The Inflation Reduction Act of 2022 (IRA) includes several cost-reduction provisions to Medicare Part D plans that are designed to help beneficiaries but may also impact employer-sponsored health plans.
Key Benefits
- Insulin is available at $35 per month per covered prescription, and recommended adult vaccines are available without cost sharing.
- There is a yearly cap of $2,000 on out-of-pocket Medicare Part D prescription drug costs.
- All Medicare Part D plans must offer the option to pay out-of-pocket prescription drug costs in monthly installments through the Medicare Prescription Payment Plan.
While these changes reduce costs for Medicare beneficiaries, they could increase costs for employer health plans, as providers and pharmacies may shift costs to the private sector. These updates may also affect whether an employer’s drug coverage qualifies as creditable under Medicare rules.
Creditable Coverage
Employers offering prescription drug coverage to Medicare-eligible individuals must notify those individuals and the Centers for Medicare & Medicaid Services (CMS) whether their coverage is considered “creditable”—meaning it is at least as good as Medicare Part D.
Due to the IRA’s updates, CMS announced that the methodology used to determine whether coverage is creditable will be revised to better reflect actuarial equivalence. Employers should watch for upcoming CMS guidance to ensure compliance by calendar year 2026.
Important Dates
- Oct. 15, 2024: Part D enrollees can begin opting into the Medicare Prescription Payment Plan for 2025 coverage.
- April 7, 2025: CMS expects to release final instructions for the 2026 plan year, including details on revised creditable coverage determinations.
Action Steps
Employers and their benefit advisors should prepare for potential private sector cost shifts and consider cost containment strategies. Additionally, they should stay alert for CMS updates related to creditable coverage determinations for the 2026 calendar year.
For further updates and resources, visit the CMS Part D Improvements webpage.
This Compliance Bulletin is not intended to be exhaustive nor should any discussion or opinions be construed as legal advice. Readers should contact legal counsel for legal advice. ©2025 Zywave, Inc. All rights reserved.