Who is responsible for creditable coverage?
Whether you are a broker, a third party administrator, or the employer yourself, the same answer applies. This page sets out who carries the obligation, who usually does the work, and where those two come apart.
It's the employer. Even when somebody else does the work.
Ask around a benefits team in September and you will get three answers. The carrier ran the test, so it must be on them. The broker sends the notices, so it must be on them. The administrator handles compliance, so surely it is on them.
CMS does not read it that way. The rule points at the entity providing the drug coverage, and for a group health plan that is the employer sponsoring it. Fully insured or self-funded, and whether or not anyone there has heard of the requirement.
Which is why “the carrier told us it was creditable” is a reasonable place to start and a poor place to finish. It answers the question. It does not give the employer anything to hand over when someone asks for evidence eight months later.
42 CFR §423.56
The disclosure requirements fall on the entity providing prescription drug coverage to Part D eligible individuals, rather than on whichever party performed the testing or produced the paperwork.
This is a summary. Read the full section on eCFR.
Who usually does it
In most books the work is split between several parties, and nobody ever writes down who has what.
- The carrier tests its own plan design and reports back
- A pharmacy benefit manager supplies the drug data behind it
- The broker or administrator keeps the calendar and sends the notices
- Someone in HR signs it off and files it
- An actuarial firm gets pulled in when a plan looks borderline
Who gets the call
One name. If the determination was wrong, or late, or nobody can lay hands on it, the employer is the party being asked.
- The employer sponsoring the plan
Nobody expects an HR manager to model actuarial value on a Tuesday afternoon. Hand the work to someone who does it properly. Just do not assume the exposure went with it.
Who does what, and who answers for it.
| Task | When | Usually handled by | Responsible party |
|---|---|---|---|
| Determine whether the drug coverage is creditable | Each plan year, before notices go out | CarrierBroker or administratorEmployer | Plan sponsor |
| Send the annual notice to Medicare-eligible individuals | Before October 15 | Broker or administratorEmployer | Plan sponsor |
| Send notices at the other trigger points | New enrollment, status change, on request | Broker or administratorEmployer | Plan sponsor |
| Complete the online disclosure to CMS | Within 60 days of the plan year starting | Broker or administratorEmployer | Plan sponsor |
| Disclose again on a change or termination | Within 30 days of either | Broker or administratorEmployer | Plan sponsor |
| Keep evidence of how the answer was reached | Ongoing | Broker or administratorEmployer | Plan sponsor |
What the obligation actually involves.
Work out whether the coverage is creditable
Compare the plan's prescription drug benefit against the CMS defined standard benefit for that year. The answer can change from one year to the next without anyone touching the plan, because the benchmark moves.
Tell the people it affects
Medicare-eligible individuals covered by the plan need written notice of whether their coverage is creditable, before the annual Medicare enrollment period opens. Notices are also required at several other points during the year.
Tell CMS
A separate online disclosure to CMS is due within sixty days of the plan year beginning, and again within thirty days if the status changes or the plan terminates. This one is missed more often than the participant notice.
Four common misconceptions.
Misconception #1
The carrier tested the plan, so the carrier is responsible for it.
What is actually true
The carrier is responsible to you under your agreement with them. They are not the party CMS looks to, and a carrier statement does not move the disclosure duty off the employer.
Misconception #2
Sending the annual notice by October 15 is the whole job.
What is actually true
The participant notice is the visible half. The online disclosure to CMS is separate, runs on the plan year rather than the calendar, and is the one most often missed.
Misconception #3
If the plan was creditable last year, it is creditable this year.
What is actually true
The benchmark is recalculated annually. A plan can cross the line without a single change to its design, which is why the test is run each year rather than once.
Misconception #4
Nobody is really checking, so the risk is theoretical.
What is actually true
The consequence usually lands on an employee, not the employer. Someone who goes without creditable coverage can face a permanent late enrollment penalty on their Part D premium, and they will ask their employer why they were not told.
The obligation stays put. The paperwork does not have to.
Creditable runs the determination, produces the notice, and keeps a record of how the answer was reached, so whoever is asked can answer.