Compliance Reminders for the Fall

Posted: July 7, 2016 10:00 am  

I hope that everyone had a very safe and memorable celebration of Independence Day this year.  It is hard to believe that it has been forty years since we celebrated the Bicentennial.  As we get back to work and begin to focus our thoughts on the tasks ahead for this fall, here are a couple important items that employers need to add to their checklist.

Employer Notice Requirements under Medicare Part D

The Medicare Modernization Act (MMA) requires entities (whose policies include prescription drug coverage) to 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. For these entities, there are two disclosure requirements:

  • The first disclosure requirement is to provide a written disclosure notice to all Medicare eligible individuals annually who are covered under its prescription drug plan, prior to October 15th each year and at various times as stated in the regulations, including to a Medicare eligible individual when he/she joins the plan. 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. The MMA imposes a late enrollment penalty on individuals who do not maintain creditable coverage for a period of 63 days or longer following their initial enrollment period for the Medicare prescription drug benefit. Accordingly, this information is essential to an individual's decision whether to enroll in a Medicare Part D prescription drug plan.
  • The second disclosure requirement is for entities to complete the Online Disclosure to CMS Form to report the creditable coverage status of their prescription drug plan. 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.

Fees Apply to Employers Sponsoring Certain Self-Insured Plans

As we announced in an alert and included in our newsletter; effective for plan years ending on or after October 1, 2012; and before October 1, 2019; employers that sponsor certain self-insured health plans are responsible for fees to fund the Patient-Centered Outcomes Research Institute (also known as PCORI). **PLEASE NOTE** Health Reimbursement Arrangements (HRAs) that do not satisfy the requirements to be treated as excepted benefits are generally subject to the fees.

Affected employers must typically report and pay the required fees via IRS Form 720, Quarterly Federal Excise Tax Return, no later than July 31st of the year following the last day of the plan year to which a fee applies. However, if the due date for filing a return falls on a Saturday, Sunday, or legal holiday, employers may file Form 720 on the next business day. Because July 31st is a Sunday, Form 720 and the required fees are due by Monday, August 1st.

Now, back to enjoying your summer!!!