- Medicare Part D imposes disclosure requirements on employers with group health plans that provide prescription drug coverage to Medicare-eligible individuals.
- Plan sponsors must provide the annual Medicare Part D creditable coverage disclosure notices to individuals before Oct. 15, 2014.
- Model notices are available for employers to use
Employers with group health plans that provide prescription drug coverage to individuals who are eligible for coverage under Medicare Part D must comply with certain annual disclosure requirements.
Each year, Medicare Part D requires group health plan sponsors to disclose to individuals who are eligible for Medicare Part D and to the Centers for Medicare and Medicaid Services (CMS) whether the prescription drug coverage is creditable.
The creditable coverage disclosure notice alerts individuals as to whether their plan’s prescription drug coverage is at least as good as the Medicare Part D coverage (in other words, whether their prescription drug coverage is “creditable”). Medicare beneficiaries who are not covered by creditable prescription drug coverage and who choose not to enroll in Medicare Part D before the end of their initial enrollment period will likely pay higher premiums if they enroll in Medicare Part D at a later date.
CMS has provided two model notices for employers to use:
- A Model Creditable Coverage Disclosure Notice for when the health plan’s prescription drug coverage is creditable; and
- A Model Non-creditable Coverage Disclosure Notice for when the health plan’s prescription drug coverage is not creditable.
These model notices are also available in Spanish on the CMS website.
Employers are not required to use the model notices from CMS. However, if the model language is not used, a plan sponsor’s notices must include certain information, including a disclosure about whether the plan’s coverage is creditable and explanations of the meaning of creditable coverage and why creditable coverage is important.
The creditable coverage disclosure notice must be provided to Medicare Part D eligible individuals who are covered by, or who apply for, the health plan’s prescription drug coverage. An individual is eligible for Medicare Part D if he or she:
- Is entitled to Medicare Part A or is enrolled in Medicare Part B; and
- Lives in the service area of a Medicare Part D plan.
In general, an individual becomes entitled to Medicare Part A when he or she actually has Part A coverage, and not simply when he or she is first eligible.
Medicare Part D eligible individuals may include active employees, disabled employees, COBRA participants and retirees, as well as their covered spouses and dependents.
As a practical matter, group health plan sponsors often provide the creditable coverage disclosure notices to all plan participants.
Timing of Notices
At a minimum, creditable coverage disclosure notices must be provided at the following times:
- Prior to the Medicare Part D annual coordinated election period – beginning Oct. 15 through Dec. 7 of each year;
- Prior to an individual’s initial enrollment period for Part D;
- Prior to the effective date of coverage for any Medicare-eligible individual who joins the plan;
- Whenever prescription drug coverage ends or changes so that it is no longer creditable or becomes creditable; and
- Upon a beneficiary’s request.
If the creditable coverage disclosure notice is provided to all plan participants annually, before Oct. 15 of each year, items (1) and (2) above will be satisfied. “Prior to,” as used above, means the individual must have been provided with the notice within the past 12 months. In addition to providing the notice each year before Oct. 15, plan sponsors should consider including the notice in plan enrollment materials provided to new hires.
Method of Delivering Notices
Plan sponsors have flexibility in how they must provide their creditable coverage disclosure notices. The disclosure notices can be provided separately, or if certain conditions are met, they can be provided with other plan participant materials, like for example, annual open enrollment materials. The notices can also be sent electronically in some instances.
If a plan sponsor chooses to provide the disclosure notice with other plan participant information, the creditable coverage disclosure must be prominent and conspicuous. This means that the disclosure notice portion of the document, or a reference to the section in the document that contains the disclosure notice portion, must be prominently referenced in at least 14-point font in a separate box, bolded or offset on the first page of the provided plan participant information.
As a general rule, a single disclosure notice may be provided to the covered Medicare beneficiary and all of his or her Medicare Part D eligible dependents covered under the same plan. However, if it is known that any spouse or dependent who is eligible for Medicare Part D lives at a different address than where the participant materials were mailed, a separate notice must be provided to the Medicare-eligible spouse or dependent residing at a different address.
Creditable coverage disclosure notices may be sent electronically under certain circumstances. CMS has issued guidance that indicates that health plan sponsors may use the electronic disclosure standards under Department of Labor (DOL) regulations in order to send the creditable coverage disclosure notices electronically. According to CMS, these regulations allow a plan sponsor to provide a creditable coverage disclosure notice electronically to plan participants who have the ability to access electronic documents at their regular place of work, if they have access to the sponsor’s electronic information system on a daily basis as part of their work duties.
The DOL’s regulations for electronic delivery require that:
- The plan administrator use appropriate and reasonable means to ensure that the system for furnishing documents results in actual receipt of transmitted information and protects the confidentiality of personal information relating to an individual’s accounts and benefits;
- The electronic materials must be prepared and furnished in accordance with otherwise applicable requirements;
- Notice is provided to each recipient, at the time the electronic document is furnished, of the significance of the document; and
- A paper version of the document is available on request.
Also, if a plan sponsor uses electronic delivery, the sponsor must inform the plan participant that the participant is responsible for providing a copy of the electronic disclosure to their Medicare-eligible dependents covered under the group health plan.
In addition, the guidance from CMS indicates that a plan sponsor may provide a creditable coverage disclosure notice electronically if the Medicare-eligible individual has indicated to the sponsor that he or she has adequate access to electronic information. According to CMS, before individuals agree to receive their information via electronic means, they must be informed of their right to obtain a paper version, how to withdraw their consent and update address information, and any hardware or software requirement to access and retain the creditable coverage disclosure notice.
If the individual consents to an electronic transfer of the notice, a valid email address must be provided to the plan sponsor and the consent from the individual must be submitted electronically to the plan sponsor. According to CMS, this ensures the individual’s ability to access the information as well as ensures that the system for furnishing these documents results in actual receipt. In addition to having the disclosure notice sent to the individual’s email address, the notice (except for personalized notices) must be posted on the plan sponsor’s website, if applicable, with a link on the sponsor’s home page to the creditable coverage disclosure notice.
Disclosure to CMS
Plan sponsors are also required to disclose to CMS whether their prescription drug coverage is creditable. The disclosure must be made to CMS on an annual basis, or upon any change that affects whether the coverage is creditable. At a minimum, the CMS creditable coverage disclosure notice must be provided at the following times:
- Within 60 days after the beginning date of the plan year for which the entity is providing the form;
- Within 30 days after the termination of the prescription drug plan; and
- Within 30 days after any change in the creditable coverage status of the prescription drug plan.
Plan sponsors are required to provide the disclosure notice to CMS through completion of the disclosure form on the CMS Creditable Coverage Disclosure webpage. This is the sole method for compliance with the CMS disclosure requirement, unless a specific exception applies.
On Jan. 25, 2013, the Department of Health and Human Services (HHS) issued a final rule under HIPAA’s administrative simplification provisions. The final rule updated HIPAA’s privacy, security, enforcement and breach notification requirements, and included changes required by the Health Information Technology for Economic and Clinical Health Act (HITECH Act).
The final rule includes changes that may require updates to the agreements between covered entities (for example, a health plan) and their business associates. These types of agreements are often referred to as “business associate agreements” or BAAs.
The deadline for complying with the changes made by the final HIPAA rule was Sept. 23, 2013. However, a special transition rule applies to some business associate agreements. Under this transition rule, covered entities and business associates may have until Sept. 22, 2014, to revise their BAAs for the changes made by the final rule.
CHANGES FOR BUSINESS ASSOCIATES
The final HIPAA rule expanded the definition of “business associate” to include all entities that create, receive, maintain or transmit protected health information (PHI) on behalf of a covered entity, including subcontractors. Also, the final rule clarified that entities that store PHI, in hard copy or electronic format, are business associates even if they do not access, use or disclose that information.
The business associate that contracts with the subcontractor, and not the covered entity, is required to enter into a business associate agreement with the subcontractor. Under the final rule, a covered entity must obtain satisfactory assurances (through a BAA) from its business associates that they will appropriately safeguard PHI. Business associates must do the same with regard to their subcontractors and so on, no matter how far “downstream” the information flows.
The final rule also clarified the privacy and security provisions that directly apply to business associates, and noted that business associates are directly liable for failing to comply with these requirements. For example, business associates are directly responsible for complying with:
- The HIPAA Security Rules’ administrative, physical and technical requirements for safeguarding electronic PHI and implementing policies and procedures for protecting electronic PHI;
- The Privacy Rules’ restrictions on the use and disclosure of PHI; and
- Reporting breaches of unsecured PHI to a covered entity in compliance with HIPAA’s breach notification requirements.
BUSINESS ASSOCIATE AGREEMENTS
Covered entities, including health plans, and business associates should review their BAAs to confirm that they are up-to-date with the final HIPAA rule. For example, among other changes, the final HIPAA rule requires business associate agreements to state that a business associate will ensure that any subcontractors that create or receive PHI on behalf of the business associate agree to the same restrictions and conditions that apply to the business associate with respect to such information.
HHS has provided sample business associate agreement language for covered entities and business associates to use as a starting point in drafting their own agreements.
The final HIPAA rule includes an extended compliance deadline for business associate agreements that were entered into prior to Jan. 25, 2013, and complied with the HIPAA requirements in effect on that date. The transition rule extended the time for the paperwork only—it did not extend the time allowed for the covered entity and business associate to comply with the changes made by the final HIPAA rule.
The transition period allows BAAs that were entered into prior to Jan. 25, 2013, and were not renewed or modified between March 26, 2013, and Sept. 23, 2013, to remain compliant until the earlier of:
- Sept. 23, 2014; or
- The date the agreement was renewed or modified after Sept. 23, 2013.
Thus, at the latest, business associate agreements should be updated to comply with the final rule by Sept. 22, 2014.
Because HHS has increased its enforcement activity under HIPAA’s Privacy and Security Rules lately, it is especially important for health plan sponsors to keep BAAs up to date and comply with all other applicable HIPAA requirements.
Health savings accounts (HSAs) are a popular type of tax-advantaged medical savings account available to individuals who are enrolled in high deductible health plans (HDHPs). Individuals can use their HSAs to pay for expenses that are covered under the HDHP until their deductible has been met, or they can use their HSAs to pay for qualified medical expenses that are not covered under the HDHP, such as dental or vision expenses.
Due to an HSA’s potential tax savings, federal tax law imposes strict eligibility requirements for HSA contributions. Among other eligibility requirements, an individual must be covered under an HDHP for the months for which contributions are made to his or her HSA.
This Legislative Brief summarizes the requirements that must be met for a health plan to qualify as an HDHP.
OVERVIEW OF ELIGIBILITY RULES
An individual’s eligibility for HSA contributions is generally determined monthly, as of the first day of the month. The HSA contribution limit is calculated each month, and a contribution can only be made for months in which the individual meets all of the HSA eligibility requirements.
To be HSA-eligible for a month, an individual must:
- Be covered by an HDHP on the first day of the month;
- Not be covered by other health coverage that is not an HDHP (with certain exceptions);
- Not be enrolled in Medicare; and
- Not be eligible to be claimed as a dependent on another person’s tax return.
The full-contribution rule that applies to individuals who are HSA-eligible on Dec. 1 is an exception to this general rule. Under this exception, an individual is treated as HSA-eligible for the entire calendar year for purposes of HSA contributions if he or she becomes covered under an HDHP in a month other than January and is HSA-eligible on Dec. 1 of that year. An individual who relies on this special rule must generally remain HSA-eligible during a 13-month testing period, with exceptions for death and disability.
HDHP COVERAGE REQUIREMENT
To be eligible for HSA contributions for a month, an individual must be covered under an HDHP as of the first day of the month and have no other impermissible coverage.
An HDHP is a health plan that provides “significant benefits” and satisfies requirements for minimum deductibles and out-of-pocket maximums. An HDHP can be insured or self-funded. Also, the HDHP coverage can be self-only coverage or family coverage. For this purpose, family coverage means any coverage other than self-only coverage.
With the exception of preventive care benefits, no benefits can be paid by an HDHP until the minimum annual deductible has been satisfied.
An HDHP must provide “significant benefits,” although it may be designed with reasonable restrictions limiting the plan’s covered benefits. The restrictions will be reasonable only if other significant benefits remain under the plan in addition to the benefits subject to the restrictions. For example, a plan that restricts benefits to expenses for hospitalization or in-patient care, and excludes out-patient services, is not an HDHP because it does not provide other significant benefits in addition to the benefits subject to the exclusion.
A plan will not qualify as an HDHP if substantially all of its coverage is either “permitted insurance” or “permitted coverage” (for example, coverage for accidents, disability, dental care or vision care). Also, if substantially all the coverage that is intended to be an HDHP is provided through a health flexible spending account (FSA) or health reimbursement arrangement (HRA), the health plan is generally not an HDHP.
COST- SHARING LIMITS
The 2014 minimum annual deductible and maximum out-of-pocket requirements for HDHPs are as follows:
|High Deductible Health Plan (HDHP)|
|Type of Coverage||Minimum Annual Deductible||Annual Out-of-pocket Maximum|
|Self-only||$1,250 ($1,300 for 2015)||$6,350 ($6,450 for 2015)|
|Family||$2,500 ($2,600 for 2015)||$12,700 ($12,900 for 2015)|
The minimum annual deductibles and the maximum out-of-pocket expense limits for HDHP coverage are adjusted for increases in the cost of living. By June 1 of each calendar year, the IRS publishes the cost-of-living adjustments that will become effective as of the next Jan. 1. For HDHPs with non-calendar plan years, IRS Notice 2004-50 clarifies that the adjusted limits for the calendar year in which the HDHP’s plan year begins can be applied for that entire plan year.
Look out for Part 2 on Tuesday’s Blog!
On June 28, 2010, the Departments of Health and Human Services (HHS), Labor and the Treasury issued interim final rules regarding these health plan coverage mandates.
Plans that provide coverage for obstetrical and/or gynecological care (ob-gyn care) and require the patient to designate an in-network primary care provider may not require preauthorization or referral for a female participant seeking ob-gyn care. However, a plan may still require the ob-gyn provider to follow any policies or procedures regarding referrals, prior authorization for treatments and the provision of services.
The plan must inform each participant of these rules and must provide the notice when an SPD or other similar description of plan benefits is provided to a participant or beneficiary. Model language for this notice is included in the interim final rules.
The ACA places additional requirements on plans and health insurance issuers that provide hospital emergency room benefits. Plans and issuers must provide those benefits without requiring prior authorization, and without regard to whether the provider is an in-network provider.
Also, the plan or issuer may not impose requirements or limitations on out-of-network emergency services that are more restrictive than those applicable to in-network emergency services. Cost sharing requirements, such as copayments or coinsurance rates imposed for out-of-network emergency services, cannot exceed the cost-sharing requirements for in-network emergency services.
To read more about patient protections visit our blog from this past Tuesday here.
Among other reforms, the Affordable Care Act (ACA) imposes three requirements on group health plans and group or individual health insurance coverage that are referred to as “patient protections.” These patient protections relate to the choice of a health care professional and requirements relating to benefits for emergency services, and became effective for plan years beginning on or after Sept. 23, 2010.
The ACA’s patient protections do not apply to grandfathered plans. Also, the rules regarding choice of health care professional apply only to plans that have a network of providers.
On June 28, 2010, the Departments of Health and Human Services (HHS), Labor and the Treasury issued interim final rules regarding these health plan coverage mandates.
Choice of Primary Care Provider
If a group health plan or group or individual health insurer requires a participant to designate a primary care provider, the participant must be able to choose any participating primary care provider who is able to accept the participant as a patient. This rule includes the designation of a pediatrician as the primary care provider for a child.
The plan must provide a notice informing each participant of the plan’s terms regarding primary care provider designation. The notice must be provided when a summary plan description (SPD) or other similar description of plan benefits is provided to a participant or beneficiary. The interim final rules include model language for this notice.
Learn More about Patient Protections in our blog this Thursday!