Retiree Drug Subsidy (RDS) Application and Instructions

OMB Approval # 0938-0957

RDS
Retiree Drug Subsidy
Plan Sponsor Application Instructions

CENTERS FOR MEDICARE & MEDICAID SERVICES

According to the Paperwork Reduction Act of 1995, no persons are required to respond to a collection of information unless it displays a valid OMB control number. The valid
OMB control number for this information collection is 0938-0957. The time required to complete this information collection is estimated to average 64 hours per response,
including the time to review instructions, search existing data resources, gather the data needed, and complete and review the information collection. If you have comments
concerning the accuracy of the time estimate(s) or suggestions for improving this form, please write to: CMS, 7500 Security Boulevard, Attn: PRA Reports Clearance Officer,
Mail Stop C4-26-05, Baltimore, Maryland 21244-1850.

CMS Form # 10156

Deleted: 40.5

OMB Approval # 0938-0957

RDS Application Instructions
Overview
The Centers for Medicare & Medicaid Services’ ((CMS’) Retiree Drug Subsidy (RDS) Program represents a particularly
important strengthening of health care coverage for Medicare-eligible retirees. The RDS Program is designed to encourage
employers, unions, and other Plan Sponsors to continue providing high quality prescription drug coverage. It has highly
flexible rules that permit Plan Sponsors to continue providing drug coverage to their Medicare-eligible retirees at a lower cost
while retaining their current plan designs that are at least equivalent to the value of the defined standard Medicare Part D
drug benefit. CMS’ RDS Program will pay 28 percent of the retiree’s allowable Part D drug costs (as defined by the
regulation) between the applicable cost threshold and cost limit. . The payments are exempt from Federal tax, which
increases their value to Plan Sponsors that are subject to taxation. To qualify for the subsidy, the Plan Sponsor must show
that its coverage is as generous as, or more generous than, the defined standard coverage under the Medicare Part D
prescription drug benefit . The final regulation includes a two-part test for Plan Sponsors to determine whether this
standard, referred to as “actuarial equivalence,” has been met. The subsidy only applies to qualifying covered retirees who
are eligible for but not enrolled in a Medicare Part D plan.
General Instructions for Submitting the RDS Application
The RDS application has been designed by CMS to assist in the efficient administration of the RDS Program in compliance
with federal regulatory requirements at 42 C.F.R. §423 Subpart R. The RDS Program is administered in a paperless
environment via the RDS Secure Web Site. Plan Sponsors must submit this application to participate in the RDS Program.
The following is an overview of the application process:
1. The Account Manager must go to the RDS Program Web Site at http://rds.cms.hhs.gov to establish a Plan
Sponsor account (if one does not already exist).
2. The Account Manager will be notified when a new Plan Sponsor Account is established.
3. The Account Manager or Authorized Representative may start a new application and will receive an application
identification number.
4. The Account Manager, Authorized Representative, or Designee(s) must complete ALL parts of the application,
except for the Attestation of Actuarial Equivalence which must be completed by a qualified actuary or actuaries,
and the Plan Sponsor Agreement which must be signed by the Plan Sponsor’s Authorized Representative.
5. The completed application is submitted electronically via the RDS Secure Web Site.
6. Plan Sponsors will be notified electronically about the status of their application.

Deleted: Medicare
Deleted: program
Deleted: retiree drug subsidy
Deleted: and
Deleted: employers and unions to
Deleted: The retiree drug subsidy
Deleted: $250 and $5000 in 2006.
Deleted: -free
Deleted: new

Deleted: the Centers for Medicare &
Medicaid Services (
Deleted: )
Deleted: program
Deleted: program will be
Deleted: secure RDS website.
Deleted: program.
Deleted: (described in Part I)
Deleted: website
Deleted: . However, Part III (
Deleted: )
Deleted: . Part VII
Deleted: website

Only one RDS application can be submitted for each qualified retiree prescription drug plan for which the Plan Sponsor is
seeking the subsidy. The application must be completed in its entirety in order to participate in the RDS Program. Omission
of any required information may delay the processing of your request.
Deadlines for Submitting
For information about the application deadline, including what is required to be submitted by the application deadline, go to
Important Application Deadline Information, at www.rds.cms.hhs.gov.
Where to go for more information
Visit the RDS Program Web Site at http://rds.cms.hhs.gov for detailed information on the RDS Program, including CMS
guidance and Common Questions. Additionally, you may contact CMS’ RDS Center Help Line at (877) RDS-HELP, or (877)
737-4357 (TTY for the hearing impaired: (877) RDS-TTY0 or (877) 737-8890) for further assistance.

Deleted: program.

Deleted: For plan years ending in 2006,
RDS applications must be submitted on or
before September 30, 2005. For subsequent
years, applications must be submitted at least
90 days prior to the start of the plan year.
Plan Sponsors may request a 30 day
extension for submitting their RDS application.
This extension must be requested online prior
to the filing deadline.¶
Deleted: website
Deleted: program
Deleted: Frequently Asked
Deleted: (FAQs)
Deleted: the
Deleted: customer service center

CMS Form # 10156

Page 2

OMB Approval # 0938-0957

NOTE: The RDS application will be submitted online and not in hard copy. Only sections relevant to the
applicant will be displayed online. Some sections of the application that are present in this Notice may
not actually be presented at the time the application is being completed. Each section of the online
application form contains links to instructions and other helpful guidance to assist you in completing the
application.

Deleted: Application

Complete the items in Parts I through VIII. All fields marked with an asterisk (*) are required. The following are specific
instructions for each Part.

Deleted: unless designated as “optional”

PART I.

Deleted: General Contact Information

A. Plan Sponsor Account Registration

Deleted: Information

Complete the required information in items 1-7 for the Plan Sponsor Account

Deleted: 9

#1 The Plan Sponsor Organization Name must be the same as that associated with its Federal Employer Tax Identification
Number (EIN).
#3 – When completing this application online, this field will be pre-populated with the number used when the Plan Sponsor
RDS ID was requested.
#6 – Organization address must be the address associated with the EIN.

Deleted: Certain items will be explained
with greater detail.

Deleted: Information.

Deleted: ¶
#7 - Plan Sponsor’s FAX number is an
optional field.¶
#8 – Company
Deleted: #9 - Plan Sponsor website
address is an optional field.

B. Authorized Representative Invitation
An Authorized Representative is an individual to whom the Plan Sponsor has granted the legal authority to bind the Sponsor
to the terms of the Plan Sponsor Agreement in the RDS application. Examples of the Authorized Representative include the
Sponsor’s general partner, CFO, CEO, president, Human Resource Director, or an individual who holds a position of similar
status and authority within the Plan Sponsor’s organization. Only one individual at a time can serve in the role of Authorized
Representative. For multi-employer plans, the Authorized Representative does not have to be an employee of the Plan
Sponsor, but may be a member of the jointly appointed board of trustees, which includes both labor and management
trustees. An Authorized Representative of the requesting Plan Sponsor must sign the Plan Sponsor Agreement in the
completed application and certify that the information contained in the application is true and accurate to the best of the Plan
Sponsor’s knowledge and belief. (42 C.F.R. §423.884(c)(4)).
The Account Manager must complete the required information in items 1-5 for the Authorized Representative to be invited to
register as an RDS Secure Web Site user.
C. Authorized Representative Information
The Authorized Representative invited in Part 1Bmust complete the required information in items 1-11.
D. Account Manager Information
The Account Manager is an individual that is authorized to begin the application process on behalf of the Plan Sponsor. An
Account Manager may be an employee of the Plan Sponsor, or a non-employee, such as a consultant, with whom the Plan
Sponsor has an arrangement to assist with the application process. This individual has full access rights to the RDS
application. The Account Manager has the authority to assign an Authorized Representative, Actuaries, and Designees.
Although an Account Manager has the ability to designate a replacement Account Manager, there can be only one Account
Manager per RDS application at a time. In addition, once designated as Account Manager, this individual will have to serve

Deleted: ¶
¶
Deleted: Complete
Deleted: 9
Deleted: . Certain data elements in this
section may be pre-populated based on
information provided at the time the Account
Manager requested a Plan Sponsor ID.¶
¶
#7 – Authorized Representative’s FAX is
optional. ¶
¶
#9 - NOTE: The
Deleted: application process is role-based.
Only certain individuals at the Plan Sponsor
may be authorized to view Protected Health
Information (PHI) under the Health Insurance
Portability and Accountability Act (HIPAA).
Indicate whether the Authorized
Representative is authorized to view HIPAA
PHI. The answer will affect which sections on
the RDS application that the Authorized
Representative may access. The Authorized
Representative must answer this question
each time s/he attempts to access a section of
the RDS Application that contains HIPAA PHI.
Deleted: an individual
Deleted: Benefit Option Administrators,
Deleted: Application

CMS Form # 10156

Page 3

OMB Approval # 0938-0957

in this role across applications (i.e. Individual cannot serve as Account Manager for one application and as a Designee for
another application.)

Complete the required information in items 1-10 for the Account Manager Information.

Deleted: 9
Deleted: Certain data elements in this
section may be pre-populated based on
information provided at the time the Account
Manager requested a Plan Sponsor ID.

E. Designee Invitation

Deleted: #7 ­

A Designee(s) is any individual chosen by either the Authorized Representative or Account Manager to assist with the
management of the RDS application, including data submission and payment processing. The Designee(s) is only able to
perform functions that have been delegated by the Authorized Representative or Account Manager.

Deleted: Account Manager’s FAX is
optional.¶
¶
#9 - NOTE: The RDS application process is
role-based. Only certain individuals at the
Plan Sponsor may

Complete the required information in items 1-8 to invite/assign a Designee to the application.
Item 6 – Pass Phrase: The Pass Phrase is created by the Authorized Representative/Account Manager, and should be
communicated directly to the Designee by the Authorized Representative/Account Manager.
Item 8 – Privileges that may be assigned to a Designee include but are not limited to the following examples:

Deleted: authorized to view Protected
Health Information (PHI) under the Health
Insurance Portability and Accountability Act
(HIPAA). Indicate whether the Account
Manager is authorized to view HIPAA PHI.
The answer will affect which sections on the
RDS application that the Account Manager
may access. The
Deleted: must answer this question each
time s/he attempts to access a section of the
RDS Application that contains HIPAA PHI.

Complete Electronic Funds Transfer Information
Choose Retiree Data Electronic Data Interchange (EDI) Method
Report Costs
Request Payment

Deleted: ¶
D. Application
Deleted: ¶
A “Designee(s)”

Multiple Designees may be added as the Plan Sponsor requires. If you need to add additional Designees, follow the
instructions in the online application.

Deleted:
Deleted: completion
Deleted: ,

F. Designee Information

Deleted: request process.

A Designee(s) is any individual chosen by either the Authorized Representative or Account Manager to assist with the
management of the RDS application, including data submission and payment processing. The Designee(s) is only able to
perform functions that have been delegated by the Authorized Representative or Account Manager.
The Designee must complete the required information in items 1-11 to register as an RDS Secure Web Site user.

Deleted: Complete
Deleted: a-o for the Application Designee
Information
Deleted: Item “g” - Designee’s FAX
number is optional.
Deleted: ¶
Item “i” - NOTE:

Item 1 - If the Designee does not know the Pass Phrase, s/he should contact the Authorized Representative/Account
Manager. The Authorized Representative/Account Manager created the Pass Phrase at the time they assigned you as the
Designee in the RDS Secure Web Site.

Deleted: RDS application process is rolebased. Only certain individuals at the Plan
Sponsor may be authorized to view Protected
Health Information (PHI) under the Health
Insurance Portability and Accountability Act
(HIPAA). Indicate whether the
Deleted: is authorized to view HIPAA PHI.
The answer will affect with sections of the
RDS application that the

G. User Agreement and Privacy Policy
The Authorized Representative, Account Manager, Designee(s), and Actuary(s) must review and indicate acceptance of the
terms of this User Agreement and Privacy Policy as part of registration.

Deleted: ) may access. The Designee

PART II.

Deleted: question each time s/he attempts
to access a section of the RDS Application
that contains HIPAA PHI. ¶
¶
... [1]

A. Plan Information

Deleted: the application.

Complete the required information in items 1-2 for the prescription drug plan for which you are requesting RDS payments.

CMS Form # 10156

Deleted: answer

Deleted: Plan Information
Deleted: 3
Deleted: Item #3 - For information about
the actuarial equivalence tests, including...the
[2]

Page 4

OMB Approval # 0938-0957
Deleted: a-p

B. Benefit Option(s) Provided Under This Plan

Deleted: “b”

Complete the required information in items 1a-d for each benefit option in the plan for which you are requesting the RDS
subsidy payment.
Item 1b – Unique Benefit Option Identifier is required to uniquely identify each benefit option under the plan. If the RX Group
Number uniquely identifies each option under the plan, then that number should be used. If the RX Group Number does not
uniquely identify each benefit option, then the Plan Sponsor must assign an identifier to each option. Plan Sponsors may
use existing internal identifiers, or can develop one specifically for purposes of completing the RDS application.
Item 1d Specify the name of the insurer, TPA, or other entity that is administering the benefit option.
If you need to add benefit options, follow the instructions in the online application.

Deleted: Item “k” - FAX number is optional
Deleted: ¶
Deleted: Contact Information for the
Deleted: Attesting to the Net Value of
the Combined Benefit Options
Deleted: You will only be prompted to
complete this section if you answered “Yes” to
question 3 in Part II(A).
Deleted: 7 for the Actuary for the Net
Value.¶
¶
#

C. Actuary Invitation
An Actuary is chosen by the Authorized Representative, Account Manager, or Designee to attest the actuarial equivalence
of the group health plan that is the subject of the application, as outlined in Part III A and B.
Complete the required information in items 1-6 to invite/assign an Actuary to the application.

Deleted: – Attesting Actuary’s FAX number
is optional.¶
¶
¶
PART III. Attestation of Actuarial
Equivalence¶
For Plan Sponsors that are combining benefit
options, a Qualified
Deleted: must attest

D. Actuary Information

Deleted: Gross Value of each benefit
option (see Part

The Actuary must complete the required information in items 1-12.

Deleted: (
Deleted: )(i)). In addition, a Qualified
Actuary must attest to the Net Value of the
combined options (see Part III(A)(ii).

PART III.

Deleted: For Plan Sponsors that are NOT
combining benefit options, a Qualified Actuary
must attest to both the Gross and Net Value of
each option (see Part (B)).

A. Benefit Option Combination Question
NOTE: When logging into the RDS Secure Web Site Actuaries will be presented with a list of applications and benefit
options for which they’ve been designated by the Plan Sponsor as the Attesting Actuary
Item 1 - The qualified Actuary must indicate, by checking the appropriate box, whether 2 or more benefit options are being
combined to meet the Net Value test, as set forth below..
1) In calculating the actuarial Net Value of the benefit option(s) listed in this Plan Sponsor Application (Please select one of
the following:
(i) Each Benefit Option individually meets the Net Value test as set forth at 42 C.F.R. §423.884(d)
(ii) Two or more Benefit Options have been combined in order to meet the Net Value test as set forth at 42
C.F.R. 423.§884(d), and each option not so combined individually meets the Net Value test as set forth in 42
C.F.R. §884
Based on the answer to the above question, the actuary will be presented with the corresponding Actuarial Attestation
agreement in Section B of Part III. (B (i) or B(ii)).
NOTE: The Plan Sponsor (or a designee), as applicable, must maintain, and furnish to CMS or the U.S. Department of
Health and Human Services Office of Inspector General upon request, certain records, including reports and working
documents of the actuary/actuaries who wrote the attestation. See 42 CFR §423.888(d).
CMS Form # 10156

Page 5

Deleted: If you answered “Yes” to question
3 in Part II(A), then a Qualified Actuary (or
Qualified Actuaries) must complete Part III(A).
If you answered “No” to question 3 in Part
II(A) then a Qualified Actuary must only
complete Part III(B) for each benefit option.
Deleted: NOTE: When signing onto the
RDS website Actuaries will be presented with
a list of Application and benefit options for
which they’ve been designated by the Plan
Sponsor as the Attesting Actuary.
Deleted: A. Actuarial Attestations Used
When Benefit Options are Combined
Deleted: ¶
(A)(i). Actuarial Attestation for the Gross
Value Test¶
The Qualified Actuary(s) who is listed as a
contact in section II(B) of this application must
read and attest to the statement in section
III(A)(i). A Qualified Actuary(s) must attest to
the Gross Value of each benefit option(s) by
providing an electronic signature. ¶
¶
(A)(ii). Actuarial Attestation for the Net
Value Test¶
Deleted: The Qualified Actuary who is
listed as a contact in section II(C) of this
application must read the attestation
statement in section III(A)(ii) of this ... [3]

OMB Approval # 0938-0957

B. Actuarial Attestation for the Gross Value and Net Value Test
NOTE Based on the answer to item 1 in Section A of Part III, the actuary will be presented with the corresponding Actuarial
Attestation agreement in (B(i) or B(ii)). This single attestation agreement includes each of the Gross Value and Net Value
Tests.
Actuarial Attestation for the Gross Value Test: A qualified Actuary must attest that each benefit option listed in the
application separately meets the Gross Value test required by 42 C.F.R. §423.884(d) and in other CMS guidance.
Actuarial Attestation for the Net Value Test: A qualified Actuary must attest that each benefit option or a combination of
some/all of the benefit options listed in the application meets the Net Value test required by 42 C.F.R. 423.884(d) and in
other CMS guidance.
The qualified Actuary must attest by providing an electronic signature.
NOTE: The Plan Sponsor (or a designee), as applicable, must maintain, and furnish to CMS or the U.S. Department of
Health and Human Services Office of Inspector General upon request, certain records, including reports and working
documents of the actuary/actuaries who wrote the attestation. See 42 CFR §423.888(d).

Deleted: B. Actuarial Attestation for the
Gross Value and Net Value Tests When the
Benefit Options are Not Combined

PART IV.

Deleted: Each Qualified Actuary listed in
Part II(B) for a benefit option must attest to the
Gross Value and Net Value of the benefit
option(s) for which they are listed. Each
Qualified Actuary must attest by providing an
electronic signature.

All RDS payments will be paid via electronic funds transfer. In order to receive payments, all information in this section
must be provided.

Deleted: Electronic Funds Transfer
(EFT) Information
Deleted: retiree drug subsidies

Please provide the required information for items 1-9 for the Plan Sponsor’s bank and related information.

Deleted: Bank.

PART V.

Deleted: Payment Frequency

42 C.F.R. §423.888(b)(1)(i) through (iii) provides Plan Sponsors the option to elect the maximum frequency for which to
receive payments. Please elect in this section of the application the maximum frequency for which the Plan Sponsor wants
to receive the subsidy payment. NOTE: The payment frequency cannot be changed mid-year.

Deleted: with
Deleted: with

PART VI.

A. Retiree Data Electronic Data Interchange (EDI) Method

Deleted: List Submission¶
¶
A. Retiree List File Submission

The Plan Sponsor must complete items 1-10 as applicable for each benefit option. These fields may be applied to multiple
benefit options or may be filled in for each benefit option individually. The following methods are available:

Deleted: Plan Sponsors must submit a list
of proposed qualifying covered retirees with
the application. There are three methods
available to plan sponsors to submit their list
of retirees to the RDS Center.

I. Hypertext Transfer Protocol Secure (HTTPS) to RDS Center
a. If Hypertext Transfer Protocol Secure (HTTPS) to RDS Center is the chosen method, complete items 3-9.
The method of retiree notification file transmission may only be Hypertext Transfer Protocol Secure
(HTTPS)

Deleted: the

Deleted: (NOTE: If you elect this option
please provide the necessary information in
2a – 2c so a representative from the RDS
Center can contact the Plan Sponsor
Technical Contact.)

II. Plan Sponsor or Vendor Mainframe to RDS Center Mainframe
CMS Form # 10156

Deleted: include

Page 6

OMB Approval # 0938-0957

a. If Plan Sponsor or Vendor Mainframe to RDS Center Mainframe is the chosen method, complete item 2 to
provide the Vendor or Plan Sponsor Mainframe ID, and complete items 3-9. Complete item 10 to provide
the method of retiree notification file transmission. The following methods are available:
i. Hypertext Transfer Protocol Secure (HTTPS) from RDS Center
ii. RDS Center Mainframe to Plan Sponsor or Vendor Mainframe
III. Voluntary Data Sharing Agreement (VDSA) via the Coordination of Benefits (COB) Contractor
a. If Voluntary Data Sharing Agreement (VDSA) via the Coordination of Benefits (COB) Contractor is the
chosen method, complete item 2 to provide the VDSA Contractor ID, and complete items 3-9. Complete
item 10 to provide the method of retiree notification file transmission .The following methods are available:
i. Hypertext Transfer Protocol Secure (HTTPS) from RDS Center
ii. Voluntary Data Sharing Agreement (VDSA) via the Coordination of Benefits (COB) Contractor

Deleted: s
Deleted: ¶
For specific step-by-step instructions for each
submission method, please visit the RDS
Center website at http://rds.cms.hhs.gov.¶

B. Retiree List
Plan Sponsors must submit an electronic list of the retirees for whom they are seeking subsidy payments. For each retiree
the following data elements must be provided:
• Application ID (assigned to you by the RDS Center)
• Unique Benefit Option Identifier – required to uniquely identify each benefit option under the plan. If the RX Group
Number uniquely identifies each option under the plan, then that number should be used. If the RX Group Number
does not uniquely identify each benefit option, then the Plan Sponsor must assign an identifier (alpha or numeric) to
each option. Plan Sponsors may use existing internal identifiers, or can develop one specifically for purposes of
completing the RDS application.
• Effective Date – This should either be the first day of the Plan Year or the first date of coverage for the Retiree
under the Plan, whichever is later.
• Termination Date – The last date of coverage for the Retiree under the plan, if known. If unknown, leave it blank.
• First name
• Last name
• Middle initial (optional)
• Social Security Number (SSN) – This field may be left blank if the Medicare Health Insurance Claim Number
(HICN) is known. However, please provide the SSN and HICN if both are known to ensure the most accurate data
match.
• Medicare Health Insurance Claim Number (HICN) – This field may be left blank if the Social Security Number
(SSN) is known. However, please provide the SSN and HICN if both are known to ensure the most accurate data
match.
• Date of Birth
• Gender
• Relationship to the Retiree (self, spouse, dependent)
• Type of record (add, update, delete)

Deleted: ,
Deleted: Plan

For instructions and information on file specifications, please go to the RDS Program Web Site at http://rds.cms.hhs.gov.

Deleted: website

PART VII.

Deleted: Plan Sponsor Agreement and
Electronic Signature

The Authorized Representative of the Plan Sponsor must indicate acceptance of the terms of this Plan Sponsor Agreement
by providing an electronic signature.
CMS Form # 10156

Page 7

Deleted: in

OMB Approval # 0938-0957

Part VIII.
Deleted: ¶
¶
Part VIII. Plan Sponsor Electronic
Signature¶

To submit this RDS application, the Authorized Representative of the Plan Sponsor must provide his/her electronic
signature.

Deleted: authorize
Deleted: Application

CMS Form # 10156

Page 8

Page 4: [1] Deleted

Author

question each time s/he attempts to access a section of the RDS Application that contains HIPAA PHI.
If you need to add additional designees, follow the instructions in the online application.
NOTE: While an affirmative answer to the HIPAA PHI question is required by at least one individual
assigned to completing the application, an affirmative answer by all individuals is not a prerequisite
to approval
Page 4: [2] Deleted

Author

Item #3 - For information about the actuarial equivalence tests, including the ability to combine options
under the Net Test, see 42 C.F.R. 423.884(d)(5) and any other guidance provided by CMS. Links to this
information can be found at http://rds.cms.hhs.gov.
Page 5: [3] Deleted

Author

The Qualified Actuary who is listed as a contact in section II(C) of this application must read
the attestation statement in section III(A)(ii) of this application. A Qualified Actuary must
attest to the Net Value of the combined option(s) by