Medicare Part D Changes: Employer Coverage Impact

1.5 minute read

The Inflation Reduction Act of 2022 (IRA) includes several cost-saving measures for Medicare Part D, potentially affecting employer-sponsored health plans.

Key benefits include:

• Insulin at $35/month per prescription and recommended adult vaccines are available without cost sharing;
• $2,000 annual cap on Medicare Part D out-of-pocket prescription drugs costs; and
• All Medicare Part D plans must allow enrollees to pay prescription costs in capped monthly installments via the Medicare Prescription Payment Plan, rather than all at once.

Lower Medicare costs might lead to increased expenses for employers offering prescription drug coverage, as pharmacies and providers adjust prices to offset revenue losses. This could also impact the creditable coverage status of employer-sponsored plans.

Employers offering prescription drug coverage to Medicare Part D-eligible individuals must inform them and the Centers for Medicare and Medicaid Services (CMS) if their coverage is creditable, meaning it matches or exceeds Medicare Part D standards. With recent IRA changes, CMS will update the method for determining creditability to better reflect actuarial equivalence.

Employers and benefit advisors should proactively manage costs and develop cost containment strategies. They should also monitor guidance on creditable coverage methods for 2026 to prepare for any changes. Find more resources and updates on the CMS Part D Improvements webpage. Download the bulletin for more details.

Important Dates

October 15, 2024: Part D enrollees can opt into the Medicare Prescription Payment Plan for 2025 from this date until the plan year starts.

April 7, 2025: CMS will publish final Part D redesign instructions for 2026, including updated creditable coverage methodology.