Creditable Coverage

CMS defines creditable coverage as the actuarial value of the coverage equals or exceeds the actuarial value of standard prescription drug coverage under Medicare Part D, as demonstrated through the use of generally accepted actuarial principles and in accordance with CMS actuarial guidelines. In general, the actuarial equivalence test measures whether the expected amount of paid claims under the entity's prescription drug coverage is at least as much as the expected amount of paid claims under the standard Part D benefit.

This decision is essential in determining whether to enroll in Medicare Part D Prescription Drug Plan. How does an employee/enrollee make this decision?

The University of Michigan Health Plan (UM Health Plan) hires an actuarial firm to perform the actuarial equivalence test for UM Health Plan’s standard benefit designs which determine if the plan’s status is creditable or non-creditable. To confirm if your plan is creditable or non-creditable, please contact Sales at Sales@UofMHealthPlan.org.

Employer Group Responsibilities

The Medicare Modernization Act (MMA) requires certain entities (including employer groups and union group health plan sponsors) to:

(1)   Notify Medicare eligible policyholders whether their prescription drug coverage is creditable coverage, which means that the coverage is expected to pay on average as much as the standard Medicare prescription drug coverage. Employers must provide Notice of Creditable or Non-creditable Coverage to all Medicare eligible individuals who are covered under, or who apply for, the entity's prescription drug plan (Part D eligible). This disclosure must be provided to Medicare eligible active working individuals and their dependents, Medicare eligible COBRA individuals and their dependents, Medicare eligible disabled individuals covered under your prescription drug plan and any retirees and their dependents. This information is essential to an individual's decision to enroll in a Medicare Part D prescription drug plan. CMS published model disclosure communication templates for employers.  Important Notices regarding Creditable Coverage (cms.gov)

·      This is mandatory at least once a year by no later than October 15.

·      The employer, NOT UM Health Plan, sends Creditable Coverage notices to its members.

(2)    Provide Notice to CMS. In addition, employers are required to provide CMS with their plan's creditable or non-creditable coverage status annually via an online form, found here. The Disclosure should be completed annually no later than 60 days from the beginning of a plan year (contract year, renewal year), within 30 days after termination of a prescription drug plan, or within 30 days after any change in creditable coverage status.

For further information related to creditable coverage, please visit the CMS website  Creditable Coverage | CMS

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