Medicare Part D Creditable Coverage Notice (Annual)
Medicare Part D; 42 CFR § 423.56(f); CMS Guidance
Annual notice to Medicare-eligible individuals disclosing whether the plan's Rx coverage is creditable (as valuable as Medicare Part D) or non-creditable. Late Part D enrollment penalty implications must be explained.
Current Fee / Rate Information
No cost to file. Model notice available from CMS. Must be provided to Medicare-eligible individuals before October 15 (start of Medicare Annual Enrollment Period). For 2027 plan years, CMS retired the original simplified determination. Plans that don't claim the Retiree Drug Subsidy must use the revised simplified method (covers brand, generic and biological drugs, gives reasonable retail pharmacy access, and pays on average at least 73% of participants' drug costs, up from 60% under the old test) or a full actuarial equivalence test. 2027 standard Part D benefit: $700 deductible, $2,400 out-of-pocket threshold.
Last reviewed: October 2026
Non-Compliance Penalties
No direct employer penalty, but failure to notify may result in employees paying higher Part D premiums (late enrollment penalty of 1%/month for each month without creditable coverage).
What does "creditable" mean?
Your prescription coverage is creditable if it's expected to pay, on average, at least as much as Medicare Part D would. The notice tells Medicare-eligible members which side of that line your plan sits on, so they can decide whether to enroll in Part D without walking into a permanent late-enrollment penalty. That penalty compounds at 1% per month without creditable coverage. Your notice is what protects them from it.
Who gets it, and when
- Every Medicare-eligible participant and dependent, before October 15 each year. You usually can't tell who's Medicare-eligible (think spouses, disabled dependents), so most employers send it to everyone. That's fine and safest.
- Also at other trigger points: when someone joins the plan, when creditable status changes, and on request.
Don't forget the second half
The member notice is one of two Part D duties. The other is the online disclosure to CMS within 60 days of your plan year start. Same creditable determination, different audience. CMS publishes model member notices, and your carrier or PBM should confirm your plan's creditable status each fall. Ask before open enrollment, not after.
What changes for 2027
CMS retired the old shortcut test. For 2027 plan years, a plan that doesn't claim the Retiree Drug Subsidy has two ways to call its drug coverage creditable: the revised simplified method, or a full actuarial test. The revised method needs reasonable coverage of brand, generic and biological drugs, reasonable retail pharmacy access, and a plan that pays on average at least 73% of participants' drug costs. The old test only needed 60%.
So a plan that passed last year may not pass now. High-deductible and high-coinsurance designs are the ones at risk. The notices you send before October 15 describe 2027 coverage, so get the determination in writing from your carrier or PBM first. If the answer changes to "non-creditable," the notice has to say so.
Related Reading
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