Employers offering group health plans with prescription drug coverage for Medicare-eligible individuals must annually disclose whether their coverage is creditable to both the Centers for Medicare and Medicaid Services (CMS) and those individuals. These requirements help employees make informed health care choices and avoid penalties. By understanding the rules and planning ahead, employers can help ensure a more seamless benefits experience.
Here are the top five common questions about Medicare Part D disclosure questions.
- What is the Medicare Part D notice, and why is it important?
The Medicare Part D notice informs Medicare-eligible individuals whether their employer-sponsored prescription drug coverage is considered creditable, meaning it meets or exceeds Medicare’s minimum standards. This notice is essential for employees, as it helps them avoid lifetime penalties for late enrollment in Medicare Part D. For employers, issuing this notice is a required compliance measure. Each year, they must notify both eligible individuals and the Centers for Medicare & Medicaid Services (CMS) regarding the creditable status of their coverage. Providing this notice supports informed decision-making and ensures adherence to federal regulations.
- What is the CMS disclosure?
In addition to providing the Part D notice to Medicare-eligible individuals, employers must also report to CMS whether their prescription drug coverage is creditable. These disclosures serve different audiences and have specific deadlines. CMS must be notified each year within 60 days of the plan year start, within 30 days after ending the prescription drug plan, and within 30 days of any change in creditable status. Employers should submit their notice using the CMS online disclosure form.
- Do Medicare Part D notices need to be sent to all employees?
All employers offering prescription drug coverage must provide annual creditable or non-creditable coverage notices to Medicare-eligible individuals covered under or applying for the plan. This includes employees, retirees, dependents, disabled individuals, and COBRA participants. To streamline compliance, many employers send this notice to all plan participants.
- When do the Medicare Part D notices need to be provided?
Medicare Part D notices must be given before the annual election period (October 15), before coverage starts for new Medicare-eligible members, whenever coverage ends or changes status, and upon request. Updated notices are needed when changes affect creditable coverage.
- How do employers determine if their coverage is creditable?
Prescription drug coverage is creditable if its actuarial value equals or exceeds the actuarial value of standard Medicare Part D. For 2026, the coverage must pay at least 72% of average drug expenses to qualify. Each benefit option must be evaluated separately, using either the current or revised CMS methods. Actuarial certification is only required for retiree drug subsidy applications.
Download the bulletin for more details.
Resources
CMS’ creditable coverage webpage provides more information about the required notices, including links to model notices
CMS’ Medicare Part D Improvements webpage provides guidance on changes to the Part D benefit newly in place for calendar year 2026
Medicare Part D webpage provides general information including covered benefits
