The Centers for Medicare & Medicaid Services (CMS) requires employers to notify individuals eligible for Medicare Part D of whether or not the employer’s prescription drug coverage is creditable or not. CMS defines “creditable coverage” as coverage which at minimum has the equivalent actuarial value as Medicare Part D.
As a reminder, CMS finalized changes for 2027 plan year creditable coverage disclosures earlier in 2026 which revised the simplified method for determining creditable coverage and eliminated the disclosure requirement for account based plans, including individual coverage health reimbursement arrangements (ICHRAs). Read more about those changes here.
The purpose of the creditable coverage notice requirement is to permit Part D eligible individuals to make an informed decision about whether they want to enroll in the Part D prescription drug benefit. The notice must be given at the following times:
- Annually prior to October 15th each year;
- Prior to an individual’s Initial Enrollment Period (IEP) for Part D, which is the period during which an individual is first eligible to enroll in Part D (which runs concurrently with an individual’s Medicare Part A & B eligibility period);
- Prior to the effective date of coverage for any Medicare eligible individual that joins the entity’s plan;
- Whenever the entity no longer offers prescription drug coverage or changes the coverage offered so that it is no longer creditable or becomes creditable; and
- Upon request by the Part D eligible member.
M3 recommends that employers send the notice to all participants in the plan, because it is difficult for an employer to know who may or may not be on Medicare or who will become eligible within the next 12 months. This notice is not only for employees, but also spouses and dependents, and Medicare is not just for those over 65. Click here for more information and the model notices.
In addition to providing notification to employees regarding whether the prescription drug coverage is “creditable” or “non-creditable”, employers must also disclose the same information to CMS. This disclosure must be submitted to CMS annually and whenever changes are made to the prescription drug coverage that impacts the coverage’s is creditable/non-creditable status. This disclosure must be provided within 60 days after the beginning of the plan year. That disclosure can be accessed here.
