Deadline to determine creditable coverage status is Oct. 15

The deadline to determine and communicate the creditable or non-creditable status of plans for 2021 is Oct. 15, 2020.

The Medicare Modernization Act mandates that certain entities offering prescription drug coverage, including employer and union group health plan sponsors, disclose to all Medicare-eligible individuals with prescription drug coverage under the plan — and who are active employees — whether such coverage is "creditable." Determining whether or not certain coverage is creditable is essential to an individual's decision whether to enroll in a Medicare Part D prescription drug plan.

To help determine creditable coverage, UnitedHealthcare annually collaborates with OptumInsight to perform bulk-testing analysis of its standard benefit designs to satisfy the actuarial value test of the Medicare Part D determination.

Here’s what employers need to know when offering a prescription drug plan to Medicare-eligible individuals:

  • OptumInsight determines if a customer's plan provides "creditable coverage" based on the results of the bulk-testing.
  • Once the plans are tested, the data becomes available on UnitedHealthcare Medicare Part D creditable coverage website.
  • Employers should communicate the creditable or non-creditable status of their plan to employees.
  • This determination is mandatory at least once a year and the deadline for completion is prior to Oct. 15, 2020, so clients can appropriately inform members.
  • Employers, not UnitedHealthcare, send creditable coverage notices to members.
  • Employers can pay UnitedHealthcare to send creditable coverage notices to members on its behalf.

Retiree Drug Subsidy (RDS) program

If a plan's coverage is creditable, the plan sponsor can elect to pursue a subsidy called the Retiree Drug Subsidy program. Under the Patient Protection and Affordable Care Act (ACA), subsidy payments to plan sponsors became subject to standard tax deduction rules starting in 2013. This optional step requires additional testing and an application process. They can apply for the subsidy by going to the Centers for Medicare & Medicaid Services (CMS) RDS website.

Note plan sponsors must apply for the subsidy 90 days prior to the beginning of an RDS plan year, which can mirror a benefit plan year. For example, if a benefit plan year begins Jan. 1, 2021, and the customer wants their RDS plan year to be the same, they would apply for the subsidy by Oct. 2, 2020. If they request an extension, CMS can grant an additional 30 days to complete the application.

Bulk testing analysis reports and more information about creditable coverage are available on UnitedHealthcare’s Medicare Part D creditable coverage website and on the CMS creditable coverage website.  

The 2020 creditable coverage tool will be posted by Tuesday, Sept. 1, 2020.

For more information, please contact your broker or UnitedHealthcare representative.