The Centers for Medicare and Medicaid Services (“CMS”) has issued proposed regulations that would relieve health reimbursement arrangements (“HRAs”), including Individual Coverage HRAs (“ICHRAs”), from the requirement to provide notices of creditable coverage to Medicare Part D eligible individuals.
Background. Individuals who fail to enroll in Medicare Part D prescription drug coverage when first eligible may be subject to late enrollment penalties if they go at least 63 consecutive days without creditable coverage. Prescription drug coverage is “creditable” when it is at least actuarially equivalent to Medicare Part D Coverage.
Medicare Part D-eligible individuals, and CMS, must be informed whether a group health plan’s prescription drug coverage is creditable or non-creditable. Accordingly, plan sponsors that provide prescription drug coverage must: (i) furnish Medicare Part D-eligible individuals with a notice disclosing the creditable or non-creditable status of their coverage, and (ii) disclose to CMS on an annual basis (and at certain other times) whether the plan’s coverage is creditable. The term, ‘‘group health plan’’ includes account-based medical plans such as HRAs and ICHRAs. However, health flexible spending accounts have already been exempted from the notice requirement.
CMS Proposal. The proposal, if finalized, will exclude all account-based plans from the Medicare Part D creditable coverage notice requirement. CMS explains in the proposal’s preamble that account-based plans are designed to provide cost savings through pre-tax contributions and reimbursements, and often supplement other coverage, rather than actually offering prescription drug coverage. “Thus, the benefit design of account-based plans makes concepts such as the disclosure of creditable coverage inapplicable and unduly burdensome because comparing a reimbursement arrangement, such as an HRA, with the ‘intricacies’ of Medicare Part D prescription drug coverage is not an ‘apples to apples’ comparison.” In addition, HRA participants may be confused if they continue to receive seemingly inconsistent notices of non-creditable coverage for the plan sponsor’s HRA and notices of creditable coverage for the sponsor’s “major medical plan.”