The Inflation Reduction Act made several changes to Medicare Part D (Medicare’s prescription drug program). The Centers for Medicare and Medicaid Services (CMS) has released a fact sheet dated April 1, 2024, on the calendar year 2025 Part D Redesign Program Instructions to conform with changes made by the Act. Some of the changes that go into effect Jan. 1, 2025, are:
- A new standard Part D benefit consisting of three phases (annual deductible, initial coverage, and catastrophic coverage)
- A lower out-of-pocket threshold of $2,000 (down from $8,000 in 2024)
- A new manufacturer discount program which replaces the coverage gap discount program
What this means is the 'coverage gap' is gone and once you have $2000 worth of out of pocket expenses, you go straight into the catastrophic phase. This is a HUGE difference for those of us that need to take a lot of expensive drugs and may no longer have to choose between food and medicine. Here is a chart from the CMS comparing the differences:
CMS also changed the regulatory definition of creditable coverage based on the redesign.
Individuals who are still working and have employer prescription drug coverage may postpone enrolling in Medicare Part D without penalty if the employer plan is creditable coverage. Creditable coverage means that the actuarial value of a group health plan’s prescription drug coverage equals or exceeds the actuarial value of the Medicare Part D coverage under the new CMS guidelines. Plan sponsors are required to disclose to enrollees whether their prescription drug coverage is creditable.