Group health plan sponsors must disclose to individuals who are eligible for Medicare Part D and to the Centers for Medicare & Medicaid Services (CMS) whether their prescription drug coverage is “creditable.” In general, coverage is considered creditable if it is expected to pay, on average, at least as much as standard Medicare Part D prescription drug coverage.​

    Disclosure to Medicare-eligible individuals must be provided prior to Oct. 15, 2026, the start of the annual enrollment period for Medicare Part D, while disclosure to CMS is due within 60 days after the start of each plan year.

    The Inflation Reduction Act of 2022 (“IRA”) made several changes to the Medicare Part D prescription drug benefit beginning in 2025. For 2026, the annual Part D out-of-pocket threshold is $2,100, up from $2,000 in 2025. Because the IRA enhanced the Medicare Part D benefit, some group health plans that historically met the creditable coverage standard may need to reevaluate their status.

    Insurance carriers can confirm whether your plan’s coverage is creditable or non-creditable. In general, creditable coverage must have an actuarial value that equals or exceeds the actuarial value of the standard Medicare Part D benefit.

    Model notices from CMS can be used to satisfy creditable/non-creditable coverage disclosure requirements.

    CMS Disclosure Form & Model Notice

    Medical Loss Ratio Rebates

    Medical Loss Ratio (MLR) rebate checks may be arriving for some companies soon. MLR rebates are required under the Affordable Care Act (ACA) when a health insurer does not spend enough of the premiums it receives on medical care and activities that improve the quality of care.

    Under the ACA, insurance companies generally must spend at least 80% of premium revenue in the individual and small group markets on medical care and quality improvement activities. Insurance companies in the large group market generally must spend at least 85%. The remaining portion may be used for administrative expenses, overhead, marketing, and other costs.

    When an insurance company does not meet the applicable MLR requirement, it is required to provide a rebate. MLR percentages are not based on the claims experience of a specific employer group or individual. Instead, they are calculated based on an insurer’s aggregate data in each state.

    If an employer receives an MLR rebate, all or a portion of the rebate may be considered plan assets, particularly when employees contributed toward the cost of coverage. Employers should determine what portion, if any, of the rebate is attributable to participant contributions.

    If a company receives an MLR rebate check, they are required to utilize it in one of three ways:

    • Provide a rebate to plan participants
    • Reduce plan participants’ future premium contributions
    • Provide benefit enhancements

    Companies that are eligible to receive a rebate are not required to take any action. Insurance companies will, in most cases, send the rebate check directly to your firm.

    For additional guidance or assistance, please reach out to your FosterThomas representative.