Coverage that’s as good as Medicare is considered creditable coverage, meaning the plan benefits are as good as Medicare. When a person has creditable coverage, they may postpone enrollment in Medicare. Creditable coverage allows beneficiaries to delay without worrying about being penalized and forced to pay a later enrollment penalty.
Examples of Creditable Coverage Under Medicare
The most common type of creditable coverage is a large employer group plan. Meaning, a company employs 20+ people. When working for an employer, you likely receive health coverage through the company. If the company you work for has more than 20 employees, you have creditable coverage for Medicare.
The same is true when you’re on your spouse’s large employer group health plan. An employer with small group insurance is a company with less than 20 employees. Small group plans may not be considered creditable coverage under Medicare.
A variety of government programs are also considered creditable coverage. Other plan types are individual, group, and student health plans.
Medicare Part D Creditable Coverage
Prescription plans are most common for creditable coverage. A Part D plan is a creditable coverage as long as it first meets four qualifications.
- Creditable Part D must pay at least 60% of the prescription cost
- Must cover both brand-name and generic medications
- Plans must offer a variety of pharmacies
- Must not have an annual benefit cap amount, or it must have a low deductible
Medicare Part B Creditable Coverage
Delaying Part B enrollment is common. Creditable coverage usually comes from a current employer plan. The Part B penalty is 10% every year that you don’t have creditable coverage. Then you pay the penalty cost plus your premium when you finally enroll in Part B.
The Medicare Modernization Act requires insurers, whose policies may or may not include prescription drug coverage, to notify Medicare-eligible policyholders whether their coverage is considered creditable coverage.
Entities Required to Provide Proof of Creditable Coverage for Medicare
- Group health plans
- Department of veterans affairs
- Federal state
- Local governments
Notice of Creditable Coverage
This notice will inform you if your current coverage is considered creditable. Keeping this notice in a safe place is a good idea. Make sure to keep the notice filed safely with your personal documents for easy access. It comes in the mail annually each September before the Annual Enrollment Period begins.
What Happens if You don’t Have Creditable Coverage?
Delaying past 63 days without creditable coverage may result in higher monthly costs. You must pay the late-enrollment fee. The penalty for Part D is equal to 1% of the “national base beneficiary premium.” Take that number times the number of months you went without creditable coverage. The total is your late penalty cost. The Part B Penalty is 10% for every year you go without coverage. Neither of the penalties ever goes away.
Examples of Coverage that is NOT Creditable Under Medicare
Is COBRA Considered Creditable Coverage?
COBRA can be considered creditable for Part D, but COBRA is NOT considered creditable under Part B.
Is Veterans Benefits Considered Creditable Coverage?
VA benefits are only considered creditable coverage under Part D. VA benefits are NOT considered creditable under Part A and Part B. This is something that is HIGHLY miscommunicated to veterans. Even if you have medical coverage under the VA, there are still many reasons to enroll in Medicare coverage to work with your VA benefits.
Is TRICARE or CHAMPVA Considered Creditable Coverage?
Whether you have CHAMPVA or TRICARE, you’ll need to enroll in both Part A and Part B of Original Medicare when you’re first eligible for Medicare to keep your CHAMPVA or TRICARE benefits as well as avoid late enrollment penalties.
Is FEHB Considered Creditable Coverage?
No, FEHB is NOT considered creditable coverage. However, some beneficiaries choose to still delay enrolling in Medicare when they have FEHB benefits. Some may find the FEHB benefits to be more cost-effective and vice versa.
I had proof of creditable coverage but lost it, how do I get another copy?
You would need to contact your benefits administrator to get proof of your creditable coverage.
How to Find Out if Your Coverage is Creditable Under Medicare
Once you know which parts of Medicare you currently have creditable coverage for, you can determine what parts of Medicare you need to enroll in, or if you can delay Medicare until you lose your creditable coverage.
Medicare guidelines and regulations regarding creditable coverage can be a little intimidating. We know the lingo, and have the knowledge and resources to help you quickly navigate the Medicare maze. Whether you have creditable coverage or not, we can help. Give us a call today, or use our rate form to see all your Medicare options in one place now.