Risk Strategies Blog Medicare Part D Creditable Coverage: CMS Finalizes Revised Simplified Determination Method for 2026

Summary: As we previously reported last year here, the Inflation Reduction Act of 2022 (IRA), enacted by Congress in August 2022, includes several cost-reduction provisions affecting Medicare Part D plans.The most significant provision for employer-sponsored group health plans is that the annual out-of-pocket (OOP) costs are capped at $2,000 (for 2025) and $2,100 (for 2026) for individuals with Medicare Part D, potentially impacting the creditable coverage status of some forms of employer-sponsored prescription drug coverage.The Centers for Medicare and Medicaid Services (CMS), the federal agency governing Medicare, released Final CY 2026 Part D Redesign Program Instructions ("Final Instructions") on April 7, 2025.The Final Instructions confirm that non-Retiree Drug Subsidy (RDS) group health plans are permitted to use either the current simplified determination methodology or the revised simplified determination methodology to determine whether their prescription drug coverage is creditable for calendar year 2026.Read on for more information and employer plan sponsor considerations.