The Inflation Reduction Act of 2022 (IRA) provided for gradual improvements to Medicare Part D benefits beginning in 2023. In 2025 a $2,000 cap on out-of-pocket expenses for prescription drugs will apply, effectively making the benefit available through Medicare more generous and potentially impacting the creditable status of employer sponsored plans.
Employer group health plans providing prescription drug coverage must provide an annual Medicare Part D creditable or non-creditable coverage notice. These notices must go to all Medicare-eligible employees and dependents annually prior to October 15.
Knowing if their prescription drug coverage is creditable or not credible allows Medicare-eligible participants and retirees to make informed decisions about whether to remain in their current prescription drug plan or enroll in Medicare Part D during their initial enrollment period (IEP), or the annual enrollment period (AEP).
Simply put, prescription drug coverage is creditable if it offers benefits at least as generous as Medicare Part D’s prescription drug coverage.
The improvement to Medicare Part D benefits forthcoming in 2025 in the form of a $2,000 out-of-pocket limit will improve the actuarial value of the Medicare Part D standard plan, effectively raising the bar for employer sponsored plans.
How are Medicare changes anticipated to impact members?
Although some employers will make changes to keep plans creditable, others will allow them to fail the creditability test.
Members should pay special attention to the creditable coverage notices to ensure they can enroll in a creditable plan. Medicare-eligible individuals enrolled in non-creditable prescription drug coverage can incur late enrollment penalties for failing to enroll in Medicare Part D. An individual who loses creditable coverage has 63 days from the loss of coverage to enroll in Medicare Part D to avoid late enrollment penalties.
Our Medicare Central team can help Medicare-eligible employees understand their Medicare Part D enrollment options and avoid late enrollment penalties.
What if I have questions about Medicare Part D creditable coverage changes?
Most employers can obtain testing results from their carrier if they’re fully insured or their PBM if they are self-funded.
Our team also supports employers in reviewing their overall employer health plans to ensure they remain both creditable and cost-effective for their workforce.
If you have questions about the Medicare Part D requirements, or need to obtain Part D coverage contact Terri Yurek Insurance Services.
