While you are comparing Medicare plans, you may come across a requirement for “creditable coverage,” especially while reviewing Medicare Part D plans. This is because it is possible for you to decline Medicare Part D coverage without penalty, but ONLY if you have another form of “creditable coverage” in place.
Although it sounds like creditable coverage is connected to your finances or your credit, it’s not. As one provider describes it, creditable coverage is simply coverage that is “as good as” Medicare Part D coverage. In other words, if you decline Medicare Part D, you may only do so if you have another form of prescription drug coverage that is as good as the coverage that Medicare Part D provides.
In general, prescription drug plans provided by a current or former employer or union will be creditable, and it’s up to your insurance company to update you on whether your plan is considered creditable. It is important to keep a copy of the annual notice to show proof of the coverage’s credibility status, therefore ensuring that you do not incur a penalty.
According to healthcare.gov, there are several types of insurance plans that may be considered creditable:
- A group health plan
- Individual health insurance
- Student health insurance
- CHAMPUS and TRICARE
- The Federal Employees Health Benefits Program
- Indian Health Service
- The Peace Corps
- Public Health Plan (any plan established or maintained by a State, the US government, or a foreign country)
- Children’s Health Insurance Program (CHIP)
- Or a state health insurance high risk pool
Keep in mind that the credibility of your coverage can change from year to year and that you should be notified annually regarding its status. If you are unsure about your plan’s credibility, we can help! Call us today to learn more about your options.