Medicare Part D Parameters Set for 2017 Affecting What is Considered Creditable Coverage

Under Medicare Part D regulations, plan sponsors of prescription drug coverage that offer such coverage to Part D eligible individuals (including active or disabled employees and their spouses and dependents, retirees, COBRA participants, and beneficiaries) must disclose to those individuals and to CMS whether the plan coverage is creditable or non-creditable. Creditable coverage means the coverage is actuarially equal to or exceeds the actuarial value standard Medicare Part D. Simply, at least as good, if not better than what Medicare Part D would offer.

CMS has released the following 2017 parameters for the standard Medicare Part D prescription drug benefit. Any creditable coverage must be equal to or better than these parameters, otherwise a non-creditable notice is provided to participants and CMS rather than a creditable coverage notice. The Medicare Part D parameters are:

  • Deductible: $400 (a $40 increase from 2016);
  • Initial coverage limit: $3,700 (a $390 increase from 2016);
  • Out-of-pocket threshold: $4,950 (a $100 increase from 2016);
  • Total covered Part D spending at the out-of-pocket expense threshold for beneficiaries who are not eligible for the coverage gap discount program: $7,425 (a $362.50 increase from 2016);
  • Estimated total covered Part D spending at the out-of-pocket expense threshold for beneficiaries who are eligible for the coverage gap discount program: $8,071.16 (a $555.94 increase from 2016); and

Minimum cost-sharing under the catastrophic coverage portion of the benefit: $3.30 for generic/preferred multi-source drugs (a $.35 increase from 2016), and $8.25 for all other drugs (a $.85 increase from 2016).

Next Steps

  • Employers with Medicare-eligible plan participants are required to provide notice of the creditable coverage state of their prescription drug plan annually by October 15. Employers may provide the notice at open enrollment with enrollment materials so long as the notice is prominently placed in the index. Additionally, employer-plan sponsors are required to report the prescription plan's creditable status to CMS annually within 60 days of the beginning of the plan year.
  • For more information on this rule, as well as for sample notices and links to CMS Disclosure Form, see Creditable Coverage.
  • For complete details, see: