The Center for Medicare and Medicaid Services (CMS) has recently released an important Final Rule regarding notices of creditable coverage and account-based plans. The rule states that account-based plans (such as HRAs, HSAs, and FSAs) do not have to abide by Medicare Part D creditable coverage rules.

As a reminder, Medicare rules require any individual eligible for Part D to maintain creditable coverage (prescription drug coverage that is actuarially equal to or greater than the standard Medicare Part D benefit). Health insurance plans have an obligation to assist individuals in their creditable coverage requirements. While the health plans do not need to provide creditable coverage, they are required to both determine if their health plan offers creditable coverage under Medicare rules and provide notice to employees of that fact annually.

The final rule determined that an account-based health plan is distinct enough from a prescription health plan that such processes were no longer necessary.

For employers, this change is practically beneficial. Employers with HRAs and other account-based plans will no longer have to make calculations to determine if the plan provides creditable coverage. Employers with account-based plans are also free from the burden of annual notice to plan participants.

You can read the entire Final Rule HERE.