Employers must send Creditable Coverage Disclosure Notices to individuals each year

All employers that provide prescription drug coverage to Medicare Part D individuals are required to notify those individuals whether the provided coverage is creditable, as part of the Medicare Part D creditable coverage requirements. Notices must be provided to Medicare-eligible active working individuals and their dependents, Medicare-eligible COBRA individuals and their dependents, Medicare eligible disabled individuals covered under the prescription drug plan, and any retirees and their dependents who are covered under the plan. Employer groups required to supply the notices to their participants include, but are not limited to, private employers, federal, state, county, and local governments, collectively bargained plans, and church plans.

These notices must be provided:

• Annually by October 14th, prior to the October 15th to December 7th election period for Medicare Part D
• Prior to an individual’s initial enrollment period for Medicare Part D-eligible individual who enrolls in the employer’s prescription drug coverage
• If the employer no longer offers prescription drug coverage or changes it so it no longer or becomes creditable
• Upon request by any Medicare Part D-eligible individual

Creditable means the coverage is expected to pay on average as much as the standard Medicare prescription drug coverage. Medicare-eligible individuals need to know if their employer plan is creditable so they can decide whether to enroll in a Medicare Part D prescription drug plan. If a Medicare Part D-eligible plan participant enrolls in non-creditable coverage, they may face penalties for late enrollment in Medicare Part D.

The Inflation Reduction Act of 2022 (“IRA”) introduced several changes to Medicare Part D, including a significant change to the Part D plan design. For 2025, the maximum out-of-pocket (MOOP) amount drops to $2,000 (a $6,000 reduction from the $8,000 MOOP amount in 2024). This change may make it more challenging to meet the creditable coverage requirements and may deem plans non-creditable, which will be a significant change for many health plans. Of particular concern will be Qualified High-Deductible Health Plans (QHDHPs) as they will have a difficult time meeting the updated threshold for creditable coverage. Please note that employers are not required to offer creditable coverage, but they must notify their employees of creditable coverage status.

• Obtain written confirmation from the employer’s carrier about the creditable or non-creditable coverage status of the employer’s plans for the upcoming plan year.
• Timely distribute the Creditable Coverage Disclosure Notice prior to October 15.
  • ****The Creditable Coverage Notice is a way to disclose creditable status of plans for the
    2025 calendar year. If the upcoming calendar year status is not yet known, employers may assume the prior year’s status, but will need to distribute new notices if/when the creditable status of the plan changes.
• Consider providing additional communications to employees with any non-creditable coverage notices to ensure that Part D eligible employees are aware of the penalty for not enrolling in creditable coverage. Employers are strongly cautioned to seek prior approval from their outside legal counsel before sending any communications to ensure compliance with Medicare Secondary Payer (“MSP”) rules.
• Employers will still be required to complete the online disclosure to CMS within 60 days from the start of the plan plan year and within 30 days of a creditable status change of termination of a prescription drug plan.

The two notices used for Medicare Part D disclosure to individuals are the:

• Creditable Coverage Disclosure Notice
• Non-Creditable Coverage Disclosure Notice

Model language for these notices is available at the Centers for Medicare & Medicaid Services (CMS) website at: www.cms.gov/Medicare/Prescription-Drug-Coverage/CreditableCoverage/Model-Notice-Letters

Each notice has a space for the employer to explain the plan’s prescription coverage provisions and the options available to the individual when they become eligible for Medicare Part D (will the plan coordinate with Medicare Part D or will it end if they elect Medicare Part D).

Delivery of the notice can be made on a stand-alone basis or combined with other documents. However, if combined, the notice must be prominent and conspicuous in at least 14-point font and placed in a separate box. A single notice can be mailed to the employee and dependents, unless the employer is aware that the spouse or dependent is Medicare Part D-eligible and resides at a different address. First class mail is preferable and the employer should document when the notice is mailed, where it is mailed, and to whom it is mailed. Electronic mailings can be made only to plan participants who have the ability to access the plan sponsor’s electronic information system on a daily basis as part of their work duties. If sent electronically, the employer must inform plan participants that they are responsible for providing a copy to their Medicare-eligible dependents covered under the group health plan. the employer also must post a copy on the company’s website.