Creditable Drug Coverage and Medicare Part D – What It Means to Employers
Creditable coverage is non-Medicare Part D prescription drug coverage that is at least as good as (i.e., pays, on average, as much as or more than) standard Medicare Part D prescription drug coverage.
When a person becomes eligible for Medicare Part D, they must maintain creditable drug coverage, and not have a break in coverage for 63 or more days. If this is not the case, they will face a significant late enrollment penalty.
Groups must determine if the drug coverage they offer is creditable and:
- Disclose this information to the Centers for Medicare and Medicaid Services (CMS) annually or when there is any change that affects whether the coverage is creditable.
- Send the required notice of creditable coverage to Medicare-eligible beneficiaries who are covered by, or who apply for, prescription drug coverage.
Additional information (including the standard model notice)
Late Enrollment Penalty
Individuals eligible for Medicare Part D (entitled to Medicare Part A and/or enrolled in Part B ) who do not maintain Part D or creditable drug coverage may have to pay a penalty for every month they were eligible to join a Medicare Part D plan and were not enrolled in one. This penalty is in addition to the monthly premium and must be paid for as long as the beneficiary is enrolled in a Medicare Part D plan.
The late enrollment penalty is at least 1 percent of the Part D national average premium ($31.08 in 2012; subject to change annually) for each full uncovered month that a beneficiary was eligible to join a Medicare Part D plan and did not.
If a Medicare-eligible beneficiary has creditable coverage and has not had a break in coverage for 63 or more days, he or she may avoid paying a late enrollment penalty if he or she enrolls later in a Medicare Part D plan.
Need help determining if drug coverage is creditable?
Excellus BlueCross BlueShield has developed a Creditable Coverage tool (Microsoft Excel file) to help you determine if drug coverage is creditable.
Access Creditable Coverage Tool (Microsoft Excel file)
If you have any questions please contact your Account Consultant.