IBC Flash

October 19, 2007

Medicare Part D Notification Requirements May Affect Active Employees

As you may know, health plans that offer prescription drug coverage to their Medicare-eligible employees, retirees, and dependents must notify them by November 15, 2007, as to whether that coverage is “creditable” or “non-creditable.” I am writing to remind you of that requirement and to provide you with information on the status of Independence Blue Cross prescription drug plans.This requirement is part of the Medicare Prescription Drug, Improvement and Modernization Act of 2003 (MMA), which added a new prescription drug program to Medicare known as the Part D drug benefit. Under the MMA, the Centers for Medicare & Medicaid Services (CMS) established two categories of prescription drug coverage – creditable and non-creditable coverage. Creditable coverage is defined as a prescription drug benefit that has an actuarial value as good as or better than the standard Part D drug benefit. A non-creditable prescription drug plan has an actuarial value that is not as good as the standard Part D drug benefit.

Notification is Required

Plan sponsors (employer groups/health and welfare funds) that provide prescription drug coverage to Medicare-eligible active employees, retirees, and dependents must disclose to them by November 15, 2007, whether the drug coverage they offer is creditable or non-creditable. To assist customers in notifying their Medicare-eligible members, click here to view a chart of our prescription drug plans highlighting which ones are creditable and which are non-creditable.

What Your Client Should Do

Your clients need to take several steps. They should:

• determine whether their prescription drug coverage is creditable or non-creditable;
• disclose to their Medicare-eligible members (employees and their dependents) whether their prescription drug coverage is creditable or non-creditable prior to the Medicare Part D Annual Election period, running from November 15 through December 31 of this year and at other times during the future;
• notify CMS whether their prescription drug coverage qualifies as creditable or non-creditable;
• visit the CMS website at http://www.cms.hhs.gov/CreditableCoverage for further information on creditable coverage and a copy of the model creditable/non-creditable disclosure letters.

Please note: Medicare beneficiaries who are not covered under creditable prescription drug coverage and who chose not to enroll in a Medicare Part D drug plan when they first became eligible for Medicare or during the initial enrollment period, will likely pay a higher premium permanently if they subsequently enroll in the Medicare Part D drug program (the premium is increased by 1 percent for each month without creditable coverage).

How Your Clients Can Learn More

This letter is not intended to provide either legal or tax advice and should be used only for guidance in educating your clients regarding the impact of Medicare Part D. This does not represent an actuarial attestation for the purpose of applying for the CMS Retiree Drug Subsidy. Your clients should consult with their legal counsel and/or their tax adviser to determine the effect of the statutes and regulations regarding Medicare Part D.Groups will be notified during the week of 10/22/07. For your reference, the link to the group letter can be found below. IBC Group LetterIf you have any questions regarding Medicare Part D, or if you do not see a prescription drug plan listed in the enclosed chart, please contact your Independence Blue Cross marketing representative.

Independence Blue Cross offers products directly, through its subsidiaries Keystone Health Plan East and QCC Insurance Company, and with Highmark Blue Shield. Independent licensees of the Blue Cross and Blue Shield Association.