3. Does my group health plan have “Creditable Coverage”?

The Centers for Medicare & Medicaid Services (CMS) runs Medicare for the U.S. Government. “Creditable Coverage” is the fancy term CMS came up with to determine if the prescription medicine coverage (Rx) of your employer-sponsored group health plan is as good as or better than the minimum Part D (Rx) plan. If it’s not as good as the minimum Part D plan and it is “non-creditable coverage” then you’ll have to pay a big penalty. Nobody wants to pay a penalty…

Your third assignment: Ask your HR department or employer for something in writing from the insurance company that says whether your plan meets the minimum requirements for creditable coverage.

Every year, your employer must send Medicare eligible employees a notice that tells the employee whether his/her group health insurance plan has creditable coverage. If you can’t find the notice, ask your employer for another copy. If your current employer-sponsored plan is non-creditable, they you probably should change to an employer health plan that is creditable – if that’s possible – usually you can only change group health plans during “open enrollment periods.”

The penalty for having non-creditable coverage is one percent per month of the Part D (Rx) “national base rate” for each month one has had non-creditable coverage. If someone had non-creditable coverage for a year, then he/she would pay a penalty of 12 percent every month for as long as that person has Medicare.

The government applies the penalty because they don’t want people to have limited or no Rx coverage and wait to sign up for coverage when they get really sick. The penalty prevents people from gaming the system. It’s best to avoid the penalty.

BenefitsCafe.com would love to work on your behalf as your agent/consultant/broker. Give us a call (800) 746-0045.

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