---
title: CMS Finalizes New Simplified Method for 2026 Coverage Credibility
description: The CMS recently issued Final Part D Redesign Program Instructions for 2026, detailing changes which affect the creditable coverage status of employer-sponsored prescription drug coverage.
---

[Employee Benefit News for School, City and County Employers ](https://blog.nisbenefits.com)

# [CMS Finalizes New Simplified Method for 2026 Coverage Credibility](https://blog.nisbenefits.com/new-simplified-method-2026-coverage-credibility)

 Written by [Steve Smith](https://blog.nisbenefits.com/author/steve-smith) | Apr 16, 2025 11:45:00 AM

*1.5 minute read*

On April 7, 2025, the Centers for Medicare and Medicaid Services (CMS) released the [Final Part D Redesign Program Instructions](https://www.cms.gov/files/document/final-cy-2026-part-d-redesign-program-instruction.pdf) for 2026, detailing changes from the Inflation Reduction Act of 2022 that affect employer-sponsored prescription drug coverage.

 

## **Creditable Coverage**

Employers offering prescription drug coverage to Medicare Part D-eligible individuals must notify them and CMS if their coverage is creditable, meaning it meets or exceeds Medicare Part D standards. [CMS’ existing guidance](https://www.cms.gov/medicare/employers-plan-sponsors/creditable-coverage?redirect=/CreditableCoverage/40_CCDisclosure.asp) provides several methods for determining creditable coverage:

- Employers with insured prescription drug plans should confirm with carriers if the coverage is creditable.
- For self-insured plans or if no creditable coverage determination is made, a simplified method can be used if design requirements are met; otherwise, an actuarial method is needed.

 

## **Revised Simplified Determination Method**

CMS is finalizing a new method to align with the enhanced Part D benefits under the IRA, as detailed in its Draft Part D Redesign Program Instructions. Under the new guidelines, group health plans must cover at least 72% of prescription drug costs to qualify as creditable coverage, up from 60%.

 

## **Creditable Coverage Determinations for 2025 and 2026**

CMS will allow the use of the simplified determination method for 2025 for group health plan sponsors not applying for the retiree drug subsidy (RDS).

In 2026, non-RDS group health plans can choose between the existing or revised simplified determination methods to assess if their prescription drug coverage is creditable.

** **** **

## **Enforcement**

Employers face no penalties for offering non-creditable prescription drug coverage, which can still benefit employees. However, it's crucial for individuals to know if their coverage is creditable. Medicare-eligible individuals with non-creditable coverage who delay enrolling in Part D may incur higher premiums later.

Download the [bulletin](https://blog.nisbenefits.com/hubfs/blog-supporting-docs/bulletin-simplified-determination-2026-creditable-coverage-determinations.pdf) for more details.

 

### **CMS Resources**

[Part D Improvements Webpage](https://www.cms.gov/inflation-reduction-act-and-medicare/part-d-improvements)

[View full post](https://blog.nisbenefits.com/new-simplified-method-2026-coverage-credibility)

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