Creditable prescription drug coverage is drug coverage expected to pay, on average, at least as much as Medicare drug coverage.
Why the term matters
After you become eligible for Medicare, going 63 consecutive days or more without Medicare drug coverage or other creditable prescription drug coverage may lead to a Part D late enrollment penalty if you join later.
Who decides whether coverage is creditable
Your current plan or benefits provider must tell you whether its prescription drug coverage is creditable. Do not decide from the plan name, premium, or a comparison with one person's prescriptions.
Possible examples
Medicare lists coverage from a current or former employer or union, TRICARE, the Indian Health Service, and the Department of Veterans Affairs as types that could be creditable. The specific plan must confirm its status.
What is not drug coverage
Doctor samples, discount cards, free clinics, and prescription discount websites are not prescription drug insurance and do not count as creditable coverage.
Keep the notice
Save every Notice of Creditable Coverage and any letter about prior coverage. A Medicare plan may ask for this information. If the plan sends a form, return it by the stated deadline so the plan can evaluate a possible late enrollment penalty.
Related terms
- Medicare drug coverage (Part D): optional coverage offered by private companies approved by Medicare.
- Late enrollment penalty: an amount that may be added to the Part D premium after a qualifying uncovered period.
- Formulary: the plan's list of covered prescription drugs.