David M. Gilston Insurance Agency, Inc.

The first reporting requirement we addressed was the grandfathered disclosure statement.  Let’s now focus on the second reporting requirement we are highlighting: Creditable Drug Coverage.

Creditable Drug Coverage

The Medicare Modernization Act (MMA) has two disclosure requirements for entities whose policies include prescription drug coverage.

The first disclosure requirement is to provide a written disclosure notice to all Medicare eligible individuals annually who are covered under its prescription drug plan as to whether the coverage is creditable.  That is to say that the coverage is expected to pay on average as much as the standard Medicare prescription drug coverage.  This disclosure must be sent prior to November 15th each year and at various times as stated in the regulations.  Sample “Model Language” and can be found at www.cms.hhs.gov/creditablecoverage.

The second disclosure requirement is for entities to complete the Online Disclosure to CMS Form to report the creditable coverage status of their prescription drug plan.  The Disclosure should be completed annually no later than 60 days from the beginning of a plan year, within 30 days after termination of a prescription drug plan, or within 30 days after any change in creditable coverage status.  The Online Disclosure to CMS Form can be found at www.cms.hhs.gov/creditablecoverage.

What does this mean to you?

Failure to notify Medicare eligible individuals that their drug plan is not creditable may subject them to a late enrollment penalty equal to 1% of the national average premium per month.