July 11 , 2005
Medicare Part D for Plan Sponsors: Get Ready, Get Set, Go
Note: This Alert is a continuation of our April 26, 2005 Benefits Alert
Centers for Medicare & Medicaid Services (CMS) issued additional guidance in June of 2005 regarding the impact of the Medicare Part D requirements on certain employer sponsored group health plans.
Originally, Medicare Part D appeared to apply to all employer sponsored group health plans including plans such as medical reimbursement accounts offered through the employer’s cafeteria plan. The CMS guidance clarifies Medicare Part D notification obligations do not apply to medical reimbursement accounts offered through the employer’s cafeteria plan, MSAs, and HSAs. However, because they may constitute creditable coverage, the notification obligations do apply with respect to health reimbursement arrangements (HRAs). The CMS guidance also clarifies that when determining whether an HRA provides creditable coverage, if the HRA is offered in conjunction with another group health plan (e.g., a major medical or high deductible health plan), the plans may be combined.
So now what?
Note: The plan sponsor of a group health plan has obligations under Medicare Part D regardless of whether the plan provides “retiree” coverage. If the plan covers anyone (e.g., employees, spouses, dependents, COBRA beneficiaries) who is actually covered by Medicare, the obligations apply to the plan.
Sponsors of HRAs, unallocated medical reimbursement plans (outside the cafeteria plan) designed to coordinate with high deductible major medical coverage, and major medical coverage should take the following actions:
- Determine whether the plan(s) provides creditable coverage; and
- Issue a notification of creditable coverage.
Creditable coverage determination. Plan sponsors of insured plans should contact their carriers to confirm that the carrier is determining whether the major medical plan provides creditable coverage. If the plan sponsor also sponsors an HRA, the plan sponsor should confirm that the carrier is treating the major medical coverage and the HRA as a combined plan for purposes of the determination. Although not specifically addressed in the CMS guidance, we believe an unallocated medical reimbursement plan should also be combined with the corresponding major medical coverage. Therefore, if the plan sponsor sponsors an unallocated medical reimbursement plan, the plan sponsor should confirm that the carrier is treating the major medical coverage and the medical reimbursement plan as a combined plan for purposes of the creditable coverage determination.
Plan sponsors of self-funded plans and stand-alone HRAs will need to make the determination of creditable coverage on their own, with the assistance of service providers such as TPAs, actuaries, and/or accountants. Again, if the employer sponsors an HRA (and/or an unallocated medical reimbursement plan) in addition to a self-funded major medical plan, the plans should combined for purposes of the determination.
Notice of creditable coverage. Once a determination is made regarding creditable coverage, a notice of that determination must be provided to those covered by the plan(s) who are actually covered by Medicare. A notice should be issued for each plan subject to the obligation. However, where the employer sponsors an HRA (and/or an unallocated medical reimbursement plan) in conjunction with another group health plan, because the plans will be combined for purposes of determining whether they provide creditable coverage, a single notice could be used for both plans.
Notices must be provided prior to November 15, 2005. CMS has issued standard notices that may be used to provide this notification, which are available from the CMS website at: http://www.cms.hhs.gov/medicarereform/CCguidances.asp. Plan sponsors should contact their TPAs and/or their insurance carriers to confirm that notices will be prepared and issued in a timely manner.
Caution: Even though the carrier may treat an insured medical plan and an HRA as a combined plan for purposes of determining whether there is creditable coverage, the notice issued by the carrier with respect to the major medical plan may not cover the HRA.
For assistance with Medicare Part D compliance, please contact us.