{"id":22928,"date":"2025-04-18T11:54:10","date_gmt":"2025-04-18T16:54:10","guid":{"rendered":"https:\/\/www.bbrown.com\/?post_type=insight&p=22928"},"modified":"2025-04-18T11:54:10","modified_gmt":"2025-04-18T16:54:10","slug":"cms-adopts-final-calendar-year-2026-part-d-creditable-coverage-redesign-program-instructions","status":"publish","type":"insight","link":"https:\/\/www.bbrown.com\/us\/insight\/cms-adopts-final-calendar-year-2026-part-d-creditable-coverage-redesign-program-instructions\/","title":{"rendered":"CMS Adopts Final Calendar Year 2026 Part D Creditable Coverage Redesign Program Instructions"},"content":{"rendered":"

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Employee Benefits<\/p>\n

\n CMS Adopts Final Calendar Year 2026 Part D Creditable Coverage Redesign Program Instructions\n <\/h1>\n\t\n <\/div>\t\t\t\t\t\n\t\t\t\t\t\n\t\t\t\t\t\t\t\t\t<\/div>\n\t\t\t<\/div>\n\t\t<\/div>\n\n\t<\/div>\n\n\t\n[\/vc_column][\/vc_row][vc_row][vc_column width=”2\/3″]\n
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\n CMS Adopts Final Calendar Year 2026 Part D Creditable Coverage Redesign Program Instructions\n <\/h1>\n\t\n <\/div>[vc_column_text css=””]<\/p>\n

Background<\/h3>\n

Employer group health plans are required to disclose to Medicare-eligible individuals whether the employer-sponsored prescription drug plan (if applicable) provides creditable or non-creditable coverage. This disclosure notice should be distributed by October 15 of each calendar year (in addition to other applicable times during the year). Employers must also report to CMS (via an online disclosure) whether the prescription coverage offered under the group health plan is considered creditable or non-creditable within 60 days following the beginning of the plan year.<\/p>\n

An employer\u2019s prescription drug plan is considered creditable<\/strong> when the actuarial value (the measurement of how robust a plan is in providing coverage) of the prescription drug plan is the same as, or greater than, the actuarial value of Medicare Part D prescription drug coverage. Non-creditable<\/strong> means an employer\u2019s prescription drug plan\u2019s actuarial value does not meet or exceed the actuarial value of Medicare Part D prescription drug coverage.<\/p>\n

Typically, a Medicare-eligible individual who does not enroll in Medicare Part D or creditable coverage within a period not to exceed 63 days after the later of the date the individual first becomes eligible for Medicare or the date they no longer have creditable coverage will be subject to late enrollment penalties under Medicare.<\/p>\n

Creditable Coverage Determination<\/h3>\n

The actuarial value of an employer\u2019s prescription drug plan varies from health plan to health plan. Whether a prescription drug plan is creditable may require an annual \u201cactuarial determination.\u201d Qualifying prescription drug plans may also utilize an alternative to the actuarial determination method, referred to as the Simplified Determination method1<\/sup>, which provides a more straightforward process for determining whether a prescription drug plan is creditable. The current Simplified Determination method may be utilized for plan years beginning in calendar year 2025 and in 2026 (pending future guidance on whether the current Simplified Determination could continue to be utilized by plan sponsors in later calendar years). The Revised Simplified Determination method may be used for all plan years beginning in calendar year 2026 (i.e., beginning January 1, 2026) and thereafter under guidance issued as of April 2025. The following describes the Simplified Determination method under the CMS rules and the newly adopted Revised Simplified Determination method for plan years occurring in or after calendar year 2026.<\/p>\n

Utilization of the Simplified and Revised Simplified Determination Method in Determining Creditable Coverage Status of a Prescription Drug Plan<\/h3>\n

Current Simplified Determination Method to Determine Creditable Coverage Status<\/h4>\n

For plan years beginning in calendar years 2025 and 2026<\/u><\/strong> only (pending future guidance on whether the current Simplified Determination could continue to be utilized by plan sponsors in later calendar years), employers\/union health plans that do not apply for the retiree drug subsidy (RDS) or participate in an Employer Group Waiver Plan (EGWP)2<\/sup> may use the Simplified Determination method to assess whether their prescription drug plan is creditable under the rules. If the prescription drug plan meets the Defined Standards (DS) set forth for an integrated or nonintegrated plan, the plan would be considered creditable. For more information on the Simplified Determination method, please go to our Brown & Brown article published in August of 2024, which can be found by clicking here<\/a>.<\/p>\n

Revised Simplified Determination Method to Determine Creditable Coverage Status<\/h3>\n

For plan years beginning in calendar year 2026 and beyond<\/u><\/strong>, employers\/union health plans that do not apply for the retiree drug subsidy (RDS) or participate in an EGWP may use the Revised Simplified Determination method to assess whether their prescription drug plan is creditable under the rules. The Revised Simplified Determination method states that a plan will be deemed to \u201cprovide prescription drug coverage with an actuarial value that equals or exceeds the actuarial value of DS Part D coverage if it meets all the following standards:<\/p>\n