Open Enrollment (OE) is a crucial time to sign up for health insurance or adjust your current plan. For Medicare OE, the dates will fall between October 15 to December 7th. It is imperative for employers to share the Medicare credibility notice prior to October 15th due to compliance and providing increased ability to make timely decisions about next year’s coverage. If the employer plan year is aligned to the calendar year (effective January 1st), the Medicare OE period will correspond well for eligible members with its effective date of January 1st. If not, these rules are leaving Medicare-eligible employees and their employers in difficult scenarios.

Q: Are these permissible Cafeteria Plan qualified life events (QLE) to drop group coverage?

A:

  1. An employee’s initial Medicare eligibility is a permissible QLE to drop coverage and enroll in Medicare outside the group OE, i.e., mid-year.
  2. Medicare OE (10/15-12/7) is not a permissible QLE to drop group health coverage. If the employee is already eligible for Medicare and the group health plan does not align with the Medicare OE dates the employee cannot drop coverage mid-year.
  3. The group plan’s credibility change is not a permissible QLE for the employee to drop group coverage. The Medicare Special Enrollment Period (SEP) is not a QLE for an employee to drop group coverage.

 Q: What is credibility as defined by Medicare Part D prescription drug coverage:

A: Employer creditable coverage measures the group prescription drug coverage to see if it pays the same or better than the standard Medicare prescription coverage (Part D). If the plan pays the same or better, the coverage is considered creditable. If it pays less, the coverage is not creditable. If a participant is eligible for Medicare Part D but lacks creditable coverage, they will incur an annual penalty for the rest of their life upon enrollment. To avoid this penalty, participants should enroll in Part D coverage. Employers are only responsible for informing their employees timely about creditable or non-creditable coverage.

Q: How do I know if the employer plans are credible or not?

A: Discuss with your carrier, TPA (third-party administrator), PBM (pharmacy benefits manager), or ASO (administrative services only) partners. If they do not provide the information, you can perform a simplified determination as outlined by CMS – Creditable Coverage Simplified Determination. If the results are determined to be non-creditable via the simplified method, you will need to complete an actuarial determination.

Q: What do I tell my employee who received a creditable/non-creditable notice, but they aren’t eligible for Medicare?

A: All employees should receive a notification to ensure proper communication – you won’t know every employee’s situation, so providing the notice to all employees ensures compliance. If the employee nor their dependents are eligible for Medicare, these changes will not impact them. If they are 65 or will become 65 soon, they will be impacted by these changes and need to understand the consequences of remaining on a plan that is not credible.  

Q: We offer multiple plans, do all plans need to be credible?

A: Plans do not need to be credible, but if you want to offer one credible option, work with your EHD team and the carrier to design the plan(s) to meet the requirements for creditability.  

 Q: What if an employee was enrolled in a QHDHP (qualified high deductible health plan) with an HSA (health savings account) and elects to enroll in Medicare?

A: Once the employee enrolls in any Medicare coverage, they are no longer eligible to contribute money to their HSA account, nor can the employer continue to contribute. The employee can continue to use the accumulated HSA funds to pay for Medicare premiums or qualified medical expenses like copays, prescriptions, deductibles, and coinsurance. However, you cannot use the HSA funds for Medicare Supplemental premiums or Medigap policies.

Q: When does CMS need to be notified of the plan credibility status?

A:

  1. Within 60 days of the plan’s effective date.
  2. Within 30 days of realization that the credibility status has changed. The employee will also need to be notified during this period. Employees will have two months under the SEP to enroll in Medicare. Remember, this is not a QLE under the Cafeteria Plan rules.

Q: Are there penalties or fines for the employer if we do not offer a credible plan?

A: No. The employer is only responsible for providing the notice to employees.

Q: Who can we call to help our employees navigate Medicare and prepare for OE?

A: Our Senior Services Consultant and Medicare expert, Bonnie Whalen. To reach her, you can email BWhalen@ehdinsurance.com or call 800-544-7292 (extension: 4262).

Bonnie Whalen

Your EHD partner is someone you can count on! As we encounter more developments, we will share updates with you.