Announcement of Calendar Year (CY) 2024 Medicare Advantage (MA) Capitation Rates and Part C and Part D Payment Policies (Mar. 31, 2023); Fact Sheet: 2024 Medicare Advantage and Part D Rate Announcement (Mar. 31, 2023)
Under Medicare Part D regulations, most group health plan sponsors offering prescription drug coverage to Part D eligible individuals (including active or disabled employees, retirees, COBRA participants, and beneficiaries) must disclose to those individuals and to CMS whether the plan coverage is creditable or non-creditable. For coverage to be creditable, its actuarial value must equal or exceed the actuarial value of defined standard Medicare Part D coverage under CMS guidelines. In simpler terms, this test measures whether the expected amount of paid claims under the employer’s prescription drug coverage is at least as much as the expected amount of paid claims under the standard Medicare prescription drug benefit.
CMS has released the following 2024 parameters for the defined standard Medicare Part D prescription drug benefit:
Deductible: $545 (up from $505 in 2023);
Initial coverage limit: $5,030 (up from $4,660 in 2023);
Out-of-pocket threshold: $8,000 (up from $7,400 in 2023);
Total covered Part D spending at the out-of-pocket expense threshold for beneficiaries who are not eligible for the coverage gap discount program: $11,477.39 (up from $10,516.25 in 2023); and
Estimated total covered Part D spending at the out-of-pocket expense threshold for beneficiaries who are eligible for the coverage gap discount program: $12,447.11 (up from $11,206.28 in 2023).
Minimum cost-sharing amounts under the catastrophic coverage portion of the benefit are not listed in the 2024 parameters because the Inflation Reduction Act of 2022 (see our Checkpoint article) eliminated cost-sharing for covered Part D drugs for beneficiaries in the catastrophic phase of coverage beginning in 2024.
EBIA Comment: These parameters will be used by group health plan sponsors to determine whether their plans’ prescription drug coverage is creditable for 2024. The information is needed for required disclosures to Part D eligible individuals and to CMS. The annual participant disclosure notice requirement may be satisfied by providing a single notice at the same time each year. In addition, disclosure notices may be required at other times (for example, prior to an individual’s Medicare Part D initial enrollment period or upon request from a Medicare Part D eligible individual―see our Checkpoint Question of the Week). For more information, see EBIA’s Group Health Plan Mandates manual at Sections XXV.C (“Overview of Medicare Part D”) and XXV.D (“What Is Creditable Coverage for Purposes of the Part D Disclosures?”). See also EBIA’s Self-Insured Health Plans manual at Sections XVI.E (“Enrollment Materials”) and XXV.C.3 (“Coordination of Benefits With Medicare Part D (Prescription Drug Benefit)”).
Contributing Editors: EBIA Staff.