On July 8, 2016, the Internal Revenue Service (IRS) issued proposed regulations that, among other things, address
affordability determinations for individuals who are eligible for employer-sponsored health coverage. This proposed rule
builds on earlier guidance, Notice 2015-87, describing the effect an opt-out payment has on affordability. This latest
guidance likely signals the direction the IRS will take in their final rule with respect to the affordability of employer sponsored
health plans.Opt-Out Bonuses May Affect Affordability

Each year, Medicare Part D requires group health plan sponsors to disclose to individuals who are eligible for Medicare Part D and to the Centers for Medicare and Medicaid Services (CMS) whether the health plan’s prescription drug coverage is creditable. Plan sponsors must provide the annual disclosure notice to Medicare-eligible individuals before Oct. 15, 2016—the start date of the annual enrollment period for Medicare Part D. CMS has provided model disclosure notices for employers to use.

This notice is important because Medicare beneficiaries who are not covered by creditable prescription drug coverage and who choose not to enroll in Medicare Part D when first eligible will likely pay higher premiums if they enroll at a later date. Thus, although there are no specific penalties associated with this notice requirement, failing to provide the notice may trigger adverse employee relations issues.

110448 Medicare Part D Notices Are Due by Oct 14 2016