Human Resources

Medicare Part D notices are due before October 15,2020. But what does that mean and how do you know if your coverage is creditable?

If you have any type of group health plan the notice is sent to advise plan participants as to whether their prescription drug coverage is “creditable.”

What is Medicare D Creditable Coverage? – The Medicare Modernization Act made it a requirement that entities that offered plans which included prescription drug coverage had to disclose to all Medicare-eligible individuals whether that prescription drug coverage was “creditable.”

Defining Creditable – For the purposes of this requirement, “creditable” means that the coverage is expected to pay as much as the standard Medicare prescription drug coverage. Among the 2020 parameters for what is considered “standard” under Medicare D are:

• Deductible: $435.00
• Initial coverage limit: $4,020
• Out-of-pocket threshold: $6,350

Determination of Creditable Coverage
The prescription drug plan is deemed to be creditable if it:

• Provides coverage for brand and generic prescriptions
• Provides reasonable access to retail providers and mail order coverage
• Is designed to pay on average at least 60% of participants’ prescription drug expenses

The plan must also satisfy one of the following criteria:

1. The prescription drug coverage has no annual benefit maximum benefit or a maximum annual benefit payable by the plan of at least $25,000
2. The prescription drug coverage has an actuarial expectation that the amount payable by the plan will be at least $2,000 annually per Medicare-eligible individual
3. For entities that have integrated health coverage, the integrated health plan has no more than a $250 deductible per year, has no annual benefit maximum, or a maximum annual benefit payable by the plan of at least $25,000 and has no less than a $1,000,000 lifetime combined benefit maximum.

Notification
The creditable or non-creditable coverage notice must be provided to Medicare Part D eligible individuals who are covered or who apply for the plan’s prescription drug coverage. This includes active, retired, disabled, and COBRA beneficiaries and dependents. The notice must be furnished no later than October 14. The Part D Annual Election Period runs from October 15 through December 7 of 2020.

It is often difficult to determine which participants are Medicare D eligible, so the prudent solution is to send the notification to ALL plan participants prior to October 14. Click here for a guide that  provides a calculator methodology for determining creditable coverage.

There is also a necessary notification requirement for entities to complete the Online Disclosure to CMS Form to report the creditable coverage status of their prescription drug plan. The disclosure should be completed annually no later than 60 days from the beginning of a plan year, within 30 days after the termination of a prescription drug plan, or within 30 days after any change in creditable coverage status.

Penalties
While there are no formal penalties attached to non-conformance of the requirement, the Medicare-eligible individual may incur a late enrollment penalty if notification as to non-creditable coverage exists and that individual then attempts to enroll in a Medicare Part D plan.

Employee Benefit Advisors provides employee benefits, tax-advantaged healthcare, compliance guidance for ACA and Health & Welfare DOL Audits, and PEO Advisory & Consulting Services.

IR-2020-57, March 20, 2020

The U.S. Treasury Department, Internal Revenue Service (IRS), and the U.S. Department of Labor (Labor) announced that small and midsize employers can begin taking advantage of two new refundable payroll tax credits, designed to immediately and fully reimburse them, dollar-for-dollar, for the cost of providing Coronavirus-related leave to their employees. This relief to employees and small and midsize businesses is provided under the Families First Coronavirus Response Act (Act), signed by President Trump on March 18, 2020.

The Act will help the United States combat and defeat COVID-19 by giving all American businesses with fewer than 500 employees funds to provide employees with paid leave, either for the employee’s own health needs or to care for family members. The legislation will enable employers to keep their workers on their payrolls, while at the same time ensuring that workers are not forced to choose between their paychecks and the public health measures needed to combat the virus.

Key Takeaways

Paid Sick Leave for Workers

• For COVID-19 related reasons, employees receive up to 80 hours of paid sick leave and expanded paid child care leave when employees’ children’s schools are closed or child care providers are unavailable.

Complete Coverage

Employers receive 100% reimbursement for paid leave pursuant to the Act.

• Health insurance costs are also included in the credit.
• Employers face no payroll tax liability.
• Self-employed individuals receive an equivalent credit.

Fast Funds

Reimbursement will be quick and easy to obtain.

• An immediate dollar-for-dollar tax offset against payroll taxes will be provided
• Where a refund is owed, the IRS will send the refund as quickly as possible.

Small Business Protection

• Employers with fewer than 50 employees are eligible for an exemption from the requirements to provide leave to care for a child whose school is closed, or child care is unavailable in cases where the viability of the business is threatened.

Easing Compliance

• Requirements subject to 30-day non-enforcement period for good faith compliance efforts.

Employee Benefit Advisors provides employee benefits, tax-advantaged healthcare, compliance guidance for ACA and Health & Welfare DOL Audits, and PEO Advisory & Consulting Services.