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In April 2024, the Centers for Medicare and Medicaid Services (CMS) unveiled the Final Part D Redesign Program Instructions for calendar year 2025, followed by the Draft Instructions for 2026 for calendar year 2026 on January 10, 2025. These documents provide comprehensive insights and guidance on the Part D benefit changes introduced by the Inflation Reduction Act of 2022 (IRA), significantly affecting the creditable coverage status of employer-sponsored prescription drug plans.
Creditable Coverage
For employers offering prescription drug coverage to Medicare Part D-eligible individuals, it's crucial to inform both the individuals and CMS about the creditable status of their coverage, ensuring it meets or exceeds Medicare Part D standards. Existing CMS guidance outlines several methods for determining creditable coverage:
- Employers with insured plans should first consult their carriers to confirm the creditable status.
- For self-insured plans or when carriers haven't made a determination, a simplified method can be used if the coverage meets specific design criteria. Otherwise, an actuarial method is required.
Part D Redesign Program Instructions for CY 2025
Regarding the Part D Redesign Program for 2025, the CMS initially indicated that the simplified determination method would be phased out due to IRA-induced changes. However, the Final Instructions allow its continued use for 2025, provided the group health plan sponsors are not seeking the retiree drug subsidy.
Draft Part D Redesign Program Instructions for CY 2026
The Draft Part D Redesign Program Instructions for CY 2026 propose a revised simplified determination method that aligns more closely with the enhanced Part D standard benefit under the IRA. This revision requires coverage to cover, on average, at least 72% of a participant's drug expenses, up from the current 60%, to qualify as creditable. CMS is open to comments on these draft instructions until February 10, 2025, with the final version expected by April 7, 2025. Download the bulletin for more details.
Additional Resource
CMS’ Part D Improvements webpage
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