CMS Announces 2022 Medicare Part D Benefit Parameters Used for Creditable Coverage Disclosures

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 simple terms, the actuarial equivalence determination measures whether the employer’s coverage is, on average, at least as good as standard Medicare prescription drug coverage; if it is, the employer’s coverage is creditable.

CMS notes that the estimates of Medicare spending in the 2022 rate announcement reflect aspects of COVID-19’s impact on health care costs, and that the announcement was issued nearly three months earlier than usual to help Part D plans project and plan for costs. CMS has released the following 2022 parameters for the defined standard Medicare Part D prescription drug benefit:

• Deductible: $480 (up from $445 in 2021);
• Initial coverage limit: $4,430 (up from $4,130 in 2021);
• Out-of-pocket threshold: $7,050 (up from $6,550 in 2021);
• Total covered Part D spending at the out-of-pocket expense threshold for beneficiaries who are not eligible for the coverage gap discount program: $10,012.50 (up from $9,313,75 in 2021);
• Estimated total covered Part D spending at the out-of-pocket expense threshold for beneficiaries who are eligible for the coverage gap discount program: $10,690.20 (up from $10,048.39 in 2021); and
• Minimum cost-sharing under the catastrophic coverage portion of the benefit: $3.95 for generic/preferred multi-source drugs and $9.85 for all other drugs (up from $3.70 and $9.20, respectively, in 2021).

EBIA Comment: These parameters will be used by group health plan sponsors to determine whether their plans’ prescription drug coverage is creditable for 2022. The information is needed for required disclosures to Part D eligible individuals and to CMS. In addition to the annual participant disclosure notice requirement, which may be satisfied by providing a single notice at the same time each year, disclosure notices may also 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.