Your Prescription Drugs, Medicare and Creditable Coverage

Studies show that prescription drug utilization seems to increase as we age. Thus, managing your prescription drug benefits and needs is an important annual task. Medicare tracks your employer prescription drug benefits and will provide you an annual update on the credibility of your plan. Every October your plan or employer will send you an update on if or if not your plan is creditable. If your plan is deemed not creditable, or you are going to retire, understanding the terms of creditable coverage is important in enrolling on time and avoiding penalties. Let’s explore how to navigate this transition, determine how to identify creditable coverage and decide what actions you need to take.

What is Creditable Prescription Drug Coverage?

The Centers for Medicare & Medicaid Services (CMS) have regulations in place that determine which health and prescription drug coverage offerings meet minimum standards to qualify as Medicare contracted plans. If you wish to retain your current prescription drug coverage instead of enrolling in Medicare Part D, your alternative plan must also meet minimum standards. Creditable prescription drug coverage is defined as plans equal to or better than Part D benefits available under Medicare, offered through your employer or union, the Department of Veterans Affairs, TRICARE or the Indian Health Service. If you are eligible for Medicare coverage because you are over the age of 65, your employer or health plan is required to notify you if your current prescription drug coverage is creditable (and thus suitable to retain).

How to Know If Your Prescription Drug Coverage is Creditable

If you are eligible for Medicare coverage, your health plan or employer must send written notice prior to October 15 each year to explain if your coverage is equal to or better than what is provided from Part D. Often this notice will arrive in September. At any time during the year, you should be able to reach out to your employer, HR department or current benefits manager to determine whether or not your prescription drug coverage is creditable.This information helps you determine if you should enroll in a Medicare Part D prescription plan.

How to Avoid Part D Late Enrollment Penalties

When you are eligible for Medicare coverage, you are required to maintain creditable prescription drug coverage, either through Medicare Part D or another creditable plan. If you are not covered by a creditable plan for longer than 63 days in a row, you may face late enrollment penalties and gaps in coverage.

If you are enrolled in a non-Medicare plan after age 65, to avoid penalties, you must verify that your current prescription drug coverage is creditable. Be sure to keep records that show you have non-Medicare, creditable drug coverage. This way, when your coverage ends (for example, if you retire), you’re able to prove you are entitled to a Special Enrollment Period so that you can sign up for a Medicare Part D plan without penalty. If through written notification, you are notified that your coverage is no longer creditable, you must enroll in a Part D before 63 days expire from your last day of your current determine it is not creditable, you must enroll in a suitable Part D plan.

When you turn 65, it’s essential to understand what Medicare benefits you are eligible for, including prescription drug coverage. Our team of licensed Medicare insurance agents can help you learn about your plan options, determine if your current prescription drug coverage is creditable, assist with enrollment and much more. Remember, our services are available at no-cost as we are compensated by insurance companies. Contact us today for professional assistance in person, over the phone and online.

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