Medicare Part D prescription drug coverage will be changing in 2025 as required under the Inflation Reduction Act, which could impact whether an employer’s group health plan provides creditable prescription drug coverage. Beginning in 2025, the out-of-pocket drug spending for Medicare Part D coverage will be capped at $2,000. This will increase the actuarial value of the coverage available via Medicare Part D.
For this reason, plans that met creditable coverage status previously may no longer be creditable beginning in 2025, especially high deductible health plans (HDHPs). However, the simplified method will remain available for 2025, which may allow many plans to maintain creditable status in spite of the changes to Medicare Part D coverage.
As a reminder: It’s important to know that employers offering group health plans ARE NOT required to offer prescription drug coverage that’s creditable, but they are required to determine whether the prescription drug coverage is creditable and then must communicate a creditable or non-creditable coverage status annually to eligible employees and their family members and also to the Centers for Medicare & Medicaid Services (CMS).