Reporting creditability to Centers for Medicare and Medicaid Services when new plan year begins
Within 60 days of the start of each new medical plan year, the employer (regardless of size) must notify the Centers for Medicare and Medicaid Services (CMS) whether their prescription drug plan options are creditable and/or non-creditable with Medicare Part D (i.e., whether the plans are expected to pay at least as well as Part D pays). This 60-day deadline is reduced to 30 days if prescription drug creditability changes or the plan terminates. Calendar year plans must report by March 2 (or by January 30 if credibility changed or the plan terminated).
Who this applies to:
Employers of any size sponsoring a fully insured, self-insured, or level-funded medical plan with prescription drug coverage. For now, this appears to include HRAs that include reimbursement of prescription drug costs, and ICHRAs that are not just reimbursing insurance premiums but also reimburse prescription drug costs. (However, CMS has suggested they might issue guidance to no longer require this of HRAs or ICHRAs in the future.)
Key details:
Employers must submit their creditable/non-creditable status via the CMS Creditable/Non-Creditable web form.
The webform should take less than five minutes to complete. It is straightforward, but the employer must know the answers to the following questions:
- Whether all prescription coverage options offered are creditable, non-creditable, or a combination of creditable and non-creditable
- Note: The employer must disclose creditability for the upcoming plans with open enrollment materials, so the employer should already know this information when it is time to submit this disclosure to CMS.
- The last date the employer provided employees with a creditable and/or non-creditable coverage notice for the plan year that just started
- Note: This will often be the date the employer provided open enrollment materials.
- An estimate of the number of Medicare-eligible employees, spouses, and dependents enrolled in the employer’s prescription drug plans
- This can be zero if the employer is not aware of anyone eligible for Medicare due to age, disability, or end stage renal disease.
The employer does not have to log in to a portal or download a template, but that also means there is no way to log in and see proof of prior submissions. So, once the employer submits the information, they should keep a copy for their records.
Penalties for non-compliance:
There is no specific penalty to the employer for not submitting this reporting to CMS. However, it is easy to do and takes very little time, so demonstrating good faith compliance is encouraged.
Impact to employers:
This process is very straightforward for reporting credibility to CMS. The only complicated part might be determining whether the prescription drug plans are creditable or not when the insurance carrier, third party administrator (TPA), or pharmacy benefits manager (PBM) will not make that determination for the employer. Erroneously calling a prescription plan creditable when it does not meet the creditability requirements can have adverse consequences to the employer and to participants in that plan who wait to enroll in Medicare Part D until after 65. So, it is best to have an actuarial-based determination of creditable coverage status.
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