How 2026 CMS Changes Could Make Your Prescription Plan Non-Creditable and What You Can Do About It
Introduction
2026 is already shaping up to be a turning point in Medicare Part D compliance. Because of changes mandated by the Inflation Reduction Act and CMS’s latest guidance, many employer-sponsored prescription drug plans that currently pass as “creditable” might struggle to do so next year. If you’re offering prescription benefits to your employees, this is one risk you can’t afford to ignore.
What’s Changing in 2026?
Higher actuarial threshold: The simplified determination method for creditable coverage is increasing from 60% to 72% for 2026 plans. Risk Strategies+2Groom Law Group+2
Dual-method flexibility in 2026 only: For CY 2026, non-Retiree Drug Subsidy (non-RDS) plans may still choose between the existing 60% method or the new 72% method. Risk Strategies+2Groom Law Group+2
New Medicare Part D features: The out-of-pocket cap is increasing to $2,100 in 2026, and other benefit enhancements are increasing the “richness” of the standard Part D benefit. CMS+2Action Benefits Blog+2
Because employer plans must be as rich as—or richer than—the standard Part D benefit to qualify as creditable, those benefit enhancements may render some current plans non-creditable under the new rules.
Which Plans Are Most at Risk?
The plans that are most likely to fail the new standard include:
High Deductible Health Plans (HDHPs) with steep member cost-sharing
Plans that barely met the previous 60% threshold
Designs with restrictive formularies or fewer covered tiers
Plans that lacked strong integration or usage of generics/biologics
What Should Plan Sponsors Do Now?
1. Model your plan now
Run a preliminary scenario using both the 60% and 72% thresholds so you know where your plan stands.
2. Consider design changes
If your plan is unlikely to pass 72%, consider adjustments:
Lower the member coinsurance/part-drug cost share
Expand formulary coverage (brand/generic/biologics)
Improve pharmacy access
3. Decide your method now
Since 2026 allows both the old and new simplified method (for non-RDS plans), you’ll want to determine which method gives you more flexibility.
4. Prepare communications early
Employees must receive the Creditable Coverage Notice by October 15 each year, and you need to report to CMS within 60 days of the plan year start. Word on Benefits+1
5. Use a reliable tech / actuarial solution
Manual calculations or outsourcing can lead to delays or vague results. A robust platform (like Creditable) can streamline testing and provide defensible documentation.
Why This Matters to You
If your plan becomes non-creditable, your Medicare-eligible employees may face lifetime late-enrollment penalties, even if the gap was unintentional. That kind of consequence can damage trust and create headaches your HR team doesn’t want.
By acting early in 2025, you turn risk into opportunity: you get ahead of compliance, protect employees, and present your benefits offerings with confidence.
Conclusion / Call to Action
Change is coming - but you don’t have to wait for it to disrupt you. Let us help you model your plans, test your creditability, and ensure you pass under the new rules.
Ready to see how your current plan measures up? Drop us a note or schedule a demo - we’ll help you understand your options before 2026 hits.