Medicare Part D Changes and Employer Impacts
The Inflation Reduction Act of 2022 (IRA) introduced cost-reduction measures for Medicare Part D, benefiting beneficiaries but potentially impacting employer-sponsored health plans.
Key Medicare Part D Benefits
- Insulin is capped at $35 per month per covered prescription.
- Recommended adult vaccines are available without cost sharing.
- Annual cap of $2,000 on out-of-pocket prescription drug costs.
- Medicare Prescription Payment Plan: Beneficiaries can opt for capped monthly installments instead of paying out-of-pocket costs all at once.
While these changes lower Medicare costs, they could lead to increased costs for employers providing prescription drug coverage as pharmacies and providers adjust their pricing. The IRA’s adjustments may also affect the creditable coverage status of employer-sponsored plans.
Creditable Coverage Considerations
Employers offering prescription drug coverage to Medicare Part D-eligible individuals must disclose to beneficiaries and CMS whether their coverage is creditable—meaning it is at least as good as Medicare Part D.
Due to IRA-driven changes, CMS will update one of the methods for determining creditable coverage to better reflect actuarial equivalence, with revisions expected for calendar year 2026.
Employers should monitor CMS guidance to ensure proper Medicare Part D disclosure notices are sent.
Key Deadlines
- Oct. 15, 2024: Medicare Part D enrollees can opt into the Medicare Prescription Payment Plan before the plan year begins.
- April 7, 2025: CMS will release final Part D redesign program instructions for 2026, including updates to the creditable coverage determination methodology.
Employer Action Steps
- Employers and benefit advisors should assess cost-management strategies to mitigate potential increases in private-sector prescription costs.
- Stay updated on CMS guidance regarding creditable coverage determination for 2026.
- Ensure timely Medicare Part D disclosure notices to beneficiaries and CMS.
For more details and the latest updates, 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.