CMS Pub. 100-18, ch. 12, § 20.1.1

“Employment-Based” Group Health Plan Requirement

Employer/union group health plan enrollment in EGWPs and individual PDPs is only

available to beneficiaries who are Part D eligibles of an employer/union sponsored group

health plan. Thus, a beneficiary’s enrollment in one of these PDPs must be based on

receiving “employment-based” retiree health coverage from an employer/union group health

plan sponsor that has entered into a contractual arrangement with a PDP sponsor to provide

coverage or that has contracted directly with CMS to provide coverage for its Part D

eligibles.3 Membership in a State Pharmaceutical Assistance Program (SPAP) would not

make an individual eligible for enrollment into these types of plans. Similarly, coverage

obtained through a professional or other type of group association would not make a

beneficiary eligible for these kinds of plans, except to the extent that the coverage obtained

through the association can properly be characterized as “employment-based” group health

plan coverage.

Retiree Status Requirement

In accordance with the waiver authority set forth in section 1860D-22(b) of the Act,

employer-sponsored enrollments in individual PDPs and EGWPs may only be offered to Part

D eligible retirees (and Part D eligible spouses and dependents of these retirees). PDP

sponsors may not enroll Part D eligible current (i.e., active) employees (or their Part D

eligible spouses and dependents) in employer/union sponsored individual PDPs or EGWPs.

(NOTE: Medicare Advantage Organizations are subject to a different statutory waiver

authority under section 1857(i) of the Act, which allows these entities to enroll both current

(i.e., active) employees and retirees (and their spouses and dependents) of an employer/union

group health plan sponsor in individual MA plans and “800 series” and Direct Contract MA

plans, provided such individuals are eligible for Medicare Parts A and B. However, when

enrolling active employees into these employer/union group sponsored MA plans, MA

Organizations must comply with all applicable Medicare program requirements including the

3 “Employment-based retiree health coverage” means health insurance or other coverage of health care costs for

Part D eligible individuals (or for such individuals and their spouses or dependents) under a group health plan

based on their status as retired participants. The term “group health plan” includes such a plan as defined in

section 607(1) of the Employee Retirement Income Security Act of 1974 and also includes federal and state

governmental plans, collectively bargained plans, and church plans. See Section 1860D-22(c) of the Act. See

also, 42 CFR 423.454 (“Employer-sponsored group prescription drug plan means prescription drug coverage

offered to retirees who are Part D eligible individuals under employment-based retiree health coverage (as

defined in §423.882) approved by CMS as a prescription drug plan.”)

Medicare Secondary Payer (MSP) requirements and must ensure that employers are not

allowed to enroll actives in a Medicare plan offered by MA Organizations in a manner

contrary to MSP rules (see Pub. 100-16, chapter 9, section 20.1.1).

Restricted Enrollment Requirement

In general, PDP sponsors have to accept all Medicare-eligible beneficiaries who reside in their

service area as set forth in 42 CFR 423.104(b). EGWPs are not subject to this requirement.

Instead, under the CMS eligibility rules for these kinds of plans, EGWPs must restrict

enrollment solely to those Medicare eligible individuals who are also eligible for the

employer/union sponsor’s employment-based retiree health coverage. See Section 1860D-

22(b) of the Act. Note that, aside from having Medicare eligibility, the employer/union

sponsor’s eligibility rules exclusively govern a beneficiary’s enrollment entitlement in these

plans. Under the employer/union sponsor’s eligibility requirements, for example, Medicare

eligible spouses and dependents of participants in the employer/union sponsor’s plan may be

permitted to enroll in these EGWPs based on the employer/union sponsor’s eligibility rules

regardless of whether or not the participant is Medicare eligible.

Employer/Union Group Health Plan Part D Eligibles Must Permanently Reside In The Service

Area of the PDP As Defined By The PDP sponsor Within HPMS

In addition to the above eligibility requirements, the eligibility requirements set forth in Pub.

100-18, chapter 3, section 10 apply to all employer/union group health plan sponsored

individual PDP and EGWP enrollments in the same manner applicable to individual

enrollments in individual PDPs. Therefore, in order for a beneficiary to be eligible to enroll in

an employer-sponsored individual PDP or EGWP, he/she must permanently reside in the

defined service area of the individual PDP or EGWP. See also Pub. 100-18, chapter 3, section

40.2 (Required Involuntary Disenrollment).

PDP sponsors offering EGWPs are eligible for extended geographic service areas for these

plans under waivers issued by CMS. See section 20.2 of this chapter. Therefore, PDP

sponsors offering EGWPs should ensure that their EGWP defined service area includes all

geographic areas in which employer/union sponsored group health plan Part D eligibles may

reside (e.g., national service area) during the contract year. No mid-year service area

expansions will be permitted.