Does my organization need to file a Part D Disclosure with CMS?

Employers that sponsor group health plans have an obligation to report whether the prescription drug coverage offered under the plan is creditable or non-creditable. Employers are likely more familiar with the obligation to notify employees, and their family members, regarding the creditable status of their plan(s) by each October 14, as this is the Part D notice that employers typically include with open enrollment documents. A second obligation also exists where employers must report the creditable status of the plan(s) to the CMS within 60 days after the start of the plan year. The second obligation is the focus of this FAQ.

Unlike some compliance requirements, the disclosure to CMS exists for health plans regardless of employer size, plan funding type (i.e., fully insured or self-insured) or whether the plan is primary or secondary to Medicare. The disclosure requirement also applies to church plans and federal, state and local government plans. For entities that are part of a controlled group and participate in the same plan, the requirement applies to the plan sponsor, not necessarily to each participating entity.

As mentioned above, disclosures are due within 60 days after the start of the plan year. Plan sponsors may be required to file an additional disclosure in limited circumstances:

• Within 30 days after any change in the creditable coverage status of the plan.
• Within 30 days after the termination of the plan (regardless of whether the termination is midyear or at the end of the plan year).

The CMS Disclosure Instructions provide detailed information on the two situations above and how to properly report that information.

Currently, there are no specific penalties for failing to timely file the disclosure, and CMS does not have a correction process for failures. However, plan sponsors have a fiduciary duty under ERISA to comply with all federal laws related to their plans, so it is important employers comply with this requirement in a timely manner. Additionally, employers that fail to meet the disclosure requirements are unable to claim retiree drug plan subsidies.

For more information, download a copy of our publication Medicare Part D Creditability Determinations and Disclosures: A Guide for Employers.

Disclosure to CMS Form »