; State
Pharmaceutical Assistance Programs (SPAPs), and State High Risk Pools
-
Military coverage including Veteran's Administration coverage and
TRICARE
-
Individual Health Insurance
-
Indian Health Insurance; Tribe or other Tribal Organizations;
Urban Indian Organizations
-
Medigap (Medicare Supplemental Insurance Plans, including
standardized plans H, I or J); pre-standardized Medigap plans
-
waiver State Plans; and plans with "innovative" benefits.
Retiree Drug Subsidy (RDS) - for those "Sponsors" approved
for this subsidy they are exempt from filing the Disclosure Notice with the CMS,
but ONLY with respect to those qualified covered retirees for which the Sponsor
is claiming the RDS subsidy (in such cases the Sponsors RDS application serves
as its disclosure to the CMS under 42 CFR 423.56(e).
The following page provides guidance documents relating to Creditable Coverage
requirements for various "Sponsors", and model Notice Documents:
Downloads -
http://www.cms.hhs.gov/PrescriptionDrugCovGenIn/
IMPORTANT DATES: The Disclosure to the CMS must be
made on an annual basis, AND upon any change that affects whether the drug
coverage is "creditable", to avoid any potential problems or fines.
-
The INITIAL NOTICE must be provided by no later than March 31,
2006.
-
For plan years that end in 2007 and beyond, disclosure of
creditable coverage status must be provided within 60 days after the beginning
date of the plan year for which the entity is providing the disclosure to CMS.
-
Within 30 days after the termination of the prescription drug
plan; and,
-
Within 30 days after any change in the creditable coverage status
of the prescription drug plan.
HOW TO COMPLY & PROVIDE THE CMS WITH YOUR
DISCLOSURE OF CREDITABLE COVERAGE:
The CMS has provided a SOLE METHOD FOR COMPLIANCE FOR A SPONSOR TO REPORT TO THE
CMS, and that is through the CMS online Disclosure Form at the following website
address:
Online CMS Disclosure Notification Form (if this link does not
work simply open your web browser and then type in the exact text of this link
into the "Location" line of your browser -- usually at the top of your browser
window just under the first or second line of button icons):
https://www.cms.hhs.gov/apps/ccdisclosure/default.asp
Please first contact your present Insurer and obtain from them a
letter confirming whether or not the specific Rx benefits of your current
Insurance does or does not represent "creditable coverage" under the new
Medicare Part D Prescription Drug Benefit. Once you obtain this letter you must
immediately provide this to any and all Medicare eligible and/or covered
employees and/or dependents (eligible, enrolled or covered under your Rx
benefits plan or that of any other), as required under law, and then you must
proceed to the CMS website above and complete your online Disclosure Form filing
BEFORE THE DEADLINE and as changes occur thereafter (see above "IMPORTANT
DATES").
Employers should keep copies of this letter and of the online CMS filing
Disclosure Form for your files so that you are able to later prove that you
timely fulfilled your initial AND ongoing requirements under this new Disclosure
Notice Law.
Additional Background & Important Notes:
Q: Why do employers care about this?
A: Even if you do not now have any Medicare "eligible" employees or their
covered dependents, you need to act now. Employers want to protect themselves by
providing the above "creditable Rx coverage" letter to their
covered employees/dependents, as is required under the Law, so that these
persons don't come
back at a later date claiming against you that you failed to timely and properly
notify them whether or not their Rx benefits coverage was/is "creditable" or
not. Were you to fail in doing so, at least annually or more frequently as
situations change, they could solidly claim financial damages against you in a
court of law.
Q: Why would the employees care about this?
A: If they fail to enroll in the NEW Medicare Part D Rx benefits when they
become eligible, they will be charged a cumulative penalty (1% a month until the
date they do enroll), which will result in their Medicare Part D premiums being
at a higher rate, from the date when they finally do enroll and for the
remainder of their lives that they remain covered under Part D.
If, however, they did have "creditable coverage" (within 63-days just prior to
enrolling in Medicare Part D), then the penalty does NOT apply to them. In other
words, if your coverage is "creditable", then Medicare eligible
employees/dependents can opt to stay covered under your group Rx benefits and
NOT be subject to any Late Enrollment Penalty if and when they later may decide
to want to get onto Medicare Part D Rx coverage (i.e. this typically occurs for
people who work past the typical Age 65 Medicare eligibility date and retire
later, loosing their group Rx benefits, and needing to then enroll in Medicare
Part D...and, who will also want to consider acquiring a Medigap plan
to pick up the "gaps" in the basic Medicare Part A, B and D benefits.
The only way the CMS (Government) can monitor this is by "forcing compliance"
and tracking who has and who does not have "creditable coverage"; hence, the
requirement for employers, and others, to learn from their Insurance company
whether or not their existing Rx benefits are "creditable" or not.
Employers and eligible employees/dependents have responsibilities under this new
Law; hence, the reason for you to obtain letters from the Insurer of your
present group Rx benefits, your providing of that letter of determination to
each of your employees and their dependents AND your completing of the CMS
online "Disclosure Notice Form".
If your coverage is NOT CREDITABLE none of your Medicare eligible
employees/dependents would likely want to remain covered under your group Rx
benefits, and would instead want to timely enroll in the NEW Medicare Part D
Prescription Drug Benefits, along with a Medigap plan.
If you require any assistance with this please feel free to call upon us:
1.800.482.5347
To learn more about the new Medicare Part D Rx Prescription Drug Benefits and
Medigap Insurance that helps cover the "gaps" in these and other Medicare
benefits, I have published an article that can be referred to on my website at
the following link:
http://www.leaguefinancial.com/medi-gap.html
