Your Medicare Part D Notice Is Due October 14, and the 2027 Test Is Stricter

This is the compliance deadline that slips past small and mid-sized employers almost every year, because nobody is chasing it. There is no form to file in October, no portal that nags you, and no vendor that automatically does it on your behalf. It just quietly comes due.

This year there is a second reason to pay attention. The test that decides what your notice says changed.

What the notice is, in plain terms

If your health plan includes prescription drug coverage, you have to tell every Medicare-eligible person covered by it whether that drug coverage is at least as good as Medicare Part D. That is what creditable means. It is a yes or no statement, and you have to make it in writing once a year.

The point is to let someone decide whether to enroll in Part D. If your coverage is creditable, they can stay on your plan and pick up Part D later without a penalty. If it is not creditable, they need to know that now, while they can still act on it.

The deadline is October 14, and the people who need it are broader than you think

Medicare open enrollment runs October 15 through December 7. The regulation requires the notice to go out before that window opens, which puts the practical deadline at October 14.

CMS is specific about who has to receive it, and the list is wider than most employers assume:

• Medicare-eligible active employees and their dependents
• Medicare-eligible COBRA participants and their dependents
• Medicare-eligible disabled individuals on the plan
• Retirees and their dependents

Two of those catch people out. A spouse on your plan can be Medicare-eligible when the employee is nowhere near 65. And a Medicare-eligible person on COBRA is still your responsibility for this notice.

Because identifying exactly who is Medicare-eligible is harder than it sounds, a lot of employers send the notice to everyone on the plan. That is a reasonable approach and it is what we usually suggest.

What changed for 2027

For years there were two ways to decide whether your coverage was creditable. You could have an actuary run the numbers, or you could use a shortcut CMS published in 2009 called the simplified determination method. The shortcut asked whether the plan covered brand and generic drugs, offered reasonable pharmacy access, and was designed to pay at least 60 percent of participants drug costs, along with a couple of conditions about deductibles and annual maximums.

Most employers who were not buying an actuarial opinion used the shortcut. It was free and it was easy to document.

In the contract year 2027 final rule, published in April 2026, CMS retired that 2009 method and wrote a revised version into the regulation instead. CMS also declined to give anyone a grace period, saying it did not believe further delay was justified.

The new number is 73 percent, and that detail is getting reported wrong

A fair amount of what is circulating right now says 72 percent. That was the figure for 2026 only, during a one-year window when employers could use either the old method or the new one.

For 2027, the regulation says 73 percent. CMS also noted the figure is projected to keep climbing, reaching 75 percent by 2030, with future years set through guidance rather than new rulemaking.

So the practical change is this. The bar moved from 60 percent to 73 percent, and the easier of the two old paths is gone. The actuarial route is still available and unchanged. Employers who sponsor a retiree drug subsidy plan were never eligible for the shortcut and still have to do an annual actuarial determination.

What this actually means for a high deductible plan

This is where we want to be careful, because the commentary has gotten ahead of what CMS said.

You will read that high deductible plans and plans with heavy drug coinsurance are going to fail the new test. CMS did not say that. What CMS said is that plans with higher deductibles might look less likely to clear the threshold, and that the risk can be mitigated by things like not applying the deductible to maintenance medications, allocating the deductible sensibly between medical and drug spend, or offering lower cost sharing than standard Part D once the deductible is met.

It is also worth knowing that CMS removed the old conditions about annual and lifetime benefit maximums and about the deductible amount. The test is simpler than it was, just set higher.

The honest summary is that a higher bar means more plans sit near the line than used to, and a plan near the line needs to be tested rather than assumed. If your plan cleared 60 percent comfortably but you have never known the actual number, this is the year to find out.

A quieter change worth knowing about

Account-based plans are now out of scope. CMS exempted health reimbursement arrangements, flexible spending accounts and health savings accounts from the creditable coverage disclosure requirement. If you have been sending notices for a standalone HRA, you can stop.

The second deadline almost everyone forgets

The October notice goes to your people. There is a separate disclosure that goes to CMS, and it is filed online through a form on the CMS site rather than mailed.

It is due in three situations:

• Within 60 days after the start of each plan year. For a calendar year plan, that means by March 1.
• Within 30 days after you terminate prescription drug coverage.
• Within 30 days after your creditable status changes.

If your plan year does not start in January, work from your own plan year rather than the calendar. The rule is 60 days after your plan year begins, so a July 1 plan year puts the filing at the end of August, not March 1.

That middle bullet is the one to watch this year. If your plan has been creditable and the new test flips it, that is a change in status, and the clock on the CMS filing starts then rather than at your next renewal.

Why this matters to the person receiving it

It is easy to treat this as paperwork. For the employee it is not.

If someone goes 63 days or longer without creditable drug coverage after their initial enrollment window closes, and they later sign up for Part D, Medicare adds a late enrollment penalty to their premium. It is calculated as one percent of the national base beneficiary premium for every full month they went uncovered, rounded to the nearest ten cents.

For 2027 the national base beneficiary premium is 41.33 dollars, so each uncovered month adds roughly 41 cents a month. That sounds small until you understand two things about it. It compounds with every month they waited, and it stays on the premium for as long as they have Part D coverage. Someone who waited three years is still paying it in their eighties.

The penalty is waived for people who qualify for Extra Help. For everyone else, it is permanent.

That is the real risk in a notice that says creditable when the plan is not. The employer gets a compliance problem. The employee gets a bill for the rest of their life.

A local note

We work with employers across Maryland, the District and Northern Virginia, and the pattern we see with this notice is consistent. Larger employers have a carrier or a benefits administration platform producing it. Companies in the twenty to two hundred employee range are usually doing it themselves, if they are doing it at all, and often from a template someone saved several years ago.

If that describes you, the template is probably still fine. CMS has not reissued its model notices, which still carry a 2011 date stamp. What is not fine is reusing last year’s answer about whether the plan is creditable without rechecking it against this year’s test.

What to do in the next ten days

1. Find out whether your plan is creditable for 2027. Ask your carrier or your broker directly. Do not assume last year carries over.
2. Pull the correct CMS model notice, creditable or non-creditable, depending on that answer.
3. Send it to everyone on the plan, including people on COBRA, by October 14.
4. Keep proof of what you sent and when.
5. Put the CMS online disclosure on the calendar for within 60 days of your plan year start.

If you are not sure where your plan lands, that is a normal place to be this year, and it is a quick conversation rather than a project. We are glad to run the determination and send you the right notice.

Paid leave is the other compliance deadline moving right now. If you have Maryland employees, the FAMLI Declaration of Intent window closes November 15, 2026. Our 50-state paid family and medical leave advisory walks through that decision and the rest of the map.

Frequently Asked Questions

When exactly is the Medicare Part D creditable coverage notice due?

Before Medicare open enrollment opens on October 15, which makes the practical deadline October 14 each year.

Who has to receive the notice?

Medicare-eligible active employees and their dependents, Medicare-eligible COBRA participants and their dependents, Medicare-eligible disabled individuals on the plan, and retirees and their dependents. Many employers simply send it to everyone on the plan.

What is creditable coverage?

Prescription drug coverage that is at least as good as standard Medicare Part D coverage. If your plan is creditable, a Medicare-eligible person can delay Part D without a penalty.

What changed for 2027?

CMS retired the 2009 simplified determination method and replaced it with a revised version. A plan now has to be designed to pay on average at least 73 percent of participants prescription drug costs. The previous benchmark was 60 percent.

Is the number 72 percent or 73 percent?

72 percent applied to 2026 only, during a one-year period when either method could be used. For 2027 the regulation says 73 percent.

Do we still have to send notices for our HRA or FSA?

No. CMS exempted account-based plans, including health reimbursement arrangements, flexible spending accounts and health savings accounts, from the creditable coverage disclosure requirement.

What happens if we send the wrong notice?

If you tell someone their coverage is creditable when it is not, and they skip Part D on that basis, they can end up with a late enrollment penalty added to their Medicare premium for as long as they have Part D coverage.

Is there a penalty for the employer for missing the deadline?

There is no direct fine attached to the notice itself, but the disclosure is a plan compliance obligation and a missed or inaccurate notice creates real exposure if an employee is harmed by relying on it.

Related reading from Capitol Benefits

• 2026 Health and Welfare Plan Compliance Calendar, the other dates worth putting on the calendar now
• COBRA Compliance Checklist for HR, because COBRA participants need this notice too
• HSAs for Late Career Employees, where Medicare timing and account-based plans intersect