QUESTION: Do we have to provide Medicare Part D disclosure notices for our HRA? What if it only covers retirees?
ANSWER: Medicare Part D creditable coverage notices generally must be provided for HRAs that reimburse prescription drug expenses, even if the HRAs only cover retirees. The notice obligation applies only for “Part D eligible individuals”—i.e., individuals covered under Medicare Part A or Part B (including active and disabled employees, COBRA participants, retirees, and their covered spouses and dependents) who live in the service area of a Part D prescription drug plan. Notices are not required, however, if the Part D eligible individuals are also covered by a Part D plan that is provided by the HRA plan sponsor, either by contracting directly with Medicare or by contracting with a Part D plan.
As background, plan sponsors that provide prescription drug coverage through a group health plan must disclose to Part D eligible individuals and to CMS whether the actuarial value of the employer’s coverage, when compared to Part D prescription drug coverage, is “creditable” (i.e., equal or greater than the actuarial value of defined standard Part D coverage) or “non-creditable” (i.e., less than the actuarial value of defined standard Part D coverage). The disclosure notices are intended to help recipients compare their employer-provided prescription drug coverage with coverage under a Part D plan and make timely, informed decisions about whether to enroll in a Part D plan. Part D eligible individuals who remain covered under an employer-provided prescription drug plan providing creditable coverage won’t have to pay higher premiums if they enroll in a Part D plan within certain timeframes at a later date. However, Part D eligible individuals who are covered under an employer-provided prescription drug plan that isn’t creditable coverage may be charged higher premiums if they do not enroll in a Part D plan during their initial enrollment period.
The term “group health plan” for these purposes specifically includes account-based medical plans such as HRAs, to the extent that they are ERISA-covered employee welfare benefit plans providing medical care (or would be subject to ERISA but for ERISA’s exclusion for governmental or church plans). Most HRAs (including retiree-only HRAs) are or are treated as ERISA plans, so they may be subject to the disclosure obligation. Of course, the HRA would have to offer prescription drug coverage to be subject to the disclosure requirements. HRAs can be creditable coverage when offered alone (e.g., a plan for retirees only) or in conjunction with other, non-account coverage (e.g., major medical coverage offered by the HRA plan sponsor that provides minimum value and is integrated with the HRA). When a Part D eligible individual has both an HRA and non-account plan coverage from the same employer, the HRA sponsor must provide notices advising whether the HRA coverage, either alone or combined with the other coverage, is creditable. CMS officials have informally commented that plan sponsors can issue a single, combined disclosure notice covering both an HRA and another group health plan offered by the same employer, if (1) the non-HRA plan is a non-account plan (e.g., an HDHP or major medical plan); and (2) the Part D eligible individual participates in both the non-account plan and the HRA.
For more information, see EBIA’s Group Health Plan Mandates manual at Section XXV.A.3 (“Group Health Plans Subject to the Disclosure Requirements”) and EBIA’s Consumer-Driven Health Care manual at Sections XXV.D (“HRAs and ERISA”) and XXV.E (“HRAs and Medicare Part D”).
Contributing Editors: EBIA Staff.