When it comes to employee benefits compliance, Medicare Part D reporting and notices often raise a lot of questions. For employers, this responsibility may feel like just another box to check, but it directly impacts employees, retirees, and their families who rely on prescription drug coverage.
Why Medicare Part D Reporting Matters
Medicare Part D provides prescription drug coverage to eligible individuals. For active employees over age 65, retirees, and their dependents, the timing of enrollment is critical. If an individual delays enrolling in Medicare Part D and has a gap of more than 62 days without “creditable coverage,” they may face a permanent late enrollment penalty.
This is where employers come in. Employers must notify both Medicare-eligible employees (and their Medicare-eligible dependents) and the Centers for Medicare & Medicaid Services (CMS) whether their prescription drug coverage is creditable (at least as good as the standard Medicare Part D Rx plan) or non-creditable.
Two Key Responsibilities for Employers
- Report to CMS: Employers must complete and submit the Disclosure to CMS Form (Form CMS-10198) online. This is the only approved method, and it must be done annually.
- Notify Medicare-Eligible Individuals: A Creditable Coverage Notice (or Non-Creditable Notice) must be distributed by October 14 each year, right before Medicare Open Enrollment begins on October 15.
Employers must also provide notices:
- Before an employee’s initial enrollment period for Medicare Part D
- Before coverage becomes effective for a Medicare-eligible individual
- If requested by an employee or beneficiary
- If coverage ends or its “creditable” status changes
What’s Changing?
Recent updates under the Inflation Reduction Act have reshaped Medicare Part D:
- The infamous “donut hole” has been eliminated.
- In 2025, the maximum OOP (out-of-pocket) for the standard Medicare Part D plan was reduced from $8,000 to $2,000 (some plans became non-creditable as a result)
- In 2026, the maximum OOP will be $2,100.
These changes may shift a plan’s creditable status, which triggers an employer’s responsibility to send updated notices.
Consequences for Non-Compliance
While there are no specific penalties for failing to complete reporting or distribute notices, consider the potential impact on Medicare-eligible employees and their beneficiaries. Failure to disclose could also be considered a violation of fiduciary duty. In addition, employers cannot qualify for the Retiree Drug Subsidy (RDS) without proper disclosures.
Employers have a legal and ethical responsibility to ensure employees and retirees understand whether their prescription drug coverage is creditable. By meeting reporting and notice deadlines, employers not only stay compliant but also protect their workforce from costly penalties.
Medcom makes compliance easier with our Required Notices Packet, which includes the Medicare Part D Notice along with other key notices tailored to each employer. Contact our sales team today to learn more!