Upcoming Medicare Changes Affecting Employee Benefit Plans
Two recent changes will affect the filing and notice requirements for plan administrators, insurers and third-party administrators of group health plans regarding Medicare-eligible health plan participants.
New Model Medicare Part D Notice
Since November 15, 2005, group health plans that provide prescription drug benefits covering any Medicare-eligible individuals have been required to disclose to such individuals whether the coverage is creditable or noncreditable (that is, whether or not it is at least the actuarial equivalent of Part D coverage). Generally, a plan sponsor must provide one notice (either the "creditable" notice or the "noncreditable" notice) and customize the notice to reflect the specific provisions of the plan. The required notice must be provided at several points. Specifically, it must be provided before the Medicare Part D annual coordinated election period beginning November 15th of each year and any annual open enrollment. Second, the notice must be provided before the effective date of coverage for any Medicare-eligible individual who joins the plan. Third, it must be provided whenever prescription drug coverage ends or changes so that it is no longer creditable or becomes creditable.
To assist with these disclosures, the Centers for Medicare & Medicaid Services ("CMS") has issued model notices of creditable and noncreditable coverage. However, CMS has recently issued new model notices for use after June 15, 2008. Although employers are not required to use the model notices, they may want to revise their Medicare Part D notices based on the new model notices. The new model notices can be obtained from the CMS website, which can be found at the following link: http://www.cms.gov/Medicare/Prescription-Drug-Coverage/CreditableCoverage/index.html?redirect=/CreditableCoverage/09_CCafterJune15.asp
New Disclosure Requirements to HHS
Last fall, Congress passed the Medicare, Medicaid, SCHIP Extension Act of 2007 (the “Act”), which was signed into law by President Bush on December 29, 2007. The Act amended the Medicare Secondary Payer statute to include provisions requiring insurers, third-party administrators and (in the case of self-funded plans) plan administrators of group health plans to obtain certain information about plan participants and submit such information to the Department of Health and Human Services ("HHS"). The information is intended to assist HHS in identifying situations where Medicare would be a secondary payer to the health plans.
An entity that fails to comply with the requirements are subject to a civil penalty of $1,000 per day for each individual for which information should have been submitted. Although HHS has not yet specified the form, manner and frequency for submitting the information to HHS, the information for group health plan participants must be submitted to HHS beginning on January 1, 2009. As a result, employers should begin discussing with their service providers (such as third-party administrators and insurers) how the service providers are preparing for the requirement.