The Centers for Medicare and Medicaid Services (CMS) published 2026 updates to Medicare’s Part D benefits parameters. Each year, employers sponsoring a plan that provides or reimburses prescription drugs must disclose to employees and their beneficiaries, including those on COBRA or retiree coverage, whether their prescription drug coverage is creditable compared to Medicare Part D (i.e., whether it expects to pay as well as Part D pays on average). The Part D parameters are needed each year to help employers determine whether their plans are creditable or non-creditable so they can provide the correct notice.
Applies To:
All size employers sponsoring a plan that provides or reimburses prescription drugs.
Go Deeper:
CMS’s announcement and two fact sheets (here and here) lay out the updates for 2026, including the following:
- Deductible increasing from $590 to $615
- Out-of-pocket maximum increasing from $2,000 to $2,100
- A revised simplified determination methodology that updates how much a creditable group health plan must be expected to pay toward prescription drug claims from the current 60% to 72% (to more accurately reflect enhancements brought by the Inflation Reduction Act)
Practical Implications to Employers:
Employers working on their 2026 benefit plans now have Part D benefit parameters and revised simplified determination methodology to help determine whether their prescription drug coverage is creditable or non-creditable. While the carrier or pharmacy benefit manager (PBM) will typically determine creditability for employer plans, there are times an employer must hire an actuary to certify creditable coverage status. So, the revised simplified determination methodology can help in submitting plan designs as compatible as possible rather than going back and forth making adjustments with the actuary.
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