Medicare Part D Creditable Coverage Notices: What Employers Need to Send by October 15

Think the Medicare Part D creditable coverage notice only matters if you have retirees on your plan? Plenty of business owners think the same thing, but this isn't true. If you have even one Medicare-eligible employee, spouse, or dependent on your plan, this rule applies to you.

In this guide, we'll break down what the notice is, who has to get it, and how to check if your plan is creditable. We'll also cover when and how to send it, the CMS disclosure, and the penalty employees face if they're left out of the loop. 

Keep in mind that the creditable coverage notice deadline is right around the corner. Your notices need to go out before October 15, and Benefits Made Great can help you keep your paperwork on track. 

Need a hand? Call us at (913) 243-3412 or fill out our contact form, and we'll get you sorted out.

What Is the Medicare Part D Creditable Coverage Notice?

The Medicare Part D creditable coverage notice is a yearly letter from you to the people on your health plan. It tells them whether your plan's prescription drug coverage is creditable or non-creditable.

Federal law requires this notice for group health plans that include drug coverage. So this Medicare Part D notice for employers isn't just a big-company rule. Small shops and startups have to send it, too.

Why This Notice Matters

When someone becomes eligible for Medicare, they get to choose whether to sign up for a Part D drug plan. If they wait too long and don't have creditable coverage, they can get stuck with a long-lasting penalty. Your notice is what helps them make the right call.

That's why the October 15 Medicare deadline exists. It lines up with the start of Medicare's yearly fall sign-up period.

Who Must Receive the Notice?

The notice goes to every Medicare-eligible person who is covered by your plan or applying to join it. That includes:

• Active employees who are Medicare-eligible.
• Spouses and dependents on your plan.
• COBRA participants.
• Employees on disability.
• Retirees and their dependents, if you have any.

Medicare-eligible doesn't always mean age 65 or older. Some folks qualify at a younger age because of a disability. And here's the catch: you often won't know who's eligible. Since it's very difficult to track the Medicare eligibility, not to mention privacy concerns, most employers play it safe and send it to everyone on the plan.

Creditable vs. Non-Creditable Coverage

Medicare has its own prescription drug plan, called Part D. Your employees need to know if your benefits plan is either as good as that, or it isn't.

• Creditable coverage means your plan is expected to pay about as much for prescriptions as Medicare Part D would. A Medicare-eligible person can usually keep your plan and skip Part D without a penalty.
• Non-creditable coverage means your plan pays less than Medicare would. A Medicare-eligible person who keeps your plan and skips Part D could pay a penalty when they sign up later.

Here's an example: One of your employees, Linda, turns 65. If your plan is creditable, she can generally stay on it without worrying about a penalty. If it's non-creditable, she needs to know that waiting on Part D could cost her more down the road. Your notice is how she finds out which one applies.

Non-creditable doesn't mean you did anything wrong, since employers aren't required to offer creditable coverage. You just have to tell people which kind of coverage you have, so either way, you have to send them a notice.

How to Know if Your Benefits Plan Is Creditable

The easiest way is to ask your insurance carrier whether your plan's drug coverage is creditable, and most will tell you in writing. You can do this by requesting a creditable coverage determination every year. If a separate company handles your prescriptions, ask them instead. Your benefits broker can also find this information for you and explain why it means.

The answer to your question comes from one of two tests that the Centers for Medicare & Medicaid Services (CMS) allows. These are completed by your insurance carrier, a benefits broker, or actuary.

• The simplified test: This is a checklist. Under CMS's updated version, your insurance carrier or broker reviews the plan to ensure it covers brand-name drugs, generic drugs, and biologics. The benefits plan must give reasonable access to retail pharmacies, and it must pay, on average, at least 72% of drug costs (73% starting in 2027). If the plan meets the checklist, it counts as creditable.
• The actuarial test: A certified actuary compares what your plan is expected to pay against standard Part D. Plans with custom or complex designs that don't clearly pass the checklist will need an employer to hire an actuary to run this mathematical test.

A plan that passed last year may not pass this year, so check every year.

And if you're shopping plans, our medical insurance page shows how we compare group plans across carriers, prescription drug coverage included.

Medicare Part D Notification Requirements: When and How to Send

Here are the requirements every employer needs to know.

Deadline for Medicare Part D

The main deadline is October 15th. Your yearly notice has to go out before that date, and it's the same date every year. That's not the only time a notice is due, though. You also need to send it:

• Before a person's Medicare Part D initial enrollment window opens (it starts three months before the month they turn 65).
• Before a Medicare-eligible person's coverage under your plan begins, like a new hire.
• Whenever your drug coverage changes from creditable to non-creditable, or the other way around.
• Any time someone asks for it.

If you send the notice to everyone each fall, that covers the yearly and turning-65 timing. Just remember to add it to your new hire packet, too.

How to Deliver the Medicare Part D Notification

• Mailing physical copies: This is the default option. You can use this method whenever you cannot meet the rules for electronic delivery.
• Emailing regular computer users: You can email the notice to employees who use a company computer or email as a normal, necessary part of their daily work. You do not need their permission first.
• Emailing everyone else: For employees who do not work on computers, retirees, and people on COBRA, you cannot just email them. You must get their clear, written permission first. If they do not give permission, you must mail them a printed copy.
• Posting online and sharing with family: If you do email the notice, you must also post it on your company website. You must also remember to tell employees to share the notice with any Medicare-eligible family members covered by the plan.
• Mailing to different addresses: If a spouse or dependent lives at a different address, you must always mail a separate printed copy directly to their home.
• Including in packets for new hires and open enrollment: You can include the notice inside your standard open enrollment or new hire welcome packets. To meet compliance rules, you must either place the notice on the first page of the packet or prominently reference it on the first page to direct the reader to the exact page number.

Our guide on what is open enrollment for employees covers the steps, timing, and paperwork for the sign-up window.

What Is the CMS Creditable Coverage Disclosure?

Telling your employees is only half the job. You also have to tell the government. The CMS creditable coverage disclosure is an online form where you report whether your drug plan is creditable. Here are the due dates:

• Within 60 days after your plan year begins.
• Within 30 days after your drug plan ends.
• Within 30 days after any change in your plan's creditable status.

Business owners often miss this one because it isn't tied to October 15. So be sure to mark your calendar.

What Penalty Do Employees Face If They Aren't Notified?

The penalty falls on your employee, not your business. Medicare adds a late enrollment penalty to anyone who goes 63 days or more in a row without creditable drug coverage after first becoming eligible.

The penalty is 1% of the national base beneficiary premium for each full month without coverage. That base premium is $38.99 for 2026. The result gets added to the monthly Part D premium.

If someone goes 24 months without creditable coverage, that's about $9.40 extra every month. And it usually sticks around as long as they have Part D, even if they switch plans. 

Without your notice, an employee could guess wrong and pay for this penalty for years. You don’t want to be the boss who’s responsible for that. Instead, a timely notice from you gives your team total peace of mind and keeps extra money in their pockets.

How Benefits Made Great Helps Every Year

At Benefits Made Great, we work with local entrepreneurs, startups, and growing businesses across Kansas and Missouri. We help our clients:

• Confirm creditable status with the carrier before the notices go out.
• Pick the right notice for the plan's status.
• Stay on top of the dates, including the CMS disclosure.

Not sure what a benefits broker handles day to day? Our guide on what an employee benefits broker does covers the role, the perks, and how to tell when it's time to bring one on.

Ready to Send Your Medicare Part D Creditable Coverage Notice?

One Medicare-eligible person on your plan is enough to trigger the rule. Send your Medicare Part D creditable coverage notice before October 15, file your CMS disclosure on time, and re-check your status every year. 

Reach out to Benefits Made Great at (913) 243-3412, and let's get it done together.