Executive Summary

With the October 15 start of the Medicare Part D annual election period looming comes the reminder that the Part D Notice of Creditable Coverage and/or Non-Creditable Coverage is due to employees prior to that October 15 start date. The purpose of the Notice is to inform employees whether their employer-sponsored group health plan’s prescription drug coverage is at least as rich as a Medicare Part D plan.

Who Must Receive the Notice of Creditable/Non-Creditable Coverage?

Technically, employers must provide the Notice only to “Part D eligible individuals” who are enrolled or seeking to enroll in the employer’s prescription drug coverage. This includes all individuals enrolled in Medicare Part A or Part B who live in the service area of a Part D plan.

As a practical matter, employers will not know which employees, spouses, or dependents are enrolled in Part A or Part B, and they will not know which individuals are seeking to enroll in the employer’s plan. Therefore, employers generally provide the Notice to all employees.

• Best Practice: Provide the Notice to all employees. It’s not realistic to attempt to target the Notice to only Part D eligible individuals.

Where Are the Model Notices?

CMS posts model versions of the Notice of Creditable Coverage and the Notice of Non-Creditable Coverage in English and Spanish.

• Note: CMS has not updated the model Notice since 2011.

How To Provide the Notice

Employers can provide the Notice by three different methods:

1. Paper delivery by first-class mail;

2. Paper delivery by hand; or

3. Electronic delivery where permitted.

CMS states that electronic delivery is permitted to “plan participants who have the ability to access electronic documents at their regular place of work if they have access to the plan sponsor’s electronic information system on a daily basis as part of their work duties.” This electronic delivery standard generally follows the ERISA electronic disclosure safe harbor.

Combining With Other Materials

Employers may choose to provide the Notice in connection with multiple other annual notices (e.g., CHIP, WHCRA) or open enrollment materials as a single distribution.

• For more details: The 2024 Required Annual Notices to Employees

CMS guidance provides that employers may include the Notice with other materials as long as the Notice disclosure is “prominent and conspicuous.” If the Notice is not on the first page of any such materials, the first page should include a separate box that is bolded or offset on the first page and prominently references the Notice in at least 14-point font.

CMS provides the following model first-page box language:

• If you (and/or your dependents) have Medicare or will become eligible for Medicare in the next 12 months, a Federal law gives you more choices about your prescription drug coverage. Please see page xx for more details.

Why the Notice Matters: The Late Enrollment Penalty

One unusual aspect of the Notice requirements is that there are no specific penalties for an employer’s failure to provide it. However, Part D eligible individuals who fail to maintain creditable coverage for a period of 63 continuous days or more will face a late enrollment penalty when they eventually enroll in Part D. The Part D premium may go up by at least 1% of the Medicare base beneficiary premium for every month a Part D eligible individual is without creditable coverage (e.g., permanent 19% Part D premium increase for 19-month gap in creditable coverage).

• Bottom Line: Employees enrolled in creditable coverage need the Notice to confirm creditable status and document they maintained creditable coverage when later enrolling in Part D. Employees enrolled in non-creditable coverage need the Notice to be informed of the late enrollment penalty if they do not choose to enroll in a Part D plan during the Medicare open enrollment period (or to enroll in a different employer-sponsored plan option that is creditable).

One Other Part D Disclosure Requirement

Keep in mind that there is also a separate requirement for the employer to disclose online to CMS within 60 days of the beginning of their plan year whether their plan provides creditable coverage. For employers with a calendar plan year, the 2024 filing deadline is March 1.

For more details:

• Disclosure to CMS Form

• Creditable Coverage Disclosure to CMS Guidance

• Creditable Coverage Disclosure to CMS Instructions & Screen Shots

Where Can I Find More Employer-Related Medicare Information?

The following materials provide additional Medicare information for employers:

• Newfront Medicare for Employers Guide

• The Medicare Form CMS-L564 for Employers

• How COBRA and Medicare Interact for Retirees

• The Medicare Enrollment COBRA Extension

• How Medicare Affects HSA Eligibility

• Early Termination of COBRA Upon Enrollment in Medicare

• Medicare Secondary Payer Size Thresholds

• Medicare Considerations for Retiring Employees

• Medicare Secondary Payer Prohibition of Employer Opt-Out Incentives

What About the Other Required Annual Notices?

Employers may choose to provide the Medicare Part D Notice of Creditable Coverage and/or Non-Creditable Coverage with other annual notices related to employer-sponsored health and welfare plans.

• For more details: The 2024 Required Annual Notices to Employees

Links to Required and Recommended Annual Notices

Many employers prefer to provide employees with online access to the annual notice materials. Here is a sample message that employers can use to distribute annual notices electronically:

2024 Health Plan Annual Notices

The Company is required by applicable law to provide you with certain notices each year that inform you of your rights and our responsibilities with respect to the Company’s health plan (the “Plan”).

Please carefully review the information contained below and share it with your covered dependents.  We suggest you keep this information with your Summary Plan Description (“SPD”) for future reference. 

[Company’s Plan Provides Part D Creditable Coverage]

• Medicare Part D Notice of Creditable Coverage

• Children’s Health Insurance Program (CHIP) Notice

• Women’s Health and Cancer Rights Act (WHCRA) Notice

• Notice of HIPAA Enrollment Rights

• Patient Protections Notice

• ADA Notice Regarding Wellness Program

[Company’s Plan DOES NOT Provide Part D Creditable Coverage]

• Medicare Part D Notice of Non-Creditable Coverage

• Children’s Health Insurance Program (CHIP) Notice

• Women’s Health and Cancer Rights Act (WHCRA) Notice

• Notice of HIPAA Enrollment Rights

• Patient Protections Notice

• ADA Notice Regarding Wellness Program

In the event of a conflict between the official Plan Document and these legal notices, the SPD, or any other communication related to the Plan, the official Plan Document will govern. If you have any questions or would like to obtain a paper version of these notices, please contact People Operations.

Disclaimer: The intent of this analysis is to provide the recipient with general information regarding the status of, and/or potential concerns related to, the recipient’s current employee benefits issues. This analysis does not necessarily fully address the recipient’s specific issue, and it should not be construed as, nor is it intended to provide, legal advice. Furthermore, this message does not establish an attorney-client relationship. Questions regarding specific issues should be addressed to the person(s) who provide legal advice to the recipient regarding employee benefits issues (e.g., the recipient’s general counsel or an attorney hired by the recipient who specializes in employee benefits law).