Creditable Coverage Letter: What It Means and What to Keep
Quick answer: This letter is your plan's yearly proof that your drug coverage is at least as good as Medicare Part D. Keep it. If you join Part D later, it is the proof that can stop the permanent late-enrollment penalty. Sixty-three days without creditable coverage starts the penalty clock, so a letter that says non-creditable means act now.
Every fall, your employer, union, or other drug plan is supposed to send you a short letter. It has one job: to tell you whether your drug coverage is creditable. Creditable means your plan is expected to pay, on average, at least as much as Medicare Part D. That is the whole definition, and it is the only thing the letter certifies.
What this letter is, and the one word that matters
Read the letter for one word: creditable or non-creditable. If it says creditable, your coverage is at least as good as Part D, and you can keep it without starting the late-enrollment penalty clock. If it says non-creditable, your coverage is not expected to pay as much as Part D. Time on it counts toward a penalty if you join Part D later.
Do not confuse this letter with the Annual Notice of Change, which also arrives each fall from a Medicare Advantage or Part D plan. That notice describes next year's benefits and costs. The creditable coverage letter is about one thing only: whether your drug coverage measures up to Part D.
The letter comes from your plan, your employer, or your union. It is not from Medicare, and it is not a bill. Keep it. It is the proof you will need later.
Why it matters: the 63-day rule and the penalty
The letter matters because of a clock. If you go 63 days or more without Part D or other creditable coverage, and you join Part D later, you pay a late-enrollment penalty. The penalty is permanent in most cases: it stays on your Part D premium for as long as you have Part D.
The penalty is 1% of the national base beneficiary premium for each full month you went without Part D or creditable coverage. Medicare rounds the amount to the nearest 10 cents. The base premium changes every year, so the same gap costs a different amount depending on when you join.
For 2026, the national base beneficiary premium is $38.99. Medicare's own example is a person who went 17 months without Part D or creditable coverage: 17% of $38.99 is $6.63, which rounds to $6.60 a month. That $6.60 is added to the plan's premium every month.
For 2027, the base premium is $41.33, according to a CMS memo dated July 28, 2026. The same 17-month gap in 2027 would be 17% of $41.33, which is $7.03, rounded to $7.00 a month.
Two things soften the rule. First, a gap of less than 63 days does not trigger it, and once the penalty does apply, only full months count. Second, if you receive Extra Help, the Low Income Subsidy, you do not pay the penalty while you receive it. That protection ends if the Extra Help ends, so tell your plan the moment your Extra Help status changes.
What counts as creditable, and what does not
Medicare lists four sources of coverage that can be creditable: an employer or union plan, TRICARE, the Department of Veterans Affairs, and the Indian Health Service. Your plan decides whether its coverage meets the standard and tells you in the letter. You do not decide it yourself.
Three things are not coverage at all, and no letter can make them creditable: discount cards, free clinics, and drug samples. If all you have is a discount card, you have no creditable coverage, and the 63-day clock is already running.
Two cautions before you act on the letter. First, joining a Part D plan can cost you your employer or union coverage, and it can cost your spouse or dependents their coverage too. Ask your benefits administrator what happens before you enroll, not after. Second, keep the letter and any form your plan asks you to return. If the plan sends you a form, return it by the deadline on it. Medicare tells you to keep your notice and your records, because a Part D plan may ask for them when you enroll.
The five times your plan must send the notice
Your plan does not send this letter once and forget it. Federal guidance requires a notice in five situations:
- Every year, before October 15, ahead of the annual open enrollment period.
- Before your Part D Initial Enrollment Period, the three months before, the month of, and the three months after the month you turn 65.
- Before the effective date of coverage for a person who is eligible for Medicare and joining the plan.
- When your coverage ends, or when its creditable status changes.
- Whenever you ask for one.
If you never got a letter, ask for one. Call your plan or your benefits administrator and ask for the creditable coverage notice in writing. Keep a note of the date you asked and the name of the person you spoke to. The letter is your proof, and asking for it is free.
The 2027 change: last year's verdict may not carry forward
This is the part that makes old advice stale. The way a plan proves its coverage is creditable changed for 2027.
For years, plans could use a shortcut called the simplified determination method, set out in 2009, which compared the plan's expected payout to a fixed percentage. Under a CMS final rule dated April 2, 2026, that shortcut is retired for plan years beginning on or after January 1, 2027. From 2027, a plan must use either a full actuarial check, a detailed calculation by the plan's experts, or a revised simplified method. The revised method raises the bar to 73% for 2027, up from 72% in 2026 and 60% before that. Account-based plans, such as health reimbursement arrangements, individual coverage health reimbursement arrangements (ICHRAs), flexible spending accounts, and health savings accounts, are exempt from the disclosure requirement from 2027. The year 2026 was a transition year, when either method was allowed.
What it means for you is simple: do not assume this year's letter says the same thing as last year's. A plan that was creditable in 2026 may not be creditable in 2027. Read the new letter when it arrives, and if it says non-creditable, act on it.
Your letter says non-creditable: act now
A non-creditable letter is not a bill and not a fine. It is a warning with a clock attached. Every full month you stay on non-creditable coverage without Part D adds 1% to the penalty you will pay if you join Part D later. That clock starts only after you have gone 63 days without creditable coverage.
Your move depends on where you are in the year. During open enrollment, October 15 to December 7, you can join a Part D plan. If you lost creditable coverage, you get a Special Enrollment Period, covered in the next section. Either way, ask your benefits administrator two questions before you enroll. Will joining Part D end my employer or union coverage? Will it end coverage for my spouse or dependents? The answer changes the decision.
Do not throw the non-creditable letter away. It proves when your coverage stopped being creditable, and that date matters if a penalty is ever calculated.
You lost your creditable coverage: the 2-month window
If you lose creditable coverage through no fault of your own, Medicare gives you a Special Enrollment Period to join a Part D plan. The window is two full months after the month you lose your coverage, or two full months after you are told your coverage is no longer creditable. Whichever date is later is the one that counts.
Do not confuse this with the Part B window. Part B gives you eight months after employer coverage ends. Part D gives you two. The two-month window is short, so start the day you get the notice, not the day your coverage ends.
While you wait, the 63-day clock is also running. The two-month enrollment window and the 63-day grace period overlap, but they are not the same rule. Enroll inside the window and, if your gap stays under 63 days, no penalty starts. Miss it, and you generally wait for the next enrollment period while the penalty grows by 1% of the base premium for each full month without coverage.
Charged a penalty you do not owe: the 60-day reconsideration
If a Part D plan charges you a late-enrollment penalty and you believe your coverage was creditable, you can ask Medicare to reconsider. You have 60 days from the date on the penalty letter to file the request.
The request goes to an independent reviewer, C2C Innovative Solutions, not to your plan. The form is the Part D Late Enrollment Penalty Reconsideration Request Form, Form CMS-10191. The reviewer generally decides within 90 days.
Attach copies of your creditable coverage letters as proof. Send copies, never originals. If you miss the 60 days, you can still file, but you must explain the delay in writing.
If you were never told your coverage was not creditable, say so in your request and attach any letters you did receive. That is why the letters matter, and why keeping them, and asking for one when you never got one, is worth the effort.
The Part B trap: this letter says nothing about Part B
The most expensive mistake with this letter is reading it as a verdict on all of Medicare. It is not. It is about Part D drug coverage only.
Part B has its own rules. If you delayed Part B because you had employer coverage, you generally get an eight-month Special Enrollment Period after that coverage ends. That eight-month window has nothing to do with the two-month Part D window in the section above, and this letter proves nothing about Part B.
So keep the two decisions apart. Use this letter to decide about drug coverage. Use your employer coverage end date, and a call to 1-800-MEDICARE or your local SHIP counselor, to decide about Part B.
Scam red flags: what a real letter never asks for
No federal agency has reported a wave of fake creditable coverage letters. The scam risk is different: a caller or a letter uses the real letter as a pretext to get your numbers.
A real creditable coverage letter usually comes by mail from your plan, your employer, or your union. It tells you a fact about your coverage. It never asks you to pay anything, and it never asks for your Medicare number, your Social Security number, or your bank details.
Treat any letter or call that does ask as a scam. The Federal Trade Commission warned in September 2025 that scammers impersonate Medicare during open enrollment. They say you need a new or updated card, then ask for your Medicare, bank account, or credit card number. Real Medicare cards are free and mailed automatically. Real representatives do not call, text, or email you out of the blue.
If a letter asks for money or numbers, do not call the number printed on it. Call your plan at a number you already have, or call 1-800-MEDICARE at 1-800-633-4227. Report the letter to the FTC at ReportFraud.ftc.gov and to your local Senior Medicare Patrol at 1-877-808-2468.
What to keep, and where
Keep every year's creditable coverage letter, creditable or not. File them with your Medicare papers, in the order they arrive. Keep the envelope too; the postmark shows when it arrived.
Keep the form your plan sends you, and a copy of anything you return to the plan. Keep a note of every call: the date, the name of the person you spoke to, and what they said. If a penalty is ever charged, those notes and letters are your evidence.
If the letter confuses you, do not guess. Take a photo of it and run it through the Letter Explainer below for a plain-English reading, or call your local SHIP counselor for free, local help. The number for SHIP is 1-877-839-2675.
Got a Medicare letter you do not understand?
Upload a photo or paste the text for a plain-English explanation, a checklist, and a call script.
Check It Now — Free →Frequently asked questions
Do I really need to keep this letter?
Yes. Keep every year's letter, creditable or not. It is the only proof that your drug coverage measured up to Part D. It is also the proof a Part D plan or a reconsideration reviewer will ask for if a penalty is ever charged. File it with your Medicare papers and keep it for as long as you have Part D.
What if I lost my letter?
Ask your plan or your benefits administrator for a written copy. A written copy from the plan is the proof a Part D plan or the reconsideration reviewer will accept. Keep a note of the date you asked and the name of the person you spoke to.
My letter says my coverage is not creditable. What do I do now?
Your coverage is not expected to pay as much as Part D, so time on it counts toward the penalty after 63 days without creditable coverage. Join a Part D plan during open enrollment, October 15 to December 7, or during the two-month Special Enrollment Period if you lost creditable coverage. Before you enroll, ask your benefits administrator whether joining Part D will end your employer or union coverage, or coverage for your spouse or dependents.
How much is the late-enrollment penalty?
It is 1% of the national base beneficiary premium for each full month you went without Part D or other creditable coverage. It is rounded to the nearest 10 cents, added to your premium, and generally stays for as long as you have Part D. The 2026 base premium is $38.99, so a 17-month gap costs $6.60 a month. The 2027 base premium is $41.33, so the same gap costs $7.00 a month. If you receive Extra Help, you do not pay the penalty while you receive it. Our Medicare Late-Enrollment Penalty Calculator works out the amount for your own gap.
Can I delay Part B the same way I delayed Part D?
No. This letter is about drug coverage only and proves nothing about Part B. Part B has its own rules, including an eight-month enrollment window after employer coverage ends. Do not use this letter to decide about Part B. Call 1-800-MEDICARE or your local SHIP counselor if you are unsure.
I never got a creditable coverage letter. What do I do?
Your plan must send one every year before October 15. Call your plan or your benefits administrator and ask for it in writing. If you are later charged a penalty, you can ask for reconsideration. If you were never told your coverage was not creditable, say so in your request. Keep a note of who you called and when.
Related: Medicare Denial Letter: How to Appeal in 5 Steps →
Related: Extra Help or MSP Letter? What It Really Means →
Related: Does Medicare Call You About Benefits? What Is Real →
Related: Medicare Open Enrollment Scams: 5 Red Flags (Oct 15-Dec 7) →
Related: Your Medicare ANOC Letter, Explained →
Related: New Medicare Card in the Mail? Is It Real or a Scam? →
Related: Medicare Scams Explained: Calls, Texts & Fake Websites →
Related: Letter Explainer: Understand Any Letter in Plain English →
Related: Free Scam Text Checker for Seniors →
Sources: Medicare.gov, Creditable prescription drug coverage; Medicare.gov, The Part D Late Enrollment Penalty (fact sheet 11222); Medicare.gov, Understanding Medicare Advantage & Medicare Drug Plan Enrollment Periods (fact sheet 11219); Centers for Medicare & Medicaid Services, Annual Release of Part D National Average Monthly Bid Amount (July 28, 2026); Centers for Medicare & Medicaid Services, Contract Year 2027 Medicare Advantage and Part D Final Rule Fact Sheet (April 2, 2026); Centers for Medicare & Medicaid Services, Part D Late Enrollment Penalty Reconsideration Request Form (Form CMS-10191); Federal Trade Commission, This Medicare Open Enrollment Season, Learn How to Protect Yourself From Scams (September 30, 2025). Last updated November 2, 2026.