Medicare And Creditable Drug Coverage • Peters & Milam Insurance Services • Santa Barbara, California
It doesn't happen often, but occasionally an employer-sponsored health plan does NOT meet the creditable coverage definition required by Medicare. Medicare Part D requires that the drug coverage of the employer plan is expected to pay, on average, as much as the standard Medicare prescription drug coverage pays.
This problem impacts those Medicare eligible employees who are still covered by their employer's plan. The employer plan should notify the employee if their plan coverage is creditable or not. If the coverage is not creditable and you terminate your employer sponsored plan, you will be considered a late enrollee into Medicare Part D & will have a lifetime premium penalty.
The vast majority of traditional employer-sponsored plans are creditable. The most likely non-creditable plans would be high deductible HSA plans where drugs aren't covered until the large deductible is met. This could also occur for some lower cost, high deductible non-HSA plans, if the drug benefit is subject to the large medical plan deductible.
For those who are Medicare eligible and looking to leave their employer sponsored plan, it is important that they sign up for plans that offer credible coverage at their next open enrollment period. If you need help determining how to proceed in this confusing area, please reach out to our Medicare agents Angie Kile (firstname.lastname@example.org) or Tarah Thompson (email@example.com) and they will be more than happy to advise you!
- Dave Peters
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