Each fall, employers who offer prescription drug coverage have an important compliance task: sending out the Annual Notice of Creditable Coverage. This notice is crucial for all Medicare-eligible individuals covered under your group health plan, including active employees, retirees, and their dependents.
So, what exactly does this notice do? The notice lets Medicare-eligible individuals know whether your prescription drug coverage is creditable (meaning it is expected to pay, on average, as much as standard Medicare Part D coverage) or non-creditable. This information is essential because it helps employees make informed decisions about whether they should enroll in Medicare Part D during the annual enrollment period.
Why does this matter? If a Medicare-eligible person doesn’t have creditable coverage and delays enrolling in Part D, they could face late enrollment penalties that last for as long as they have Medicare coverage. Providing this notice on time ensures your employees can avoid unnecessary costs and stay compliant with Medicare’s rules.
The deadline is firm. Employers must send the notice by October 15, 2025.
Notices can be distributed by mail, electronically (with proper consent), or even by hand delivery, as long as all eligible individuals receive them. Employers must also disclose this creditable coverage information to the Centers for Medicare & Medicaid Services (CMS) each year, typically within 60 days of the start of your plan year.
Failing to send timely notices can create confusion for employees and compliance risks for employers. A well-organized communication plan is key to staying on track.
If you need guidance on drafting your creditable coverage notice, determining whether your coverage is creditable, or filing the CMS disclosure, we can help. Contact Bay Area Health Insurance to ensure you’re fully compliant before the October 15 deadline, and together we’ll give your employees peace of mind about their Medicare choices.
