Medicare Part D Modifications - Creditable Coverage Impact

Medicare Part D Modifications - Creditable Coverage Impact

As you may recall, the Inflation Reduction Act of 2022 (IRA) changed the Medicare Part D program (prescription drug benefit program). Highlights are described below. Importantly this may impact the creditable status of an employer’s prescription drug benefit program. As a reminder, an employer who offers prescription drug benefits to Medicare eligible individuals must provide annually and at certain other times a statement indicating whether the employer’s prescription drug benefit is creditable, meaning is it comparable to Medicare Part D. On April 1, 2024, the Centers for Medicare & Medicaid Services (CMS) released the Final Calendar Year (CY) 2025 Part D Redesign Program Instructions, detailing CMS updates for Part D in 2025. Key changes for 2025 include a newly designed Part D benefit with three phases: annual deductible, initial coverage, and catastrophic coverage; lower annual out-of-pocket threshold of $2,000, the current threshold is $8,000; sunset of the Coverage Gap Discount Program and initiation of the Manufacturer Discount Program; and the annual deductible will rise from $545 to $590. These changes may impact whether an employer’s prescription drug benefit is creditable. A simplified method of determining creditable coverage can continue to be used in 2025, however, this may change in subsequent years. It should also be noted that the health savings account high deductible health plan determination may impact creditable coverage as well. The 2025 HDHP dollar amounts are expected to be issued in the next four to six weeks.

It is not required that an employer offer creditable coverage, however, it is required that an employer communicate whether its prescription drug plan is creditable. If the plan changes from creditable to non-creditable or vice versa, Medicare eligible individuals must be notified within thirty days of the change.

The information contained in this Benefit Beat is not intended to be legal, accounting, or other professional advice, nor are these comments directed to specific situations. This information is provided as general guidance and may be affected by changes in law or regulation. This information is not intended to replace or substitute for accounting or other professional advice. You must consult your own attorney or tax advisor for assistance in specific situations. This information is provided as-is, with no warranties of any kind. CBIZ shall not be liable for any damages whatsoever in connection with its use and assumes no obligation to inform the reader of any changes in laws or other factors that could affect the information contained herein.

Medicare Part D Modifications - Creditable Coverage Impacthttps://www.cbiz.com/Portals/0/Images/GettyImages-1485076880-1.jpg?ver=z51PG8PrENM4-4AzHIhdRw%3d%3dhttps://www.cbiz.com/Portals/0/Images/GettyImages-1485076880-2.jpg?ver=faJP0ZdskGBWDeranLH0oQ%3d%3dAs you may recall, the Inflation Reduction Act of 2022 (IRA) changed the Medicare Part D program (prescription drug benefit program). Highlights are described below.2024-05-02T17:00:00-05:00As you may recall, the Inflation Reduction Act of 2022 (IRA) changed the Medicare Part D program (prescription drug benefit program). Highlights are described below.Regulatory, Compliance, & LegislativeEmployee Benefits ComplianceNo