Creditable Coverage

Creditable Coverage Explained

Every year, employer groups are required to determine if the prescription drug coverage they offer their employees is as good as or better than what’s available with a Medicare Part D Prescription Drug plan. This is known as creditable coverage. A plan’s creditable coverage status is determined by actuarial value using actuarial guidelines from the Centers for Medicare and Medicaid Services (CMS).

It’s important for employer groups to inform their Medicare-eligible employees of the plan’s prescription drug coverage creditability status because of the Medicare Part D Late Enrollment Penalty. The Part D Late Enrollment Penalty kicks in when a Medicare-eligible individual goes 63 days or longer without creditable drug coverage. If a Medicare-eligible employee is assessed with the Part D Late Enrollment Penalty, they will pay a monthly premium penalty when they finally do enroll in a Medicare Part D plan and that Late Enrollment Penalty never goes away. The individual will pay that additional amount every month for as long as they are enrolled in a Medicare Part D plan.

Find out how a Medicare Part D Late Enrollment Penalty is calculated.

What Employer Groups Need to Do

Employer groups are required by law to send an annual notification to members who are currently or will become Medicare eligible during the calendar year. The notice, which needs to be sent prior to Oct. 15, explains whether or not the employer group’s prescription drug coverage is creditable.

All employers, regardless of funding type or group size, are also required to log in to the CMS website and notify the government of their health plan’s creditability status. Additional information is available in the Creditable Coverage section of the CMS website.

What Medical Mutual Does to Help

On an annual basis, Medical Mutual tests group health plans that have prescription drug coverage through our pharmacy benefit manager, Express Scripts (ESI). Our findings are available to group officials who are then required to notify their Medicare-eligible employees of the plan’s creditability status.

Medical Mutual sends the required annual creditable coverage notifications to our individual plan members and, as a courtesy, to members of our small group customers and Multiple Employer Welfare Arrangement (MEWA) groups with fewer than 50 eligible employees. Large-group employers (51+) are responsible for sending the notices to their employees. CMS publishes model disclosure communication templates that can be accessed here. 

Medical Mutual’s 2025 Creditable Coverage Test Results

Medical Mutual tested group health plans that have prescription drug coverage with Medical Mutual through ESI based on benefit designs as of Aug. 15, 2024. The vast majority of our plans were deemed to be creditable for 2025, including all Mutual Health Services plans.

For Medical Mutual groups in the under 100 and MEWA segments, click here to view a list of Medical Mutual plans (2-50, 51-99 and COSE Benefit Plan MEWA) and creditability status for 2025. 

For Medical Mutual 100+ groups, you can use this flyer to determine your plan’s 2025 creditability status, or you can reach out to your Medical Mutual representative for more information.