What You Need to Know About Creditable Coverage

About

Medicare 101

Current Clients

What You Need to Know About Creditable Coverage

Health insurance form on a table with pen, calculator and glasses stock image

By Daniel Petkevich

Jan 18, 2023

Can you stick with employer insurance or move to Medicare?

As soon as you turn 65, you are likely inundated with mail and people reaching out to get you to sign up for Medicare. But you may not need to sign up if you are still working and have creditable coverage. How can you tell if you have creditable coverage? Read on to find out.

Stay Up to Date on Medicare!

What is creditable coverage?

Creditable coverage is insurance coverage that you can keep instead of Medicare. For your insurance coverage to qualify as creditable, it must have benefits as good if not better than what you get with Medicare. Typically, your private insurance coverage is creditable if you work for a company with at least 20 employees. But there are exceptions, so we recommend you check with your company's human resources department to verify that you have creditable coverage.

Employer/Union and other group health plans are required to provide Medicare-eligible employees with a Notice of Creditable Coverage each year by October 15th.

What if you don't have creditable coverage?

Suppose you do not have creditable coverage and you choose not to enroll in Medicare. In that case, you will likely face a lifetime Late Enrollment Penalty (LEP) in addition to your monthly premium. For

Part B

, this penalty is 10% of the base national monthly premium ($185 for 2025) for every 12 months you were without coverage. For

Part D

, this penalty is 1% of the "national base beneficiary premium" ($36.78 in 2025) for every month you were without coverage, rounded to the nearest $0.10.

For example, if you turned 65 this year and did not enroll in Medicare for a year despite not having creditable coverage, your monthly premiums would be $203.50 for Part B ($185 + $18.50) and $41.98 ($36.78 + $5.20) for Part D.

In the example above, $36.78 is an average premium, but the penalty will be in addition to whatever your monthly premium is for your specific plan.

What if you have creditable coverage?

The decision on whether to keep your insurance is something we've covered before when considering

employer's insurance

, either yours or

your spouse's

. The general rule of thumb is that if you have creditable coverage, stick with it. If you aren't a fan of your current insurance and want to switch to Medicare, talk with one of our licensed insurance experts at

Fair Square Medicare

. We can give you an honest assessment of how your current policy stacks up to what you can get with Medicare.

Some people decide to double up on coverage. For example, people like to add

Medicare as a secondary payer

option while private insurance pays primary. Our agents can work with you to figure out what's best, but the important thing to know is that you may not need to sign up for Medicare if you have creditable coverage. You will have a special enrollment period (SEP) to enroll in Part B and/or Part D when you retire.

What about Part D creditable coverage?

The standards for Part D are as follows. To be considered creditable, your private health insurance plan must:

Pay at least 60% of prescription drug costs
Cover name brand and generic drugs
Include a variety of pharmacies to choose from
Not have a low deductible or an annual benefit cap amount

As mentioned earlier, you should receive a Notice of Creditable Coverage.

Notice of Creditable Coverage

The

Notice

of Creditable Coverage

is the form your employer or union sends you by October 15 to inform you that your health plan meets the minimum standards required by Medicare. You don't need to do anything but hang on to this notice if you join a Part D plan later. Medicare's website recommends that you do not send in your Notice of Creditable Coverage.

Is COBRA considered creditable coverage?

COBRA is an individual policy created to mimic your former employer's group health plan. COBRA is not creditable coverage. So you will need to sign up for Medicare. Referencing the primary vs. secondary distinction from earlier, COBRA pays secondary to Medicare because it does not offer suitable coverage. In addition to COBRA following insurance options are not replaceable for creditable coverage:

Some retirement plans
CHAMPVA
(for Parts A & B)
Veterans Benefits (for Parts A & B)
TRICARE
(for Parts A & B)

CHAMPVA, Veterans Benefits, and TRICARE might be creditable coverage for your Part D prescription drug plan (however, for Veterans Benefits if a non-VA doctor prescribes a prescription they will not fill/cover it).

GoodRx

is not considered creditable (although it is a great resource for coupons and information). Reference the four qualifications above to see if your prescription drug plan is considered creditable.

Takeaway

You can keep your employer's health insurance policy as long as it's creditable coverage. If you don't have creditable coverage, you should sign up for Medicare as soon as possible. You could face penalties for not switching to Medicare, depending on your situation. If you have a unique case not listed above, call us today at 1-888-376-2028. Our team of experts is trained to help work through all kinds of problems.

Stay Up to Date on Medicare!

Your Medicare One-Stop-Shop

Your guide to Medicare Parts A & B, Medicare Advantage, and Medigap. 100% free.

Get the Fair Square Bulletin

Medicare savings tips, helpful guides, and more.

888-572-6033

info@fairsquaremedicare.com

About

Medicare 101

Current Clients

Medicare Supplement Plans

Medicare Advantage Plans

Fair Square 2025

•

Notice of Privacy Practices

Virgil Insurance Agency, LLC (DBA Fair Square Medicare) and www.fairsquaremedicare.com are privately owned and operated by Help Button Inc. Medicare supplement insurance plans are not connected with or endorsed by the U.S. government or the federal Medicare program. This is a solicitation of insurance. A licensed agent/producer may contact you. Medicare Supplement insurance is available to those age 65 and older enrolled in Medicare Parts A and B and, in some states, to those under age 65 eligible for Medicare due to disability or End-Stage Renal disease. Virgil Insurance Agency is a licensed and certified representative of Medicare Advantage HMO, HMO SNP, PPO, PPO SNP and PFFS organizations and stand-alone PDP prescription drug plans. Each of the organizations we represent has a Medicare contract. Enrollment in any plan depends on contract renewal. The plans we represent do not discriminate on the basis of race, color, national origin, age, disability, or sex. Plan availability varies by region and state. For a complete list of available plans please contact 1-800-MEDICARE (TTY users should call 1-877-486-2048), 24 hours a day/7 days a week or consult www.medicare.gov. © 2025 Help Button Inc

We do not offer every plan available in your area. Any information we provide is limited to those plans we do offer in your area. Please contact Medicare.gov or 1-800-MEDICARE to get information on all of your options.

MULTIPLAN_FairSquareMedicare_01062022_M

What You Need to Know About Creditable Coverage

Can you stick with employer insurance or move to Medicare?

Stay Up to Date on Medicare!

What is creditable coverage?

What if you don't have creditable coverage?

What if you have creditable coverage?

What about Part D creditable coverage?

Notice of Creditable Coverage

Is COBRA considered creditable coverage?

Takeaway

Stay Up to Date on Medicare!

Recommended Articles

More of our articles

Your Medicare One-Stop-Shop

About

Medicare 101

Current Clients

Medicare Supplement Plans

Medicare Advantage Plans