Severance Agreements and CMS Reporting/Medicare

If as part of a severance agreement, employees are given funds to purchase COBRA, is that reportable to CMS?  I understand that if a settlement, severance, etc. payment to a Medicare - eligible individual if the payment relates to past or future medical expenses, but if the settlement just includes funds to use for COBRA (we don't know whether they actually purchased COBRA or not), do we have to report?

I assume you're referring to the CMS Medicare Part D creditable coverage disclosure.  The guidance says to report the total number of Part D eligible individuals covered by the plan as of the first day of the plan year, including COBRA participants.  Any severance payment here (even if ostensibly to assist with the COBRA premium, if elected) is irrelevant.  What matters is if they are enrolled in the plan, including COBRA.

CMS Part D Disclosure Guidance:

https://www.cms.gov/Medicare/Prescription-Drug-Coverage/CreditableCoverage/Downloads/CreditableCoverageDisclosureUserManual05292012.pdf

10. Number of Part D Eligible Individuals expected to be covered under these Plan(s) as of the Beginning Date of the Plan Year. While CMS recognizes that many entities will not be able to provide an exact number of Part D eligible individuals, entities should estimate the number of covered Part D eligible individuals under the Options offered under the type of coverage for which they are providing the Disclosure Notice to CMS. This estimate should be the total number of Medicare eligible individuals, less any Medicare eligible individual(s) being claimed under the RDS program, that are expected to be covered under the entity’s RDS prescription drug plan options (this includes active, disabled, individuals on COBRA and retired individuals). For purposes of this disclosure question, a “Medicare eligible individual being claimed under the RDS program” is any qualified covered retiree for which the entity is expected to collect the retiree drug subsidy. This is a numeric field and must be filled in with a number.

Entities should work with their current vendors (Insurance carrier, TPA, PBM, Consultant, etc.) to verify whether the prescription drug plan(s) offered by entity covers any Medicare eligible individuals (including active, retired, disabled individuals and their dependents or any individuals on COBRA) at the start of each plan year.

If the entity has a plan participant that will be or becomes eligible for Part D coverage during the plan year, the entity should not include these individuals on their Disclosure to CMS form if they were not effective on the beginning date of the plan year. These individual(s) should be included on their annual Disclosure to CMS form at the beginning date of the next plan year. Entities are required; however, to provide a disclosure of creditable coverage status to the individual prior to when they become Medicare eligible as outlined in the General Creditable Coverage Guidance at http://www.cms.hhs.gov/CreditableCoverage/.

Thank you for your reply - I am referring to the reporting obligations under CMS which require that settlement agreements with Medicare-eligible individuals be reported to the government.  

My recollection is that you are to report amounts that would be used to pay for benefits that Medicare might pay to ensure that Medicare is not paying for benefits it should not otherwise pay.  That is, if providing payments or benefits for which Medicare should be the Secondary Payer (or perhaps have a subrogation right) as opposed to being the primary payer.  A settlement payment to pay for COBRA premiums, whether used or not, under a severance agreement does not appear to be the sort of amounts that are intended to be reported under these rules.  If, on the other hand, the amounts were being paid for medical benefits received by or medical benefits were being provided to the Medicare eligible individual in settlement of some claim like a work injury, then those amounts likely would be reportable.  Just my thoughts...