Small Business Health Options Program (SHOP) FAQ

Guidance for FAQ regarding Issuer Participation Requirements and Other

Program Area: Small Business Health Options Program (SHOP)

Question: What is Medicare "creditable prescription drug coverage," and what obligations do issuers have to inform CMS and consumers whether the QHP prescription drug coverage is "creditable prescription drug coverage"?

Answer: Some individuals who are enrolled in QHPs may also be eligible to obtain prescription drug coverage under Medicare Part D, pursuant to 42 CFR 423.30. These individuals will have to pay a late enrollment penalty if they delay enrollment in a Medicare Part D prescription drug plan unless they can show that they delayed enrollment because they had "creditable prescription drug coverage" under other insurance. 42 CFR 423.46(a)(2). Group health plans and individual health insurance coverage are among the types of plans that may offer creditable prescription drug coverage. The prescription drug coverage is creditable if the actuarial value of the coverage equals or exceeds the actuarial value of the Medicare Part D defined standard prescription drug coverage. 42 CFR 523.56(a), (b). Thus, the drug coverage benefit offered under QHPs sold inside and outside the Marketplace, including SHOP plans, may qualify as creditable coverage. Medicare regulations impose notice requirements on entities that offer prescription drug coverage. These entities must inform enrollees and potential enrollees whether the prescription drug coverage constitutes creditable coverage. They also must disclose to CMS whether the prescription drug coverage they provide is creditable. 42 CFR 423.56 (c), (d), (e), and (f). Consumers who establish to CMS that they were not adequately informed that their prescription drug coverage was not creditable may not be subject to the late enrollment penalty when they eventually enroll in a Medicare prescription drug plan. 42 CFR 423.56 (g). QHP issuers therefore must (1) determine whether the prescription drug coverage offered through each QHP constitutes creditable prescription drug coverage, and (2) notify enrollees, potential enrollees, and CMS of the determination pursuant to the Medicare prescription drug regulations and guidance. In making the creditable prescription drug coverage determination and in complying the notice requirements, QHPs are advised to follow the procedures described on the CMS Creditable Coverage page, http://www.cms.gov/Medicare/Prescription-Drug-Coverage/CreditableCoverage/index.html?redirect=/Creditablecoverage, and in the Creditable Coverage Disclosure To CMS Instructions and Screen Shots,https://www.cms.gov/Medicare/Prescription-Drug-Coverage/CreditableCoverage/Downloads/CreditableCoverageDisclosureUserManual05292012.pdf.