What's Creditable Drug Coverage?

Are you used to getting your health coverage through an employer? After you become eligible for Medicare, your employer may continue to provide additional health coverage, like a Medicare Advantage plan

When that coverage includes prescription drugs, it's important to know whether it's creditable. 

What does creditable mean? 

Creditable means as good as. Creditable drug coverage is as good as Medicare's standard prescription drug coverage. It's expected to pay, on average, at least as much as a Medicare Part D prescription drug plan. 

Why is it important?

Having creditable drug coverage now saves you from a Part D penalty later. When you become eligible for Medicare, you're expected to have Part D drug coverage within a certain time frame. To avoid a penalty, sign up within your time frame when you're first eligible for Medicare.

If you wait, you'll pay more for your coverage when you do enroll. This is called a late enrollment penalty. Having creditable drug coverage protects you from that penalty. 

If you recently lost creditable drug coverage, make sure you get Part D coverage within 63 days.

How do I know if my prescription coverage is creditable?

The employer providing your coverage is required to send you a notice each September. It'll tell you if your plan's drug coverage is creditable. This letter serves as proof of creditable drug coverage.

You can also ask your employer.

What happens if I don't have creditable drug coverage? 

If you don't have creditable coverage and you decide to sign up for a Medicare drug plan later, you might have to pay a penalty. This penalty is added to your Medicare Part D premium. 

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