It's pretty easy. All employers with health plans that have prescription drug coverage must provide the notice. No small employer exception here. Even if an employer qualifies for the small employer exception under the Medicare Secondary Payer rules (fewer than 20 employees), it's still subject to the Part D disclosure requirements. This is a Medicare law, not a requirement of ERISA, so governmental and church plans are not exempt either.

The precise contours of who must receive the notice are rather technical, and there's no downside to casting a larger net. So for all practical purposes, the notice should be sent to any benefits-eligible employee, retiree (if retiree coverage is provided) or spouse of an employee or retiree who is age 65 or older and to younger individuals who sign up for Medicare because of a disability or End-Stage Renal Disease (ESRD). It is not necessary to send the Part D notice to expats, however.

Strictly speaking, the Medicare Part D regulations require that the notice be given to benefits-eligible individuals who are actually enrolled in Medicare Part A or B (which generally happens automatically if if someone starts taking Social Security retirement benefits), but the administrative burden of finding out exactly who is enrolled in Medicare usually far outweighs the nominal incremental burden of sending a few extra notices if they're just sent to everyone who is 65+.

The Part D notice of creditable coverage must be provided annually to all recipients before what is essentially Medicare open enrollment, which begins October 15. So the annual notice is due by October 14. Any annual notice given more than 12 months before any given Medicare open enrollment period is considered "prior to" Medicare open enrollment. If you're getting dangerously close to the deadline, be mindful of any non-business days when selecting your distribution date and method because the deadline is the deadline. It doesn't get extended if October 14 is a Sunday, for instance.

In addition, the notice must also be provided at several other times on an individual basis:

There are two types of notices: one informs recipients that the employer's prescription drug coverage is creditable; the other informs recipients that the employer's prescription drug coverage is not creditable. The CMS content requirements are pretty specific. CMS has issued model notices that employers can use as a starting point, but we caution against using the model notice word-for-word.

The model notices, while compliant, are quite confusing. This introduces risk because plan communications are held to a fiduciary standard, and confusing communications should be avoided. Also, the model notices from CMS contain much more content than is actually required by law, contributing to the propensity for the model notices to confuse employees. For these reasons, many employers do not use the model Medicare Part D notice(s). In fact, we at ERISAfire do not use the model notice when doing notice and disclosure compliance projects.

Before picking a template or starting point for your Medicare Part D notice, you have to know whether the employer's prescription drug coverage is creditable—that is, comparable in quality to Medicare Part D. There are two ways to determine if a plan's prescription drug coverage is creditable. The "simplified determination," as it is called, is based purely on plan design. If the plan is designed consistent with these CMS requirements, it's creditable. If it is not, then the employer must use the second method and determine whether the prescription drug coverage is actuarially equivalent. Actuarial attestation is not required for the actuarial equivalence method, but the assistance of an actuary likely will be.

As account-based supplemental benefits like flexible spending arrangements, health savings accounts and healthcare reimbursement arrangements grew in popularity, CMS issued specific guidance about how such accounts factor into the creditable coverage determination. Basically, FSAs and HSAs are ignored; portions of HRAs can be factored in. This will affect the extent to which a high deductible health plan (HDHP) will be considered creditable coverage.

CMS guidance from 2009 (the most recent available) clarifies that notices do not have to be sent as a separate mailing; they can be provided as part of enrollment/renewal or other plan information materials. If the notice is included with other plan information, the notice must be “prominent and conspicuous.” A single notice can be provided to a Medicare Part D-eligible individual and all Medicare-eligible dependents at the same address. However, a separate notice is required “if it is known that any spouse or dependent that is Medicare eligible resides at a different address than from where the participant/policyholder materials were provided.”

Importantly, notices can be electronically distributed if the employer follows the DOL electronic delivery safe harbor regulations, which permit electronic distribution to participants who have the ability to access electronic documents at their regular place of work if they have access to the plan sponsor’s electronic information system on a daily basis as part of their work duties. With respect to retirees, however, employers must have affirmative consent and an indication that the retiree has adequate access to electronic information.

The DOL electronic delivery safe harbor rule splits recipients into two categories: those whose integral job duties include work-related computer access and those whose integral job duties do not include work-related computer access. For employees with work-related computer access as an integral part of their job duties, an employer may distribute documents and notices electronically without obtaining employee consent. For individuals whose integral job duties do not include work-related computer access, an employer must obtain affirmative consent meeting DOL's standards; otherwise, the employer must provide paper copies of documents and notices.

An employer may distribute documents and notices electronically without obtaining employee consent if the employer (or plan administrator, to the extent the employer is not the ERISA plan administrator) complies with the following requirements:

An employer may distribute documents and notices electronically to employees whose integral job duties do not include work-related computer access only if the employer/plan administrator complies with the following requirements:

For employees whose integral job duties do not include work-related computer access and who do not affirmatively consent to electronic disclosure as outlined above, the employer/plan administrator must provide paper copies of the documents or notices and generally cannot charge an additional amount to do so.

Sponsors of group health plans that provide prescription drug coverage must notify CMS about their medical plans' creditable coverage status. This is true even if there are no Medicare-eligible participants in the employer's group health plan.

Notice of each plan's creditable coverage status is due to CMS within 60 days after the beginning date of the plan year for which the notice to CMS is provided. For example, in the case of a calendar year plan providing notice for the 2017 calendar plan year, the employer would file its creditable coverage status notice with CMS by March 1, 2017. (Note that notice would be due for calendar year plans on February 29 during leap years.) For a fiscal plan year that starts on July 1, 2017, the employer must submit its notice to CMS no later than August 30, 2017.

Notice is also required within 30 days after termination of the prescription drug benefit or plan and within 30 days after any change in creditable status of the prescription drug benefit or plan.

Notice to CMS of a plan's creditable coverage status must be completed and sent electronically through the CMS website; paper copies are not generally allowed.
​