Your Health Plan and Medicare Part D - What to Know About Drug Coverage

If you’re an employer sponsoring a group health plan or an insured covered under your employer’s plan, it’s important to learn about Medicare Part D.

Coverage for prescription drugs became available in 2006 for everyone with Medicare. This is referred to as Medicare Part D. If you’re about to become Medicare eligible (the first of the month you turn age 65) and are still covered under your employer's health plan, you need to know some details about your plan’s prescription drug coverage in order to decide what to do about Medicare Part D.

Your health plan should be able to tell you if your prescription drug coverage is “Creditable Coverage”. This means your coverage is expected to pay benefits that are as much as standard Medicare Part D. If you have Creditable Coverage with your employer plan, you can keep that coverage and not have to pay a higher premium (a penalty) if you later decide to join a Medicare drug plan.

If your health plan’s prescription drug coverage is “Non-Creditable Coverage”, this means you will get more help with your drug costs through a Medicare drug plan. But most importantly, it means that if you decide NOT to enroll in Medicare Part D when you first become Medicare eligible, you will pay a higher premium when you do enroll. The penalty for this late enrollment goes up by at least 1% for every month that you delay enrolling under Medicare Part D.

For employers sponsoring health plans, you are required to provide all Medicare eligible employees with notice of their rights. One unique benefit Allied offers its members, is that we send these notices directly to Medicare eligible employees on our employers’ behalf.

You also are required to complete an online report for CMS (Centers for Medicare & Medicaid Services) indicating whether or not your current plan is considered creditable. This online report can be found at cms.gov.

It’s extremely important that Medicare eligible individuals and employers learn how an employer sponsored health plan impacts an individual’s Medicare rights for coverage, as well as the impact that delays in enrolling for Medicare might have on Medicare premiums.

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Allied National

Founded in 1970, Allied is one of the nation's oldest and most experienced third-party administrators. Allied National is a 90 Degree Benefits Company, a subsidiary of Blue Cross Blue Shield Alabama. As the small group benefit experts, Allied works with small business employers to provide unique and affordable group health benefits.