Creditable Coverage Notice Deadlines now October 15


June 29, 2011

Medicare Part D Annual Enrollment Period Pushed Forward to October 15;
Creditable Coverage Notices Will Need
to Change

The Affordable Care Act1 made significant changes to the Medicare program, one of which was to move the annual enrollment period for Medicare Part D and Medicare Advantage plans to earlier in the year, in order to provide for a more efficient annual enrollment process.2 Recently, the Centers for Medicare & Medicaid Services (CMS) updated the Part D model Notices of Creditable and Non-Creditable Coverage to reflect the new Medicare annual enrollment period of October 15 through December 7 starting in 2011.3

Background on the Notices

Most plan sponsors that provide prescription drug coverage to Medicare-eligible individuals are required to provide those individuals with a Notice of Creditable (or Non-Creditable) Coverage stating whether their prescription drug coverage is “creditable” or not. This Notice must be provided regardless of whether the plan sponsor is applying for the Medicare Retiree Drug Subsidy (RDS). Coverage is considered creditable if, on average for all plan participants, the coverage is expected to pay out at least as much as the standard Medicare Part D benefit.

To meet this Notice requirement on an annual basis and before the Notices are issued, plan sponsors need to determine whether coverage for the upcoming year is creditable. After the plan sponsor determines whether the coverage is creditable, it must provide the Notices to Medicare-eligible individuals who are covered under, or who apply for, the plan’s prescription drug coverage, including Medicare beneficiaries who are active employees, retirees, disabled and/or are receiving coverage under the Consolidated Omnibus Budget Reconciliation Act (COBRA), as well as Medicare beneficiaries covered as spouses or dependents of active employees or retirees. The only plan sponsors that are exempt from this requirement are those that contract with a Medicare Part D plan to provide prescription drug benefits (either a stand-alone Prescription Drug Plan or a Medicare Advantage plan with drug coverage) and those that have applied to CMS to act as a Medicare prescription drug plan themselves.4

CMS has periodically updated its guidance on this Notice requirement and revised its model Notices. The last guidance was issued on July 1, 2009, and previous model Notices were issued for use on or after January 1, 2009.


According to the July 2009 guidance, plans must provide the Notices of Creditable (or non-Creditable) Coverage at the following times:

  • Prior to the Medicare annual enrollment period,
  • Prior to an individual’s initial opportunity to enroll in Part D,
  • Prior to the effective date of coverage for any Medicare-eligible individual that joins the plan,
  • When the plan’s prescription drug coverage changes (i.e., ends, is no longer creditable or becomes creditable), and
  • Upon request by an individual.

If the Notice is provided to all plan participants annually prior to the beginning of the Medicare annual enrollment period, CMS will consider the first two items to be satisfied.

Notices that must be provided prior to the annual enrollment period should now be provided prior to October 15 (rather than prior to November 15, the old deadline).

Implications for Plan Sponsors

Plan sponsors that opt to send annual Notices before each Medicare annual enrollment period to all plan participants need to send the next round of notices by October 15, 2011. Plan sponsors that send annual Notices only to Medicare Part D-eligible individuals also must send an annual notice to these individuals before the Medicare annual enrollment period (which now begins October 15, 2011). In addition, plan sponsors need to provide a Notice to each new participant who may be Medicare-eligible.

While the latest model Notices, which can be used immediately, are available on CMS’s website, plan sponsors should review the models carefully to ensure that they accurately reflect both the nature of the coverage and the rights that individuals have if they lose coverage. Plan sponsors that choose to use the model Notices drafted by CMS should take care to download the most recent version of the model Notices. As has always been the case, these model Notices will require a fair amount of customization to provide useful information to a plan’s participants.

Plan sponsors that apply for the RDS will need an actuarial attestation that the plan’s prescription drug coverage is actuarially equivalent to the standard Part D benefit. If that attestation provides the basis for the plan sponsor’s determination that the coverage is creditable, plan sponsors may also want to move up the time frame for securing that attestation. Plan sponsors that are not applying for the RDS also need to determine annually and before they distribute their Notices (now by October 15, 2011) whether their prescription drug coverage is creditable, but they are not required to obtain an actuarial attestation.