Health insurance options are sometimes a lot for employers to tackle. One of the things that employers need to understand what creditable coverage notices are, and when to send them to eligible employees. When an employee reaches the age of sixty-five, they become eligible for Medicare coverage through Federal Government programs. Technically, employees can begin their initial enrollment three months before they turn sixty-five and must complete the enrollment by 3 months after an employee turns 65.
Here is where it can be tricky. Not all health insurance plans are created equal. Employers must send out notices to employees that are of age to qualify for Medicare programs. No matter if the health insurance plan qualifies as “creditable coverage,” or not. Employers are required by law to give notice to all employees. It is important for all employers to understand what Creditable coverage requirements are, and when they are required to give notices to eligible employees.
What is “Creditable Coverage” and Why is it Important?
Creditable coverage is a health insurance plan that meets or exceeds the coverage provided by Medicare. Creditable coverage can also refer to coverage under a previous health insurance plan prior to enrollment in a new one.
Creditable coverage also entitles the policyholder to buy or switch health insurance coverage without penalty, restriction, or waiting period. Maintaining enrollment in creditable drug coverage means you will not incur a late enrollment penalty (LEP) for delaying Part D enrollment. For more on what this is and why it is important check out this resource from the Society for Human Resource Management (SHRM) HERE.
Understanding Creditable Coverage Notices
As an employer, it is important to understand what is required when issuing Creditable coverage notices. Creditable coverage notices are typically related to health insurance plans. These notices must be sent to Medicare-eligible individuals by employers or health plan sponsors by October 15th of each year.
These notices inform employees whether the prescription drug coverage provided by their current plan is considered “creditable.” To be considered “creditable coverage” must be at least equivalent to the standard Medicare Part D prescription drug coverage. It is important to note that if an employee does not have credible coverage, they could receive a penalty when they elect Part D.
How Do I Determine if My Coverage Is Considered “Creditable?”
Knowing if your current coverage qualifies as “creditable coverage” is important. No one wants an employee to unexpectedly have to pay a penalty for having a plan that does not meet the creditable coverage requirements. The Centers for Medicare & Medicaid Services (CMS) has provided a Creditable Coverage Simplified Determination method that employers can use to determine if a plan provides creditable coverage.
Your health insurance carriers will typically provide guidance for employees during this transition time. As an employer, make sure you talk to your carrier prior to the deadline to make sure you understand where your health insurance benefits qualify or in some cases do not. Need more resources? Check out this downloadable PDF from the Centers for Medicare and Medicaid Services (CMS) Here:
Why Do Employers Have to Give Employees Notices?
The notices are intended to help Medicare-eligible individuals make an informed decision about whether to enroll in the Part D prescription drug benefits. In addition to the employee notices, employers must also notify CMS that the notices were sent to employees. This crucial step keeps employers accountable and compliant. You can read more about compliance HERE
When Should the Notices Be Sent?
The notices should be provided to all Medicare-eligible individuals who are covered under, or who apply for, the entity’s prescription drug plan, at least once a year. They are due by October 15th, as open enrolment for Medicare programs starts on October 15th and continues through December. New Medicare coverage begins in January.
Your carrier will send a notice for you, but you will still have to make sure you follow the correct steps to inform employees and follow up with CMS.
CMS requires that Part D-eligible individuals be given notice of the creditable or non-creditable status of their prescription drug coverage at the following times:
- Before an individual’s initial enrollment period for Medicare Part D.
- Before the effective date of coverage for any Medicare-eligible individual who joins employer plans.
- Whenever prescription drug coverage ends or creditable coverage status changes.
- On the individual employee request.
How Can AUI Help?
AUI cares about employers and their employees like they are part of our family. We know that no matter what plan you have, employers genuinely want to do the right thing for each of their employees. Staying compliant with health insurance regulations is an important part of that. While we may not have helped you pick out your current healthcare plan, we can absolutely help you figure it out and we can also be there to talk to your employees that may be affected by creditable coverage requirements. We can even help figure out who to talk to with your carrier to ensure you have all the information regarding your policies’ Creditable coverage eligibility.
We can also help you find a different plan if your current one does not meet creditable coverage requirements. Our brokers are dedicated to our clients as an extension of your team, and if your current provider is not there to help, let us show you the AUI difference. We are here to help. Contact us today with any of your creditable coverage questions.
