What is Creditable Drug Coverage?Posted by Medicare Made Clear
Medicare defines “creditable coverage” as coverage that is at least as good as what Medicare provides. Therefore, creditable drug coverage is as good or better than Medicare Part D.
Why Creditable Drug Coverage Matters in Medicare
Creditable drug coverage matters because it may allow you to avoid the Part D late enrollment penalty. The penalty is charged if you enroll in a Medicare Part D plan after your Initial Enrollment Period (IEP) ends, unless you qualify for an exception.
The Part D penalty can sneak up on you if don’t know the rules. Here’s a summary of what you need to do to delay Part D enrollment without penalty:
- Qualify for a Medicare Special Enrollment Period.
- Get a “notification of creditable coverage” from your previous plan.
- Enroll in a Part D plan within 63 days of losing or leaving creditable drug coverage.
If you are working past age 65 and plan to delay Medicare enrollment, talk with your employer benefits manager. He or she can tell you if your employer plan provides creditable drug coverage.
How Much is the Medicare Part D Late Enrollment Penalty?
The late penalty for Medicare Part D is an additional 1 percent of the premium amount for each month you’re late. You pay the penalty for as long as you have Part D.
For example, you enroll in a Part D plan that starts on November 1 but your IEP ended on June 30. As a result, you are four months late signing up for Part D.
Your Part D penalty would be 4 percent of the premium because you signed up four months late.
How to Get Medicare Part D Coverage
You can get Medicare prescription drug coverage in a standalone Part D plan or as part of a Medicare Advantage plan (Part C). Private insurance companies offer the plans under contract with Medicare.
You may enroll when you turn 65 or delay enrollment until later if you have creditable drug coverage. Either way, you can call the shots with confidence when you know the rules.
For more information, explore MedicareMadeClear.com or contact the Medicare helpline 24 hours a day, seven days a week at 1-800-MEDICARE (1-800-633-4227), TTY 1-877-486-2048.