Are any of your Medicare-eligible clients covered by non-creditable prescription drug coverage?

If they are enrolled in non-creditable coverage for more than 63-days, they may incur higher premiums when they eventually enroll in Medicare prescription drug coverage (such as a Part D plan or a Medicare Advantage plan that offers prescription drug coverage).

Their premium will increase by one percent each month over what they otherwise would have paid for each month without creditable coverage. It’s important to know if you have clients in this situation and to apprise them of their options. Here is an example of how a small change by the carrier, that caught us by surprise, would have triggered this penalty and how we were able to resolve it.

Situation

The client is Medicare-eligible (66 years old), but not enrolled in Medicare and during 2016 was covered through his company’s small group, high-deductible, HSA-compatible plan (the “Plan”) which had creditable coverage. His company’s renewal was January 1, 2017 and he elected to stay with his current plan. Here’s the tricky part: for 2017, the carrier tweaked the plan and the prescription drug benefit changed from being creditable to being non-creditable on January 1st. The carrier did disclose it….on page 43 of a 56 page renewal packet.

Resolution

When we became aware of this, 53 days had elapsed. We immediately petitioned the carrier to grant this individual a waiver allowing him to change to a plan with creditable coverage retro to January 1^st. They approved the petition. The benefits were that the client had no gap of creditable coverage and does not risk higher premiums when he eventually enrolls in a Medicare prescription drug plan. Of course, if we had known that the client’s plan had become non-creditable, we (Claremont and the broker) would have advised him to switch to a creditable plan at renewal.

To ensure you and your clients are not unpleasantly surprised, we recommend you:

• Review your book of business and identify any employees who are Medicare-eligible.
• Of that group, identify those that are not or don’t intend to enroll in Medicare and instead will continue coverage with their group plan.
• Identify the plan in which they are currently enrolled.
• Determine if that plan is creditable. For your reference, below is a list of non-creditable plans from the carriers we represent. They tend to be Bronze level plans.
• If your client meets all of the above criteria, quickly discuss options for moving them onto a plan with creditable coverage.
• And for clients, who are currently on creditable plans, but have an upcoming renewal, know which of your recommended plans are non-creditable.

More information:

• The Centers for Medicare and Medicaid Services (CMS) creditable coverage web page provides background and links to helpful explanatory documents.
• This Model Non-Creditable Coverage Notice from CMS clearly explains the impact on the individual of not having creditable coverage. It’s a template for employers to distribute, if necessary, as a notice of non-creditable coverage to Medicare-eligible employees/retirees.
• The Society of Human Resource Managers (SHRM) provides an excellent summary of an employer’s responsibility for disclosing their creditable/non-creditable coverage to CMS and to Medicare-eligible employees and retirees.

2017 Plans with Non-Creditable Coverage from carriers represented by Claremont Insurance Services (as of 2/28/17):

Blue Shield of California

• Bronze Full PPO Savings 4700/40% OffEx
• Bronze Full PPO Savings 5500/40% OffEx
• Blue Shield Bronze 60 PPO 6300/75 + Child Dental (CCSB/Mirror)

Covered California for Small Business

• Blue Shield Bronze 60 PPO 6300/75 + Child Dental
• CCHP Bronze 60 HMO 6300/75 + Child Dental
• Healthnet Bronze 60 PPO 6300/75 + Child Dental
• Kaiser Bronze 60 HMO 6300/75
• Sharp Bronze 60 HDHP HMO 4800/40% + Child Dental Network 1*
• Sharp Silver 70 HDHP HMO 2000/20% + Child Dental Network 1*
• WHA Bronze 60 HDHP HMO 4800/40% + Child Dental
• WHA Bronze 60 HDHP HMO 6500/0 + Child Dental Alternate

UnitedHealthcare

• HSA Bronze 4800/40% (Networks: PPO – Core and Navigate. HMO – Alliance)
• HSA Bronze 6500/0% (Networks: PPO – Select Plus, Core and Navigate. HMO – Alliance)
• State Bronze 75/6300/100% (Networks: PPO – Core and Navigate. HMO – N/A)

*Non-Creditable if Sharp is secondary payer to Medicare.