An employer's group prescription drug coverage is 'creditable coverage' for Medicare Part D purposes if:
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Answer & full 3-part explanation (select an option above, or peek)
Why A is correct
Creditable coverage for Part D means prescription drug coverage whose expected value is at least equal to standard Medicare Part D coverage. Employers and pharmacy benefit sponsors must give enrollees an annual notice stating whether their coverage is creditable. The notice matters because a person who goes without Part D or other creditable coverage faces the Part D late-enrollment penalty — 1% of the national base beneficiary premium added to the monthly premium for each uncovered month, for life. Whether the employer pays the premium or the employee uses the plan is irrelevant to creditable status.
Why the other options are wrong
- B) Creditable status is measured by the value of the coverage compared with Part D, not by who pays the premium. The value test compares coverage to Part D, not cost.
- C) Unused coverage can still be creditable; the test is the value of the coverage itself, not whether claims were filed. The coverage's value is the test, not its use.
- D) A generic-only plan generally does not meet the value standard; creditable coverage must be at least as good as standard Part D. Generic-only coverage generally fails the value comparison with Part D.
Memory hook
Creditable = at least as good as Part D, and the employer must say so in writing every year. Otherwise, the 1%-per-month penalty waits.