Announcement of Calendar Year (CY) 2025 Medicare Advantage (MA) Capitation Rates and Part C and Part D Payment Policies (Apr. 1, 2024); Fact Sheet: 2025 Medicare Advantage and Part D Rate Announcement (Apr. 1, 2024)
CMS has released the 2025 parameters for the defined standard Medicare Part D prescription drug benefit. 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.
The structure of the Part D benefit has been updated to reflect Inflation Reduction Act changes that will take effect January 1, 2025. (Certain other changes had earlier effective dates. For example, cost-sharing for covered Part D drugs for beneficiaries in the catastrophic phase of coverage was eliminated effective January 1, 2024.) Part D Redesign Program Instructions and a related Fact Sheet have been issued concurrently with the 2025 parameters. They describe the newest changes, which include—
- A newly defined standard Part D benefit consisting of three phases: annual deductible, initial coverage, and catastrophic coverage;
- A lower annual out-of-pocket threshold of $2,000;
- The sunset of the Coverage Gap Discount Program and establishment of a Manufacturer Discount Program; and
- Changes to the liability of enrollees, Part D sponsors, manufacturers, and CMS.
In addition to the $2,000 out-of-pocket threshold (down from $8,000 in 2024), the 2025 parameters include an annual deductible of $590 (up from $545 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 2025. 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). 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)”).
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