If you’re managing a group health plan with Medicare prescription drug coverage, there’s important information you need to know. Here’s a streamlined guide to what’s coming and how to stay compliant.
Key Deadlines: Creditable vs. Non-Creditable Coverage
- Annual Notices Begin in October: Employers must notify plan members whether their prescription drug coverage is creditable (comparable to Medicare Part D) or non-creditable.
- October 15 Deadline: All group health plans must ensure notifications to members are completed by this date.
What’s New in 2026?
Several changes are underway—here’s a snapshot of the highlights:
- Out-of-Pocket Maximum Increase: The annual maximum is rising to $2,100, up from $2,000 in 2025.
- Part D Benefit Design Overhaul: The new standard Medicare Part D format now includes updated rules for how costs are allocated among enrollees, sponsors, manufacturers, and CMS based on negotiated drug pricing.
- Select Drug Subsidy Program: A new program aimed at addressing high-cost medications is being rolled out.
These adjustments reflect ongoing efforts that began in 2022 to modernize and balance the prescription drug benefit structure.
Understanding Deductibles and OOP Maximums
- Exhibit 3 Guidance: The notices include an “Exhibit 3” for plans with integrated deductibles and out-of-pocket (OOP) maximums.
- If a plan’s OOP maximum exceeds $2,100—but the medical portion still keeps it under the threshold—it may still qualify as creditable.
- Need help? If your plan doesn’t match any listed combinations, working with a third-party consultant can help determine whether your coverage meets the required standards.
Quick Definition: What Does “Creditable Coverage” Mean?
As defined by CMS, creditable coverage is prescription drug coverage (for example, from an employer or union) that’s expected to pay, on average, at least as much as Medicare’s standard prescription drug coverage. Ensuring your plan meets this threshold helps members avoid penalties and maintain continuous coverage.