The Five Ws, and One H of Medicare Part D Creditable Coverage Notices

September 15, 2020

This is the sixth article in our Compliance 101 blog series where we use six questions to break down important compliance topics. Below you will learn more about Medicare Part D Creditable Coverage Notices. Read more below! 

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Who is required to provide a Medicare Part D Creditable Coverage Notice?   

  • All group plan sponsors (i.e. employers) that provide prescription drug coverage are required to provide a disclosure notice to all Part D eligible individuals who are covered under, or who apply for, the employer’s prescription drug coverage.

  • Part D eligible individuals are those who are eligible for Medicare A or B, and include COBRA participants, retirees, covered spouses and dependents, and employees. Because the list of Medicare-eligible individuals is broad, many employers choose to provide all participants with a Part D notice.

  • While the plan sponsor that provides the coverage is responsible for providing the notice, nothing in the regulation prevents that employer from arranging to have it provided by a third party.

What does creditable or non-creditable coverage mean?  

  • Creditable coverage means that on average, the actuarial value of the coverage under the employer’s plan equals or exceeds the actuarial value of standard prescription drug coverage under Medicare Part D.

  • In general, if an employer’s plan is creditable, it will pay at least as much for prescription drug claims as the expected amount of paid claims under the standard Medicare Part D benefit.

  • Some carriers will provide guidance on whether their plans are creditable or may provide a calculator for determining credibility. These calculators have not been formally approved by CMS, so risk adverse employers should consider paying for an actuarial analysis in the event their carrier does not provide the actuarial determination for them and the plan does not meet the simplified determination of the creditable coverage safe harbor. Information on the safe harbor can be found on the CMS website.

Where does an employer obtain model disclosure notices?   

  • CMS has provided model/sample language that entities can (but are not required to) use when disclosing creditable coverage status to beneficiaries. The model notices are posted on the CMS website.

  • Employers that choose not to use the model/sample disclosure notice language must ensure the disclosure notices they provide meet minimum content standards prescribed by CMS.

Why is a notice required to be provided? 

  • Disclosure of whether prescription drug coverage is creditable provides Medicare beneficiaries with important information relating to their Medicare Part D enrollment. Beneficiaries who do not have creditable prescription drug coverage and who choose not to enroll before the end of their initial enrollment period for Part D may pay a higher premium on a permanent basis if they subsequently enroll in a Part D drug plan.

When is the notice required to be provided?

  • There are five times that creditable coverage determinations must be provided to Part D eligible beneficiaries:

  1. Prior to the Medicare Part D Annual Coordinated Election Period–beginning October 15 – December 7th of each year;

  2. Prior to an individual’s Initial Enrollment Period for Part D;

  3. Prior to the effective date of coverage for any Medicare-eligible individual that joins the plan;

  4. 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

  5. Upon request by the individual.

  • If the creditable coverage disclosure notice is provided to all plan participants annually, prior to October 15th of each year, for instance during open enrollment, CMS will consider items 1 and 2 to be met.

How does the notice need to be distributed?

  • The notice need not be sent as a separate mailing. The disclosure notice may be provided with other plan participant information materials (including enrollment and/or renewal materials).

  • If employers choose to incorporate disclosures with other plan participant information, the disclosure must be prominent and conspicuous. This means that the disclosure notice portion of the document (or a reference to the section in the document being provided to the individual that contains the required statement) must be prominently referenced in at least 14-point font in a separate box, bolded, or offset on the first page of the provided plan participant information.

  • An employer may provide a single disclosure notice to the covered Medicare individual and all his/her Medicare-eligible dependent(s) covered under the same plan. However, the employer is required to provide a separate disclosure notice if it is known that any spouse or dependent that is Medicare eligible resides at a different address than from where the participant/policyholder materials were provided.

  • Employers may provide the notices electronically, if the plan participants have the ability to access electronic documents at their regular place of work and if they have access to the plan sponsor’s electronic information system on a daily basis as part of their work duties. If this electronic method of disclosure is chosen, the plan sponsor must inform the plan participant that the participant is responsible for providing a copy of the electronic disclosure to their Medicare-eligible dependents covered under the group health plan.

  • Notices to non-employee participants (e.g. COBRA, retirees) or participants who do not access the plan sponsor’s electronic information system as a regular part of their work duties, may also be provided electronically, however, electronic consent from the participant must be obtained prior to the notices being provided.

If you have any questions, please contact your local advisor or email us at to be connected with a compliance consultant and Alera firm near you. 

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Disclaimer: This blog was written by Michelle Turner, MBA, CEBS, Compliance Consultant, Alera Group Central Region. This blog post intends to provide general information regarding the status of, and/or potential concerns related to, current employer HR & benefits issues. This blog should not be construed as, nor is it intended to provide, legal advice. The opinions expressed herein are based upon the author’s experience as a Compliance Consultant and may not reflect the opinions of your counsel. 

The information contained herein should be understood to be general insurance brokerage information only and does not constitute advice for any particular situation or fact pattern and cannot be relied upon as such.  Statements concerning financial, regulatory or legal matters are based on general observations as an insurance broker and may not be relied upon as financial, regulatory or legal advice.  This document is owned by Alera Group, Inc., and its contents may not be reproduced, in whole or in part, without the written permission of Alera Group, Inc.

This article was last reviewed and up to date as of 09/08/2020.