The Inflation Reduction Act of 2022 included delayed enhancements to the Medicare Part D prescription drug benefits for 2024 and 2025. The 2024 enhancements were minor and did not generally affect employers sponsoring prescription drug coverage. By contrast, the enhancements for 2025 are significant and include a $2,000 limit on annual out-of-pocket prescription drug costs. The 2025 changes may affect the creditable coverage status for some employer-provided group health plans. The Centers for Medicare and Medicaid Services published corresponding guidance on April 1, 2024.
This Alert is relevant for all employers offering prescription drug benefits, including both fully insured and self-insured coverage. It addresses: (i) a refresher on Medicare creditable coverage status and its notice and disclosure requirements; (ii) The potential issues caused by the 2025 changes to Medicare Part D (including a number of examples and potential solutions); and (iii) employer action items.
