Is Your Rx Plan Creditable? Medicare Part D requires group health plan sponsors to disclose to Part D eligible individuals and to the Centers for Medicare and Medicaid Services (CMS) whether the their prescription drug coverage is “creditable.” Creditable coverage is prescription drug coverage through an insurer (such as an employer, former employer, or union) that, on average, pays out at least as much as the standard coverage available through a Medicare prescription drug plan.
Some plans are finding that due to the closing of the “donut hole” mandated by the Affordable Care Act and/or increasing their prescription deductible that their prescription drug coverage is now non-creditable. Some employers are not even aware of this change until their plans renew.
What Happens If Rx Coverage Becomes Non-Creditable?
If Medicare eligible individuals are in a non-creditable prescription drug plan and they go more than 63 days without creditable prescription drug coverage, their premium to join the Medicare Part D plan goes up by 1% per month that they did not have creditable coverage until they enroll. Medicare Part D open enrollment does not begin until October.
When a prescription drug plan changes from creditable to non-creditable, there is an obligation on the part of the plan to provide notice of this change in creditable status. This gives rise to a 2 month special enrollment period that runs from the date of the change or the date of the notice, whichever is later. CMS rules require notice “Whenever the entity no longer offers prescription drug coverage or changes the coverage offered so that it is no longer creditable or becomes creditable.”
Employers should be aware of this important compliance requirement and take action if needed.