Medicare Part D Obligation Fulfillment

While you would have to be living under a rock to be unfamiliar with the new Medicare Part D Prescription Drug coverage beginning January 1, 2006, some clarification regarding notification may be helpful.

According to the final Part D regulations, any group health plan that includes prescription drug coverage must provide an annual notice (Creditable Coverage Disclosure Notice) to the following individuals:

• All individuals who are covered by or offered prescription drug coverage

• Any individual entitled to Medicare Part A or enrolled in Medicare Part B.

• Individuals who qualify for Medicare because of a disability

• All employees who are over the age of 65

• All Medicare-eligible spouses or dependents of retirees participating in fund-sponsored or employer-sponsored group health plans

We Recommend That A Disclosure Notice Be Sent to All Employees
Rather than tracking Medicare-eligible employees, spouses and dependents throughout the entire year, we recommend that a notice be sent to all employees. This approach will enable your plan to provide any employee, spouse or dependent who may become eligible during the year with the proper Disclosure Notice. You may send a single notice to the covered Medicare eligible individual and his/her eligible dependents covered under the plan, however a separate notice must be sent to any Medicare eligible spouse or dependent residing at a different address than the plan participant/employee.

Notification is a critical concern because those eligible for Part D who do not get Medicare prescription drug coverage or equivalent coverage by May 15, 2006 will be required to pay a late-enrollment penalty of 1% per month. Even if coverage is secured later, the penalty will remain in effect for as long as the individual has Medicare prescription drug coverage. Late enrollees who are notified and have proof of Creditable Coverage, will not be assessed this late penalty.

The Federal Government anticipates that of the more than 43 million eligible Medicare beneficiaries in the U.S., 29.3 million are expected to enroll in the optional Medicare Part D Prescription Drug Plans in 2006. For additional information regarding Medicare Part D legislation, visit our website or consult your benefits administration specialist.