The Washington Report

September 10, 2025

While we do our best to provide timely updates, it is possible that the information shared in the newsletter may change after our publication deadline.

Health

 

It’s Time to Review Prescription Drug Benefits to Prepare for the Annual Medicare Part D Notice
Each year, prior to October 15, a Medicare Part D notice of creditable (or non-creditable) coverage must be provided to all Part D-eligible individuals under an employer-sponsored prescription drug plan. Creditable coverage means the employer-sponsored group health plan’s prescription drug coverage is, on average, for all plan participants, expected to pay out as much as standard Medicare Part D benefits. While employers are not required to offer creditable coverage, they must communicate the prescription drug coverage’s status as creditable or non-creditable. While a “simplified method” is available, most employers should review their prescription drug plan’s creditable status with their actuary. A Part D-eligible individual, who does not enroll in Part D when first eligible, will be subject to a permanent late enrollment penalty upon a later enrollment in Part D if the individual does not maintain creditable coverage elsewhere – so it’s important information to understand for plan participants. 

For calendar year plans, it’s prudent to communicate the 2025 plan’s creditable status and the upcoming 2026 plan’s creditable status with the annual Medicare Part D notice distribution, especially if the plan (or a plan option) is moving from creditable to non-creditable status. Due to Part D improvements under the Inflation Reduction Act, some plans may lose creditable status in 2025 or in 2026, or in future years. 

A few additional tips:

When to provide the Medicare Part D Notice

The Medicare Part D notice should be provided:

1. Every year prior to the Medicare Part D election period beginning October 15;
2. Prior to an individual’s initial enrollment period for Part D;
3. Prior to the effective date of coverage for any Medicare-eligible individual that joins the employer’s plan;
4. Whenever the entity no longer offers prescription drug coverage or changes the coverage so that the creditable status changes; or
5. Upon request (if upon request, the notice must be personalized).

If the creditable coverage disclosure notice is provided to all plan participants (i.e., not just those who are Part D-eligible) annually, prior to October 15 of each year, the Centers for Medicare & Medicaid Services (CMS) will consider items 1 and 2 to be met.

This guidance clarifies that “prior to” means that the individual must have been provided the Disclosure Notice within the past 12 months. 

Disclosure to CMS
Don’t forget to complete the disclosure to CMS each year within 60 days of the beginning of the plan year. Aon provides a reminder bulletin on this requirement each year in January. 

Resources
Aon’s most recent bulletin on the impact of the Inflation Reduction Act, CMS Finalizes Instructions on Impact of Inflation Reduction Act on Creditable Coverage Testing for Employer Plans, is available here.

Aon’s 2025 Medicare Part D Disclosure Reminder bulletin is available here.