If your company sponsors a group health plan with prescription drug coverage, October 15 is a deadline you cannot treat as an administrative formality.
Each year, employers must provide Medicare Part D creditable or non-creditable coverage notices to Medicare-eligible individuals covered by the plan before Medicare’s Annual Enrollment Period. The notice tells employees and their covered family members whether the employer’s prescription drug coverage is expected to pay at least as much as standard Medicare Part D coverage.
The 2026 notice deadline is October 15. At the same time, employers need to prepare for an important 2027 change: CMS has retired the legacy 2009 Simplified Determination Method for plan years beginning on or after January 1, 2027.
That means the conclusion from last year may not automatically carry forward.
What “creditable coverage” means
Creditable coverage means your employer-sponsored prescription drug coverage is expected to pay at least as much as standard Medicare Part D coverage.
The determination matters because a Medicare-eligible individual who goes 63 days or longer without creditable prescription drug coverage may face a Medicare Part D late enrollment penalty. That penalty is generally permanent.
An inaccurate or missing notice can therefore cost an employee money for life. Although there is no separate statutory penalty attached to the notice itself, the disclosure is still legally required. Providing incorrect information can also create real liability and represents a serious service failure for the people who rely on your benefits program.
Who must receive the notice?
The notice must be provided to all Medicare-eligible individuals covered under the prescription drug plan. That includes:
- Medicare-eligible active employees
- Medicare-eligible spouses and dependents
- Medicare-eligible COBRA participants and their dependents
- Medicare-eligible disabled individuals covered under the drug plan
- Medicare-eligible retirees and their dependents
Do not limit your process to the active employee population. If a spouse, dependent, COBRA participant, retiree, or disabled individual is covered under the plan and is Medicare-eligible, that person belongs in your notice process.
This is one reason a simple email to the active employee group may not be enough.
October 15 is not the only notice deadline
The annual notice must be provided before October 15 each year. However, your responsibility also applies at several other points.
You must provide the notice:
- Before an individual’s Medicare Part D Initial Enrollment Period
- Before the individual’s effective date of employer plan coverage
- Within 30 days after the plan’s creditable status changes from creditable to non-creditable, or from non-creditable to creditable
- Upon request
In other words, October 15 is the annual checkpoint, not the entire compliance process. Your benefits administration procedures should identify events that trigger an additional notice during the year.
The 2027 determination method is different
For plan years beginning on or after January 1, 2027, CMS has retired the legacy 2009 Simplified Determination Method.
For 2027, a plan must use either:
- An actuarial determination, or
- The revised Simplified Determination Method
An actuarial determination is a formal analysis of whether the plan’s prescription drug benefit is expected to provide value at least equal to standard Part D coverage. The revised simplified method provides a more structured way to make the determination without relying on the retired 2009 framework.
Under the revised method, a plan is creditable if it:
- Provides reasonable coverage for brand-name, generic, and biological drugs
- Provides reasonable access to retail pharmacies
- Is designed to pay, on average, at least 73% of participants’ prescription drug expenses
This change does not mean that every plan’s creditable status will change. It does mean you should not assume that a plan that passed the old test will receive the same answer under the new framework.
The 2027 method should be placed on your compliance calendar now, particularly if your plan year begins January 1.
Account-based plans receive a 2027 exemption
Beginning in 2027, account-based plans (including HRAs, ICHRAs, HSAs, and FSAs) are exempt from the Medicare Part D creditable coverage disclosure requirements.
For these arrangements, sponsors will not need to make the Part D creditable coverage determination, provide the Part D notice, or complete the CMS disclosure for coverage beginning on or after January 1, 2027.
The exemption applies to the account-based arrangement itself. If you also sponsor a traditional group health plan with prescription drug coverage, that traditional plan may still be subject to the creditable coverage determination and notice requirements.
Do not combine the two categories when reviewing your obligations. A company may have an exempt account-based arrangement and a separate group medical plan that still requires Part D compliance.
For more background on account-based benefits, see our overview of how an HRA works.
The employer remains responsible
Many small and midsized employers delegate the creditable coverage process to a carrier, third-party administrator, or pharmacy benefit manager. Delegation can be practical, but it does not transfer the legal responsibility away from the plan sponsor.
The plan sponsor is responsible for:
- Making the creditable or non-creditable determination
- Providing accurate notices
- Identifying everyone who must receive a notice
- Meeting the delivery deadlines
- Completing the CMS disclosure
A fully insured plan’s carrier may help calculate the result. A self-insured plan’s TPA or pharmacy benefit manager may provide information or perform the analysis. You should still verify who made the determination and obtain the conclusion in writing.
Plans should be tested at least annually before the plan year begins and whenever the prescription drug benefit changes.
Do not overlook the CMS disclosure
The notice to individuals and the disclosure to CMS are two separate requirements.
In addition to distributing notices, plan sponsors must complete the CMS “Disclosure to CMS” online form reporting whether the plan’s prescription drug coverage is creditable or non-creditable.
The CMS disclosure is generally required:
- Annually, within 60 days of the plan year start
- Within 30 days after termination of a prescription drug plan
- Within 30 days after a change in creditable coverage status
A calendar-year plan generally has 60 days from January 1 to complete its annual disclosure. Your process should track this separately from the October 15 participant notice.
You can review the official requirements and CMS resources on the CMS Creditable Coverage page.
Delivery methods matter
You may deliver the notice electronically if the Department of Labor’s electronic disclosure safe harbor is met.
When using electronic delivery, employees should also be told that they are responsible for sharing the notice with their Medicare-eligible spouses and dependents. Make sure your process reaches covered individuals who do not use the employer’s electronic system.
Hand delivery and mail are also available. A separate mailing is needed for spouses and dependents who do not live with the employee.
If you include the notice with annual enrollment materials, it must be prominent and conspicuous. Use:
- At least 14-point font
- A separate box
- Bolded or otherwise offset formatting
- Placement on the first page of the plan information
- CMS model language that references the page number where the notice appears
Burying the notice in a large enrollment packet makes it easier to miss and harder to demonstrate that the required information was properly presented.
Your October 15 checklist
Before the deadline, confirm that you have:
- Confirmed whether your prescription drug plan is creditable.
- Verified who performed the determination and obtained the carrier, TPA, or PBM conclusion in writing.
- Identified every Medicare-eligible person covered under the plan, including spouses, dependents, COBRA participants, disabled individuals, and retirees.
- Distributed the appropriate creditable or non-creditable notices by October 15.
- Used a compliant delivery method and separately addressed covered spouses and dependents who do not live with the employee.
- Completed the CMS Disclosure to CMS form within the applicable deadline.
- Calendared the 2027 method change and confirmed whether your plan will use the revised simplified method or an actuarial determination.
- Reviewed the plan again if the prescription drug benefit changes.
This is a compliance obligation that many employers delegate and never verify. That approach can leave gaps in the determination, the recipient list, the delivery record, or the CMS filing.
At Total Benefit Solutions, we help employers review plan documents, verify creditable status, coordinate with carriers and administrators, identify the people who need notices, and make sure the notices actually go out on time. We serve as your benefits advocate, not just another handoff in the process.
Visit www.totalbenefits.net or call (215) 355-2121 to discuss your October 15 notice process and prepare for the 2027 rule change.
This article provides general information and is not legal, tax, or compliance advice. Plan sponsors should consult qualified counsel and confirm applicable requirements with CMS.
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