What is 'creditable coverage' in the context of Medicare Part D?
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Answer & full 3-part explanation (select an option above, or peek)
Why A is correct
Creditable coverage, in the Part D context, is prescription drug coverage that is actuarially determined to be at least as good as the standard Medicare Part D coverage. A beneficiary who maintains creditable drug coverage through an employer plan or other source does not incur the Part D late enrollment penalty when they later enroll. The agent should advise clients to keep evidence of creditable coverage, since the determination is what shields them from the 1%-per-month lifetime penalty. Employer plans must provide an annual creditable coverage notice so the beneficiary has written proof; without it, the agent should caution the client that a late enrollment penalty may apply when Part D is eventually chosen.
Why the other options are wrong
- B) The coverage must include prescription drug benefits and meet the standard; an employer medical plan without qualifying drug coverage is not creditable.
- C) Medigap policies sold to new beneficiaries may not include drug benefits, and Medigap drug coverage does not count as creditable Part D coverage.
- D) Pharmacy discount cards are not insurance coverage and are not treated as creditable coverage for the late-enrollment penalty.
Memory hook
Creditable = drug coverage as good as Part D's own bar. Keep it and the late penalty never knocks.