Applying and Filing for the Medicare D Subsidy

Planning to seek the Medicare D subsidy for your company? The deadline to submit your subsidy request application to the Centers for Medicare and Medicaid Services (CMS) is September 30.

To be eligible to receive the subsidy, employer-sponsored drug plans must satisfy an actuarial equivalence test to prove they offer benefits at least as good as the standard Part D benefits – a test that includes comparing the company plan’s benefits to the standard Part D plan and comparing the value of the plan’s provisions minus retiree contributions with Part D benefits minus part D premiums.

Qualifying plans must pass both tests and have the results certified by a member of the Academy of Actuaries. The savings can be substantial – up to 20 percent or more. According to CMS, the estimated value of the tax-deductible subsidy is $668 per beneficiary. That’s equal to a $1,028 taxable payment for employers in the 35 percent tax bracket.

In addition to the actuarial test, employers applying for the subsidy must submit a census file with records for each qualifying employee claimed under the subsidy.

The census files must include:

• Social Security number or Health
• Insurance Claim number
• Full name
• Gender
• Date of birth
• Relationship of the retiree/disabled

CMS will match the lists against its records to identify those enrolled in both Part D and employer plans since employers cannot collect a subsidy for joint enrollees. Employers also must update the census file monthly for CMS in addition to other reporting requirements.

Check now with your vendors to assure that you can meet the data reporting requirements. Receive the subsidy monthly, quarterly or annually. The choice depends on data capabilities, fees and the size of the subsidy.

There’s no shortcut to the time-consuming process of collecting the data required to meet the federal guidelines under the Medicare Prescription Drug and Modernization Act – the federal law that created the subsidy and Medicare Prescription Drug coverage.

For help with contacting your retirees about Medicare Part D or the data collection and reporting of census files to meet the subsidy requirements, call us from 8:30 a.m. to 5 p.m. at 721-2029 in Winston-Salem, N.C., at 800-344-5677, or e-mail us at info@benefitadvocates.net. We already provide this service for other clients and would be glad to assist you.