Employers offering prescription drug coverage through a group health plan must meet annual disclosure requirements for Medicare Part D, stating whether prescription drug coverage is creditable or non-creditable. For calendar-year plans, this includes submitting a disclosure to the Centers for Medicare & Medicaid Services (CMS) by March 1 each year.
Coverage is considered to be creditable when it is expected to pay at least as much Medicare Part D.
This is separate from the Part D notice to individuals, which must be given each year before October 15 (the start of Medicare open enrollment).
Failing to meet this deadline can result in:
- Loss of eligibility for the Medicare retiree drug subsidy
- Potential ERISA fiduciary responsibility claims
- Late enrollment penalties for Medicare-eligible employees
If there are changes to a plan’s prescription drug coverage or if coverage is terminated, a new disclosure must be submitted to CMS within 30 days of the change.
Coming in 2026, CMS has proposed a simplified determination methodology that would specify that coverage must be designed to pay, on average, at least 72% of a participant’s drug expenses—an increase from 60% under the current methodology—to be considered creditable coverage. This may impact how plan creditability is assessed, especially for high deductible health plans (HDHPs).
Employer Considerations
- Check with insurance carriers or third-party administrators (TPAs) to verify if your prescription drug plan is creditable or non-creditable.
- Complete the required online disclosure form within 60 days of the plan year’s end (by March 1, 2025, for calendar-year plans). CMS provides instructions for completing the online disclosure on its website.
- Keep records of your submission for audit or compliance purposes.
- Ensure Medicare-eligible employees receive their annual notice by October 14 for calendar-year plans.