The annual deadline is approaching. Here’s what employers need to know about Medicare Part D Creditable Coverage Disclosure Notices. As employers prepare for the upcoming open enrollment season, there is an important compliance deadline to keep on the radar: Medicare Part D Creditable Coverage Disclosure
Employers that offer prescription drug coverage to Medicare-eligible individuals are required to communicate whether their coverage is creditable or non-creditable under Medicare Part D rules.
Who Needs to Receive the Notice?
The disclosure requirement applies to Medicare Part D-eligible individuals covered by an employer’s prescription drug plan, including:
- Medicare-eligible active employees and their dependents
- Medicare-eligible COBRA participants and their dependents
- Medicare-eligible disabled individuals covered by the plan
- Retirees and their dependents who are covered under the plan
The requirement applies broadly to employer-sponsored plans, including private employers, government entities, collectively bargained plans, and church plans.
What Does “Creditable Coverage” Mean?
Prescription drug coverage is considered creditable when it is expected to pay, on average, at least as much as standard Medicare prescription drug coverage.
Why does this matter? Medicare-eligible individuals use this information to determine whether they should enroll in Medicare Part D. An individual who goes without creditable prescription drug coverage for a specified period after becoming eligible for Medicare Part D may face a late enrollment penalty if they subsequently enroll.
Importantly, employers are not required to offer creditable prescription drug coverage. They are, however, required to disclose the plan’s creditable or non-creditable status to eligible individuals.
When Are Notices Required?
In addition to the annual deadline, notices may be required at other times, including:
- By October 14 each year, before the October 15–December 7 Medicare Part D annual election period
- Before an individual’s initial Medicare Part D enrollment period
- Before the effective date of employer prescription drug coverage for a Medicare Part D-eligible individual
- When an employer’s prescription drug coverage changes from creditable to non-creditable status, or vice versa
- When prescription drug coverage is terminated
- Upon request from a Medicare Part D-eligible individual
A Key Consideration for 2027
Employers should confirm the creditable or non-creditable status of their prescription drug plans for the upcoming 2027 calendar year.
Recent changes to the Medicare Part D creditable coverage determination have made the analysis particularly important for some plans, including certain Qualified High Deductible.
Health Plans (QHDHPs).
Employers should obtain written confirmation from their carrier or other appropriate source regarding the creditable status of each prescription drug plan before distributing the notices.
If the 2027 status has not yet been determined, employers may generally use the prior year’s status for the initial annual notice, but should be prepared to distribute updated notices if the status changes.
Don’t Forget the CMS Disclosure
Providing the notice to employees is only one part of the requirement.
Employers must also complete the Medicare Part D Creditable Coverage Disclosure to the Centers for Medicare & Medicaid Services (CMS). The disclosure is generally due within 60 days after the beginning of the plan year and within 30 days of a change in creditable status or termination of the prescription drug plan.
Employer Action Steps
With October approaching, employers should:
- Confirm creditable status. Obtain written confirmation from the carrier or other appropriate source for each prescription drug plan.
- Identify affected individuals. Determine which employees, dependents, COBRA participants and retirees may be Medicare-eligible.
- Distribute the appropriate notice. Provide the Creditable or Non-Creditable Coverage Disclosure Notice by October 14.
- Address non-creditable coverage carefully. Consider whether additional employee communication is appropriate. Employers should consult with legal counsel before providing additional guidance regarding Medicare enrollment or coordination.
- Complete the CMS disclosure. Remember that the participant notice and CMS disclosure are separate requirements.
- Document compliance. Retain records showing the notices were distributed and the plan’s creditable status was determined.
Don’t Let This Deadline Get Lost in Open Enrollment
October is already a busy month for HR teams. Adding Medicare Part D compliance to the open enrollment checklist now can help prevent a deadline from being overlooked.
If your organization offers prescription drug coverage, now is the time to confirm your plan’s 2027 creditable status and make sure the appropriate notices are ready for distribution by October 14.