2026 Medicare Part D Creditable Coverage annual notification
Every employer that provides pharmacy coverage must assess on an annual basis if their pharmacy plan(s) are "creditable" under Medicare rules. To be "creditable," a plan's prescription drug coverage must be at least as rich as the standard Medicare Part D plan for the upcoming plan year. Employers must notify all Medicare Part D-eligible persons covered by the prescription drug plan of its creditability status by October 15.
Effective 2025, the Centers for Medicare & Medicaid Services (CMS) made significant changes to the standard Medicare Part D plan design, which includes a $2,000 maximum out-of-pocket amount ($2,100 for 2026). This, along with other benefit improvements, means employers’ plans have to meet a higher creditability threshold for 2025 and beyond.
Why is this important?
If the pharmacy benefits provided by the employer’s plan are not creditable, a Medicare-eligible person can enroll in another creditable plan offered by their employer or their spouse’s employer, or enroll in a Part D plan, to avoid paying penalties on their Part D premiums for the rest of their lives. If a Medicare-eligible beneficiary goes without creditable coverage for more than 63 days, when he or she later enrolls in a Part D plan, they will be assessed premium penalties at a rate of 1 percent per month for the time that they went without creditable coverage.