The Centers for Medicare and Medicaid Services (CMS) have made some changes to the Medicare Part D Creditable Coverage determination because of recent federal legislation (most notably the Inflation Reduction Act). The most prominent changes are the $2000 Out of Pocket Maximum for Part D plans and the way Medicare Part D creditable coverage is determined using the Simplified Determination.

As a reminder, the Affordable Care Act (ACA) requires the employer to inform plan participants if the prescription drug coverage offered by their group health plan is at least as comprehensive as the prescription drug coverage offered under Medicare Part D. There are two permissible methods to determine creditable coverage:

1. Actuarial Determination- A determination made by using an actuary. Often expensive but can be the most accurate way to determine prescription drug comprehension.

2. Simplified Determination- A determination made by using a specific process. Des not require an outside contractor and is much less intensive than actuarial determination. You can read the specifics of the (pre-updated) Simplified Determination HERE.

CMS has decided to update the Simplified Determination. In order for coverage to be considered creditable under the new rules, it must satisfy all of the following:

1. Provides reasonable coverage for brand name and generic prescription drugs and biological products;

2. Provides reasonable access to retail pharmacies; and

3. Is designed to pay on average at least 72% of participants’ prescription drug expenses.

However, for calendar year 2026, employers will be able to use either Simplified Determination Method. However, there has been no indication that this will be extended beyond 2026, so employers should transition to the new Determination process as soon as possible.