Coverage that’s as good as Medicare is creditable coverage, meaning the plan benefits are up to the same standards as Medicare. When a person has creditable coverage, they may postpone enrollment in Medicare. Creditable coverage allows beneficiaries to delay enrolling without worrying about being late enrollment penalties.
Examples of Creditable Coverage Under Medicare
The most common type of creditable coverage is a large employer group plan. Meaning, a company that employs 20 or more 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.
Additionally, 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 and may not be creditable coverage under Medicare. Further, a variety of government programs are also considered creditable coverage. Examples of other types of coverage are individual, group, and student health plans.
What is Creditable Coverage for Medicare Part D?
Prescription plans are the most common type of creditable coverage. A plan is creditable for Part D as long as it meets four qualifications.
- Pays at least 60% of the prescription cost
- Covers both brand-name and generic medications
- Offers a variety of pharmacies
- Does not have an annual benefit cap amount, or has a low deductible
What is Creditable Coverage for Medicare Part B?
Delaying Part B enrollment is common. Creditable coverage usually comes from a current employer plan. The Part B penalty increases incrementally for every year you lack creditable coverage.
Thus, 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
The Notice of Creditable Coverage works as proof of your coverage when you first become eligible for Medicare. Your Notice of Creditable Coverage comes in the mail each year for those who obtain drug coverage through an employer or union.
This notice will inform you if your current coverage is considered creditable. 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?
You must pay the late enrollment penalty, in addition to your premium, if you delay enrollment. Therefore, delaying beyond 63 days without creditable coverage may result in higher monthly costs.
The penalty for Part D is equal to 1% of the national base beneficiary premium times the number of months you went without creditable coverage. In addition, 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 Creditable Coverage?
COBRA can be creditable for Part D, but COBRA is NOT creditable under Part B.
Is Veterans Benefits Creditable Coverage?
VA benefits are only creditable coverage under Part D. VA benefits are NOT 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 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’ll 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.