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.

Plans are required to tell both CMS and certain individuals whether or not the plan's prescription drug coverage is on par with Medicare—that is, whether the prescription drug coverage is "creditable." Before anything can be reported to CMS, and before any notice can be given to individuals, the plan's creditable coverage status must be determined.

As an aside, the notice to individuals must be provided 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).

Technically, it's the plan sponsor's responsibility. For plans that have medical and prescription drugs with the same carrier or TPA, the carrier or TPA will usually disclose the creditable or non-creditable coverage status of each plan it offers or administers, but usually only when asked. So first start by asking the carrier or TPA. Some carriers and TPAs are better than others, though, so if the carrier or TPA is of little help, the employer may have to take matters into its own hands.

The methods available vary depending on whether prescription drug claims and other medical claims accumulate together toward the same deductible.

When medical and prescription drug claims accumulate toward the same deductible and that deductible is $250 or less, a plan's creditable coverage status can be determined using the so-called "simplified determination" method. Under the simplified determination method, if all of the following are true, the prescription drug coverage is deemed creditable:

The last requirement is the tricky one, but for ACA-compliant plans with a deductible of $250 or less and fairly standard prescription drug coverage, it's highly likely the prescription drug coverage is creditable. It would be prudent, though, to get a quick confirmation from the carrier, TPA or PBM.

When medical and prescription drug claims accumulate toward the same deductible but the deductible is more than $250, the simplified determination method is not available. Instead, the plan's prescription drug coverage must be actuarially compared to Medicare. Actuarial attestation is not required for the actuarial equivalence method, but the use of a model developed by an actuary will be. ERISAfire's attorneys, for example, will examine a plan's design and issue a legal opinion certifying creditable coverage status using a combination of their own analysis and a computer model developed by actuaries for this purpose. No actuary needed.

As a practical matter, when medical and prescription drug claims have separate deductibles, it's more common that an employer will have to arrange its own creditable coverage determination, even under the simplified method. For plans with separate deductibles, the simplified method requires all of the following to be true in order to deem the prescription drug coverage creditable:

Again, it's the last requirement that is the tricky one. Plans with very high (albeit still ACA-compliant) deductibles and out-of-pocket maximums are more likely to be non-creditable. Based on the experience of ERISAfire's attorneys, plans with deductibles higher than $3,000/$6,000 are more likely to be non-creditable, and it may not be possible to eyeball those plans.

The net result is that employers with plans that have separate deductibles will need to obtain some sort of determination of creditable or non-creditable status. Start first with the carrier, TPA or PBM. Ask if it has determined the creditable coverage status of the plan. The carrier, TPA or PBM may be able to provide a definitive answer. However, if the answer is anything like, "This is up to the plan sponsor, but here's some information," then to be safe the employer should obtain its own formal determination. ERISAfire's attorneys, for example, will examine a plan's design and issue a legal opinion certifying creditable coverage status using a combination of their own analysis and a computer model developed by actuaries for this purpose.