May 11, 2023
On March 31, 2023, the Centers for Medicare and Medicaid Services (CMS) released the 2024 Medicare Part D parameters that group health plans must use for creditable coverage disclosures. Under Medicare Part D regulations, most group health plan sponsors that offer prescription drug coverage to individuals eligible for Part D must disclose to those eligible individuals and to CMS whether the group health plan’s prescription drug coverage is creditable or non-creditable. Eligible individuals who must receive notices include active employees, disabled employees, retirees, and COBRA participants and their beneficiaries. Coverage is deemed to be creditable if the plan’s actuarial value is equal to or exceeds the actuarial value of defined standard Medicare Part D coverage under CMS guidelines.
- Determine whether group health plan prescription drug coverage is creditable or non-creditable.
- Provide applicable notice to Medicare Part D eligible individuals and applicable disclosure to CMS by corresponding deadlines.
The 2024 parameters for the defined standard Medicare Part D prescription drug benefit are:
|Medicare Part D Benefit Parameters for Creditable Coverage Disclosures by Year|
|Initial coverage limit||$4,660||$5,030|
|Total covered Part D spending at the out-of-pocket expense threshold for beneficiaries who are not eligible for the coverage gap discount program||$10,516.25||$11,477.39|
|Estimated total covered Part D spending at the out-of-pocket threshold for beneficiaries who are eligible for the coverage gap discount program||$11,206.28||$12,447.11|
| Minimum cost-sharing under the catastrophic coverage portion of the benefit
Generic/preferred multi-source drugs
All other drugs
*The Inflation Reduction Act of 2022 eliminated the minimum cost-sharing amounts under the catastrophic coverage portion of the Part D benefit effective for 2024.
Group health plans use these parameters to determine whether their plans’ prescription drug coverage is creditable for 2024. Plan sponsors must disclose to both Medicare Part D eligible individuals and to CMS whether the coverage is creditable or non-creditable. This requirement applies to insured and self-funded plans, regardless of the enrollment in a given group health plan, employer size, or plans’ ACA grandfathered status. Employers that provide prescription drug coverage through a Medicare Part D Employer Group Waiver Plan (EGWP) are not required to issue creditable coverage notices to individuals eligible for the EGWP.
Group health plan sponsors must provide the creditable or non-creditable coverage notices to Medicare Part D eligible individuals before each year’s Medicare Part D annual enrollment – for 2024, these notices must be provided no later than October 14, 2023.
The creditable coverage disclosure to CMS must also be completed annually no more than 60 days after the beginning of each plan year, regardless of whether the coverage is creditable or non-creditable. For 2024 calendar year plans, this disclosure to CMS must be submitted prior to March 1, 2024. Employer plan sponsors electronically file these notices through the Disclosure to CMS Form on the CMS website.
As plan designs are being finalized for the upcoming plan year, employers should confirm with your prescription drug benefit managers (PBMs), third-party administrators, consultants and legal counsel to confirm whether your prescription drug coverage is creditable or non-creditable. Employers should be prepared to submit the required disclosures to eligible individuals and to CMS by the applicable deadlines.
- CMS: Announcement of 2024 Medicare Part D Benefit Parameters Used for Creditable Coverage Disclosures
- CMS: Fact Sheet – 2024 Medicare Advantage and Part D Rate Announcement
- CMS: Creditable and Non-Creditable Coverage Model Notice Letters
- Creditable and Non-Creditable Disclosure to CMS Form
If you have questions, comments, or concerns about these or other regulatory and compliance issues, please contact us.
We provide this material for informational purposes only; it is not a substitute for legal advice.