Medicare 2026 Redesign Final Guidance Issued

On April 7, 2025, the Centers for Medicare and Medicaid Services (CMS) released guidance relating to the Medicare Part D creditable coverage determination for 2026. As a reminder, an employer is not obligated to provide creditable prescription drug coverage. If an employer-sponsored health plan provides prescription drug coverage, the employer is obligated to notify individuals about the status of that prescription drug coverage at least once per year and at certain other times, as follows:

• Prior to an individual’s initial enrollment in Part D;
• Prior to the effective date of coverage for any Medicare-eligible individual that joins the plan;
• Whenever prescription drug coverage ends, or changes from creditable to non-creditable coverage or vice versa; and
• Upon an individual’s request.

Historically, a simplified safe-harbor method of determining creditable coverage status has been available. Alternatively, an actuarial determination could be used. Due to recent changes to Medicare Part D, and for various other reasons, the existing simplified method has become outdated.

For 2026, a new simplified method is available, and it provides as follows:

• Availability of brand name, generic, and biological prescription drug products;
• Provides reasonable access to retail pharmacy; and
• Designed to pay at least 72%, up from 60% of the participant’s prescription drug expenses.

The new simplified method differs from the existing method in several ways. Notably, it adds biological prescriptions to the types of prescriptions that must be covered, removes the annual, lifetime, and cost-share standards, and increases the plan payments for prescription drugs from 60% to 72%.

For 2026 only, a plan can choose to use either the old or new, simplified method. Alternatively, the actuarial method can be used. To assist high-deductible health plans in meeting creditable status, the guidance offers a couple of design suggestions. Examples include:

• Ensuring that preventive and permissive maintenance drugs are covered at first dollar or at a low cost; and
• Lowering cost sharing once the minimum statutory deductible has been satisfied.

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