Informing Medicare-Eligible Participants of Creditable Coverage

Written by benefitexpress | October 5, 2016

The deadline to provide creditable coverage notices to your employees is fast approaching. Every year before October 15th, you must let all Medicare-eligible plan participants whether your employer health plan is considered creditable or non-creditable. If you do not provide creditable coverage and your employee decides not to enroll in Medicare Part D, they could be subject to a fee if (and when) they leave your plan and enroll. Your plan provider will be able to tell you if you have creditable coverage, and an easily adaptable notice template is available here.

So what is creditable coverage? According to Healthcare.gov, creditable coverage includes health insurance that is at least as good as (in actuarial value) Medicare under any of the following:

  • A group health plan
  • Individual health insurance
  • Student health insurance
  • Medicare/Medicaid
  • CHAMPUS and TRICARE
  • The Federal Employees Health Benefits Program
  • Indian Health Service
  • The Peace Corps
  • Public Health Plan
  • Children’s Health Insurance Program (CHIP)
  • A state health insurance high risk pool

 

Going over your coverage for your Medicare notices is a great time to consider discussing Medicare with your eligible employees. Especially if your coverage is not creditable, forgoing your employer health plan and having Medicare as their only insurer may be the best possible choice for your employees.

To be creditable under CMS rules, prescription drug coverage must specifically:

  • Provide coverage for brand and generic prescriptions
  • Provide reasonable access to retail providers
  • The plan is designed to pay an average of at least 60% of participants’ prescription drug expenses
  • Must satisfy at least one of the following:
    • Have no annual benefit maximum benefit/maximum annual benefit payable by the plan of at least $25,000
    • Have an actuarial expectation that the amount payable by the plan will be at least $2,000 per Medicare-eligible employee per year
    • For integrated health coverage, the plan must have no more than a $250 deductible per year, has no annual benefit maximum or maximum annual benefit payable by the plan of at least $25,000 and no less than a $1,000,000 lifetime combined benefit maximum

 

If your employee doesn’t know they do not have creditable coverage, they could be subject to penalties for a lapse in coverage (which they didn’t think they had!) when they enroll in Medicare. Make sure you notify your employees in time for them to make the right decision for their needs and budget.

Check out our top tips for that conversation here.

Topics: For Employers, For Brokers & Consultants, Retirement Planning