Creditable coverage

By Oct. 15 (beginning of the annual Medicare coordinated election period), groups that offer prescription drug coverage to employees or retirees should notify their members of the creditable coverage status of their plan and of possible penalties for late enrollment in Medicare Part D if their current coverage is not creditable.

As defined by the Centers for Medicare & Medicaid Services, coverage is considered creditable if its actuarial value equals or exceeds the actuarial value of standard prescription drug coverage under the Medicare prescription drug benefit. 

The Medicare Modernization Act imposes a late enrollment penalty on individuals who do not maintain creditable coverage for a period of 63 days or longer following their initial enrollment period for the Medicare prescription drug benefit.

Which prescription drug coverage is creditable to Medicare Part D?

The following charts reflect the creditable/noncreditable status of plans: 

How should I notify employees of the creditable coverage status of their prescription drug plan?

The Centers for Medicare & Medicaid Services provide sample notices for your convenience.

Learn more

For more information, refer to the question and answer document and/or visit the Centers for Medicare & Medicaid Services website