Creditable Coverage Notification Explained


According to the Centers for Medicare & Medicaid Services,, the Medicare Modernization Act (MMA) requires “entities (whose policies include prescription drug coverage) to notify Medicare eligible policyholders whether their prescription drug coverage is creditable coverage.” This means that employers who sponsor a health plan offering prescription drug benefits must provide an annual notice to all Medicare-eligible participants that explains whether the prescription drug benefits offered under the plan are at least as good as the benefits offered under the Medicare Part D plan.

The only employers exempt from this requirement are those that establish their own Part D plan or contract with a Part D plan.

The Notice of Creditable Coverage must be provided in writing:

  • At least once a year before October 15 (the start of the annual Medicare Part D enrollment period);
  • Whenever a Medicare-eligible employee, spouse or dependent enrolls in your health plan (this includes Medicare-eligible active working individuals and their dependents, Medicare-eligible COBRA individuals and their dependents, Medicare-eligible disabled individuals covered under your prescription drug plan and any retirees and their dependents); and
  • Whenever there is a change in the creditable or non-creditable status of your health plan’s prescription drug coverage.

The MMA imposes a late enrollment penalty on individuals who do not maintain creditable coverage for a period of 63 days or longer following their initial enrollment period for the Medicare prescription drug benefit. This information is essential to an individual’s decision whether to enroll in a Medicare Part D prescription drug plan.

Disclosure to CMS Form each year, reporting whether your prescription drug coverage is creditable or non-creditable. This form must be submitted electronically within 60 days of the beginning of each plan year. For example, if you are on a calendar year, you must submit the form by March 1, 2013.

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