Creditable Coverage Disclosure Requirements for Employer Groups Offering Prescription Drug Coverage

Employer groups that offer prescription drug coverage to Medicare eligible employees, dependents and/or retirees, need to provide annual creditable disclosures to both their eligible plan participants and the federal Centers for Medicare and Medicaid Services (CMS).

Creditable” plans mean that the coverage provided is as good as, if not better than, the standard Medicare Part D prescription drug coverage. Coverage is considered creditable if it meets all 4 of the following standards:

  1. Provides coverage for brand and generic prescriptions
  2. Provides reasonable access to retail providers
  3. Pays on average at least 60% of participants’ prescription drug expenses; and,
  4. Satisfies one of the following:
    • The prescription drug coverage has no annual maximum benefit payable by the plan
    • The prescription drug coverage has an actuarial expectation that the amount payable by the plan will be at least $2000 per eligible individual
    • For, for entities with integrated health and prescription drug coverage, the plan has no more than a $250 deductible per year and has no annual benefit maximum payable by the plan

Once Creditable status is determined, the employer has 2 responsibilities:

  1. Provide the Medicare Part D Creditable Coverage Notice to all Medicare beneficiaries by October 15th each year, upon any Medicare eligible individual’s enrollment in the plan, and at any time it is requested by any eligible beneficiary
  2. Complete the CMS disclosure regarding creditable status by March 1st of each year by completing the online form. Note: if the plan sponsor offers multiple prescription drug offerings, then they must test each benefit option to attest if each is or is not creditable.

Since plan enrollment changes throughout the year, and knowledge of Medicare eligibility is not always known, all employer groups who offer prescription drug coverage are advised to be proactive with the above by incorporating this into their benefits administration practices.

Any questions, please contact us, or, you can read more about this on the CMS website: