How does an employer plan know if their coverage is creditable?
Coverage is creditable if the actuarial value of the coverage equals or exceeds the actuarial value of standard Medicare prescription drug coverage, as demonstrated through the use of generally accepted actuarial principles and in accordance with CMS actuarial guidelines. In general, this actuarial determination measures whether the expected amount of paid claims under the entity’s prescription drug coverage is at least as much as the expected amount of paid claims under the standard Medicare prescription drug benefit. For plans with multiple benefit options, the employer must apply the actuarial value test separately for each benefit option. A benefit option is defined as a particular benefit design, category of benefits, or cost-sharing arrangement offered within a group health plan.
Related Questions
- Does the employer need to include a creditable or not creditable coverage statement in their Standard Plan Document (SPD) or other member material?
- Does the employer have to send a Non-Creditable Coverage notification if their pharmacy plan is deemed not creditable?
- How does an employer plan know if their coverage is creditable?
