By April Handlir, EHD Compliance Specialist

As we head into renewal season, there are new legislative changes to be cognizant of that may impact medical plan design decisions, specifically prescription drug coverage. The Centers for Medicare and Medicaid Services (CMS) have passed a significant change that could greatly impact employees’ decisions to remain enrolled in the group medical plan if eligible for Medicare enrollment. Providing credible or non-credible coverage notices (Model Notice Letters | CMS – also available in Spanish) to your employees before the October 15th Medicare open enrollment period is an annual requirement that will be critical for 2024.

What is CMS changing?

  • The Medicare Part D (prescription drug coverage) out-of-pocket (OOP) maximum will be reduced to $2,000.

Who is impacted by the CMS change?

  • Employer: All employers offering a group medical plan with prescription drug coverage regardless of group size.
  • Employee: Any employee (including COBRA subscribers) and their dependents could be impacted by this change if they are eligible for Medicare coverage. Since we are unable to know for certain who is impacted, sending a credible or non-credible notice to all employees is the best practice.

When does the CMS OOP Max change go into effect?

  • January 1, 2025

Where does this change impact the employer group medical plan?

  • The prescription drug OOP employee cost share cannot exceed $2,000 for prescription drug costs. If it does the plan is no longer credible.

Why does an employer provide credible or non-credible notices to employees before October 15th?

  • The notice enables the member to properly elect or decline Medicare Part D coverage based on their employer’s prescription benefit of the group health plan. If the plan is not credible the employee faces a lifetime penalty upon enrollment in Medicare. Knowing will allow the employee to make an informed decision.

How do we proceed?

  • Discuss plan design options that meet your organizational needs and costs. Considerations: adjust specialty tiers, change the deductible design to have a separate OOP maximum for the prescription drugs, exclude vaccines and insulin from the deductible, change the formulary, or will you simply not make any changes?
  • Be ready to discuss with EHD the ideal solution. EHD will work with you to find the best solution.
  • Prepare your educational discussions with your employees.
  • Introduce your employees to our Medicare expert.

When do I communicate to help my employees prepare for the changes?

  • As soon as possible but before October 15th to ensure they have enough time to consider their options.