This month, the Centers for Medicare and Medicaid Services (CMS) announced final instructions for the changes to Medicare Part D prescription drug coverage mandated by the Inflation Reduction Act of 2022 (IRA) which will affect employer-sponsored plans in 2026. The changes are intended to enhance benefits and offer cost savings for enrollees but will also impact the ability of some prescription benefit plans to continue qualifying as creditable coverage.
Employer Action Items
- Contact your carrier, TPA, ASO, or PBM to determine whether your prescription drug coverage will be creditable in 2026.
- Evaluate deductibles in your prescription drug coverage, in particular any HSA-compatible HDHPs.
- Immediately review and evaluate all benefit options for 2025 in light of the changes to Medicare Part D.
- Develop a participant communication strategy advising affected individuals of the changes to the creditable coverage requirements and the potential impact on HDHPs and other benefit options in 2026.
- Consider a Medicare enrollment guide for employees. Failing to make informed choices can result in significant financial exposure relating to coordination of benefits with COBRA, for example, or in lifetime premium penalties under Medicare for late enrollment.