If you’re an employer sponsoring a group health plan that includes prescription drug coverage, it’s important to understand your responsibilities around credible coverage, especially with upcoming changes to Medicare Part D in 2025. While you’re not required to offer creditable prescription drug coverage, you must determine if your coverage is creditable and commute the results annually to employees and the Centers for Medicare & Medicaid Services (CMS).

Why Does Creditability Matter?

Creditable prescription drug coverage helps Medicare-eligible individuals make informed decisions about whether to enroll in Medicare Part D. Failing to do so within 63 Days of losing credible coverage can result in penalties for employees later enrolling in Medicare Part D.

Changes Under the Inflation Reduction Act (IRA)

Starting in 2025, out-of-pocket prescription drug costs for Medicare Part D will be capped at $2,000. This change may affect whether your group health plan still qualifies as creditable. Employers who assumed creditable status previously should re-evaluate their plans for 2025 to ensure compliance.

Resources Employers Can Use

Employers have several tools and resources available to help manage the process of determining and communicating creditable coverage:

1. Insurance Carriers and Third-Party Administrators (TPAs): Many insurance carriers and TPAs provide detailed information on whether your prescription drug coverage is creditable. If your plan doesn’t automatically offer this, reach out to your carrier or TPA for assistance. They can also help with determining if any plan design changes may be necessary for 2025.
2. CMS Model Notices: The Centers for Medicare & Medicaid Services (CMS) provides model notices for informing employees about their plan’s creditable or non-creditable status. These notices can be customized to fit your organization’s communication needs. Visit the CMS website to access these templates: Model Notices.
3. Simplified Determination Guide: Employers may be able to use the simplified method for determining creditable status. The criteria and process are outlined in CMS’s simplified determination guide, available at CMS Creditable Coverage Simplified Guide.
4. CMS Reporting System: Employers are required to report their plan’s creditable and non-creditable status to CMS annually. The online form and instructions for this reporting can be found at CMS Creditable Coverage Disclosure. The user manual provides detailed guidance, including screenshot, to assist with reporting: CMS Creditable Coverage User Manual.

By utilizing these resources, employers can ensure they are prepared for the upcoming changes and fulfill their obligations to both employees and CMS.

Partnering with Pierce Group Benefits

Please contact your Account Executive or a PGB Representative at partnership@piercegroupbenefits.com at for additional information to ensure your prescription drug coverage meets federal guidelines. Our professionals can help navigate the nuances of the Medicare Part D changes in 2025 and beyond, ensuring that your plan stays in compliance with all requirements.