Creditable Drug Coverage and Medicare Part D — What It Means to You
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.