Medicare Part D Disclosure Notices May Be Required for an HRA. What About Health FSAs?
Medicare Part D helps millions of Americans pay for self-administered prescription drugs. Some people who are eligible for Medicare Part D work for companies that offer at least one health reimbursement arrangement (HRA). Those same employers may offer employees another option – a flexible spending account or FSA. Employers are required to provide Medicare Part D Notices to certain employees. The question is assuming Medicare Part D disclosure notices may be required for an HRA, what about Health FSAs? Are employers held to the same disclosure notice standard?
Reasoning Behind the Disclosure Notices
Employers notify Part D-eligible employees and the Center for Medicare Services (CMS) that their drug coverage is “creditable.”
Individuals with access to employer-paid prescription drug plan should not be charged late enrollment penalties if they later attempt to enroll in a Medicare Part-D plan. However, there are some time frames involved with this exemption from penalties.
If an individual’s employer-provided plan is not creditable, they are expected to enroll before their initial enrollment period ends in order to avoid late enrollment penalties.
However, the employees need to know whether their plan is creditable or not. Employers do this through the disclosure notices.
Significant Differences between HRAs and Health FSAs
When it comes to Part D Disclosure Notices, the term “group health plan” may include HRAs and health FSAs. This depends, in part, on whether the plans are account-based or not. IF the HRAs and FSAs are offered in conjunction with an ERISA-qualified plan, the plan sponsor must notify Part D-eligible employees that the HRAs are creditable.
However, FSAs are handled differently. A specific exemption in CMS guidance may remove the requirement to send participants Part D disclosure notices.
The answer is likely yes for HRAs, and no for health FSAs. This assumes that your company's health FSA and HRA will offer prescription drug coverage to Part D-eligible individuals -- i.e., individuals covered under Medicare Part A or Part B, including active and disabled employees, COBRA participants, retirees, and their covered spouses and dependents who live in the service area of a Part D prescription drug plan
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Anne Tyler Hall is the founding attorney and Principal at Hall Benefits Law, a boutique ERISA and Employee Benefits law firm in Atlanta, GA. Hall Benefits Law serves clients in 25 states and was recognized by the Law Firm 500 in 2018 as the fastest growing ERISA law firm in the country.