Medicare Part D: Creditable and Non-Creditable Disclosures

Creditable and non-creditable coverage notices help Medicare-eligible individuals understand how their current prescription drug coverage compares with standard Medicare Part D coverage. These notices support compliance and help individuals decide whether they need to enroll in a Medicare Part D plan.

What is creditable coverage?

Prescription drug coverage is creditable when it is expected to pay, on average, as much as or more than standard Medicare Part D coverage.

Individuals who maintain creditable prescription drug coverage can generally delay enrolling in Medicare Part D without a late enrollment penalty. They should keep copies of their coverage notices and review their enrollment options before that coverage ends or changes.

What is non-creditable coverage?

Prescription drug coverage is non-creditable when it is not expected to pay, on average, as much as standard Medicare Part D coverage.

Individuals with non-creditable coverage who delay enrolling in Medicare Part D may face a late enrollment penalty when they enroll. Generally, a penalty may apply if someone goes 63 consecutive days or longer without Medicare Part D or other creditable prescription drug coverage after their initial enrollment period, subject to applicable exceptions.

Important: A creditable or non-creditable determination applies specifically to prescription drug coverage. It is not a rating of the overall quality of a health insurance policy.

How does this relate to an ICHRA?

An Individual Coverage Health Reimbursement Arrangement (ICHRA) is an employer-funded reimbursement arrangement, not the individual health insurance policy an employee purchases. The ICHRA has its own plan documents, but the employee’s insurance policy determines their prescription drug benefits.

Reimbursement through an ICHRA does not automatically make a policy’s prescription drug coverage creditable. Employees should obtain the creditable or non-creditable coverage determination from their insurance company.

Please see the attached article for more information about Medicare Part D and how it specifically applies to your benefitbay ICHRA.