Spotlight: 2025 Changes to Medicare Part D

Effective January 1, 2025, Medicare Part D prescription drug benefits will be changing. For group health plan sponsors, this means that a new evaluation whether their prescription drug benefits are creditable or not will need to be completed.

Medicare Part D changes include:

• New standard benefit will include an annual deductible, initial coverage, and catastrophic coverage.
• Annual out-of-pocket maximum of $2,000, reduced from the 2024 maximum of $8,000.
• Sunset of the coverage gap discount program and establishment of a manufacturer discount program.
• Changes to the liability of enrollees, Part D sponsors, manufacturers, and CMS.

Employers sponsoring a health plan with prescription benefits will need to continue to distribute notices to plan participants telling them if the group plan coverage is creditable, i.e., equal to or better than Medicare Part D coverage, or non-creditable. Group health plans do not have to provide creditable coverage. However, if an individual waives Medicare Part D coverage when they become eligible due to having group insurance, if that coverage is not creditable, then the individual will have to pay a 1% penalty for each month that they had non-creditable coverage. It is very important that employers provide accurate information.

The Center for Medicare and Medicaid Services (CMS) also announced that they will continue to permit use of the creditable coverage simplified determination methodology for the 2025 Calendar Year. They will re-evaluate if changes need to be made for the 2026 Calendar Year.

Carriers may provide a creditability determination, but there has been an increasing number that do not. Current carrier provided tools to make that determination may be obsolete.