Medicare Part D Notice (Creditable Coverage)

Employers that offer prescription drug coverage must tell Medicare-eligible employees, dependents, COBRA continuants, and retirees whether that coverage is creditable, so they can avoid a Part D late-enrollment penalty. This is separate from the employer's online disclosure to CMS.

See the Step-by-Step ProcessView Model Notice Letters
What A written disclosure telling Medicare-eligible individuals whether each plan option's Rx coverage is creditable or non-creditable (use CMS model letters). Separate from the employer's Disclosure to CMS filing.
Who All Medicare-eligible individuals covered by, or eligible to enroll in, your plan (employees, dependents, COBRA, retirees).
When Annually before Oct 15 (Part D open enrollment) and at other trigger times (see Deadlines). The method for determining creditable status is changing for plan years 2026 and later; complete that step first. See the Determine Part D Creditability page.
Risk If a Medicare-eligible individual doesn't receive this notice and goes 63 or more days without creditable coverage, they may face a permanent Part D late-enrollment premium surcharge. Employers who miss or mishandle notices face CMS and DOL audit exposure and remediation obligations.
Oct 15
Annual deadline

Distribute before October 15, the start of Part D open enrollment.

63 days
LEP gap rule

A 63-day-or-longer gap without creditable coverage can trigger a permanent Part D surcharge.

Annual
Re-test status

Re-test creditable status each renewal; Part D parameters change annually.

When to Send Who Notes
Annually before Oct 15 All Medicare-eligible individuals covered by or eligible for your plan Best practice: include in open-enrollment packets.
Prior to an individual's initial Part D enrollment period Newly Medicare-eligible employee/dependent Helps avoid the LEP (63-day gap rule).
Before the effective date for any Medicare-eligible person who joins your plan New enrollees (employees, COBRA, dependents, retirees) Include with enrollment materials when possible.
Upon request Any Medicare-eligible individual Provide promptly; keep a copy of what you sent.
When coverage ends or changes creditable status Affected Medicare-eligible individuals Send as soon as practicable when status changes.
When: Annually before Oct 15
Who: All Medicare-eligible individuals covered by or eligible for your plan
Notes: Best practice: include in open-enrollment packets.
When: Prior to initial Part D enrollment period
Who: Newly Medicare-eligible employee/dependent
Notes: Helps avoid the LEP (63-day gap rule).
When: Before the effective date of joining your plan
Who: New enrollees (employees, COBRA, dependents, retirees)
Notes: Include with enrollment materials when possible.
When: Upon request
Who: Any Medicare-eligible individual
Notes: Provide promptly; keep a copy of what you sent.
When: Coverage ends or changes creditable status
Who: Affected Medicare-eligible individuals
Notes: Send as soon as practicable when status changes.

Separate requirement: the CMS Online Disclosure (filed by the plan sponsor) is not this notice; see the Disclosure to CMS page for that filing's timing and instructions.

  • Creditable status determination for each Rx option (carrier confirmation letter or actuary report). Complete this step first; see the Determine Part D Creditability page for the full process.
  • CMS Model Notice Letter (Creditable or Non-Creditable) to personalize (plan name, contact, dates). See the Model Notice Letters section below.
  • List of Medicare-eligible individuals covered by or eligible for your plan (employees, dependents, COBRA, retirees).
  • Distribution plan (paper/HRIS/email) and any required e-delivery consent.
  • Recordkeeping template (version/date; who/when/how delivered).
1
Inventory plansWith Rx coverage (including COBRA/retiree options).
2
Determine creditable statusFor each plan option; see the Determine Part D Creditability page for the full process, including which method applies for your plan year.
3
Select the correct model letterCreditable vs. Non-Creditable, and personalize with your plan name, contact, and dates. See the Model Notice Letters section below.
4
Build your recipient listAll Medicare-eligible covered or eligible individuals.
5
DistributeAnnually before Oct 15, and at the other trigger times in Deadlines. Use paper or e-delivery that meets notice rules; keep proof.
6
If status changesIf a plan moves from creditable to non-creditable (or vice versa), send updated notices promptly.
7
DocumentThe determination method, distribution, and copies of notices.
8
Repeat annuallyRe-test status each renewal since Part D parameters can change.

Related but separate: the plan sponsor's CMS Online Disclosure is a different filing; see the Disclosure to CMS page for timing and instructions.

  • Who must receive: Medicare-eligible individuals who are covered by or eligible for your plan (employees, dependents, COBRA, retirees).
  • Electronic delivery: Use HRIS/portal/email and retain delivery/read logs. Provide paper on request.
  • Combined vs. separate: You may include with enrollment packets or send separately; timing still applies.
  • Language/accessibility: Provide accessible formats and translations where appropriate; follow CMS model formatting.
  • Copy of the exact notice(s) sentCreditable or Non-Creditable, with version/date.
  • Creditable status supportCarrier confirmation letter or actuary report (and your method election for 2026 if applicable).
  • Distribution logWho/when/how, or HRIS acknowledgment export.
  • Status-change noticesAnd dates sent.

Common traps

Using the wrong model (Creditable vs. Non-Creditable): Confirm the status of each plan option before selecting the letter.
Missing COBRA and retiree populations: Include all Medicare-eligible covered or eligible individuals, not just active employees.
Not re-testing at renewal: Part D parameters change annually; re-test creditable status every year. See the Determine Part D Creditability page.
Missing the October 15 deadline by bundling notices with late open enrollment materials: Set an internal deadline of October 1 to give yourself buffer.

FAQs

Is this the same as the CMS Online Disclosure?

No. This notice goes to individuals: employees, dependents, COBRA continuants, and retirees. The CMS Online Disclosure is a separate employer-level filing on the CMS website with its own deadlines and process. See the Disclosure to CMS page for details.

What is the Part D late-enrollment penalty (LEP)?

A permanent premium surcharge added to a person's Part D premium if they went 63 or more consecutive days without creditable drug coverage after their initial Part D enrollment window. The surcharge stays for as long as the person has Part D, so receiving this notice on time genuinely matters to your employees.

What happens if we miss sending the notice?

There is no single enumerated civil fine for a missed participant notice, but the consequences are real: affected individuals may face LEP exposure and file complaints; CMS and DOL reviews can result in required remediation and re-notification; and the administrative burden of correcting a missed distribution is significant. Keep an audit packet: creditable status support, final notices, recipient lists, delivery proofs, and any status-change notices.

  • RDS plans: Retiree Drug Subsidy sponsors typically rely on actuarial equivalence rather than the simplified methods; coordinate notices with RDS determinations. The revised 2026 simplified method does not apply to RDS plans.
  • Multiple Rx options: Determine status for each option and send the correct model letter for the coverage each person actually has.
  • Carve-outs and union plans: Coordinate with carriers and TPAs to confirm status and ensure model language aligns with actual coverage terms.
  • Move to non-creditable: If a previously creditable option becomes non-creditable, notify affected individuals promptly so they can consider enrolling in Part D without incurring an LEP.

CMS provides ready-to-use model notice letters: select the one that matches your plan's status, fill in your plan name, plan year, and a contact name and phone number, and you're ready to distribute. Keep a dated copy of the version sent each year with your ACA records.

Which letter do you need?

  • Creditable coverage: Use the CMS Model Creditable Coverage Notice if your plan's Rx coverage meets or exceeds the actuarial value of standard Part D coverage.
  • Non-creditable coverage: Use the CMS Model Non-Creditable Coverage Notice if your plan's Rx coverage falls below that threshold. This one is especially important; it tells Medicare-eligible individuals they should consider enrolling in a Part D plan to avoid a late-enrollment penalty.

Both model letters are available at: CMS Model Creditable/Non-Creditable Notice Letters

If you offer multiple plan options with different creditable status, send the appropriate model for each option to each affected individual.