Medicare Part D Creditable Coverage Is Changing: What Employers and Brokers Need to Know for 2026 and 2027
Medicare Part D creditable coverage requirements are changing, and employers and benefits brokers should start preparing now.
CMS has introduced a revised simplified determination methodology for determining whether an employer-sponsored prescription drug plan is considered creditable coverage. The biggest change is significant: under the revised methodology, a plan must be designed to pay, on average, at least 72% of participants’ prescription drug expenses.
That's up from 60% under the existing simplified determination methodology.
For employers and brokers, that means a plan that previously satisfied the simplified determination requirements may need to be reviewed again under the new standard.
What Is Medicare Part D Creditable Coverage?
Prescription drug coverage is considered "creditable" when its actuarial value equals or exceeds the actuarial value of standard Medicare Part D coverage.
This matters because Medicare-eligible individuals who go 63 consecutive days or longer without Part D or other creditable prescription drug coverage after their initial enrollment period may be subject to a Part D late enrollment penalty when they eventually enroll.
Employers offering prescription drug coverage therefore have an important responsibility to determine the creditable status of their plans and communicate that status to Medicare-eligible individuals.
What's Changing?
CMS determined that the existing simplified determination methodology no longer adequately reflects the actuarial value of the redesigned Medicare Part D benefit.
As a result, CMS created a revised simplified determination methodology.
Under the revised methodology, coverage must:
Provide reasonable coverage for brand-name and generic prescription drugs and biological products
Provide reasonable access to retail pharmacies
Be designed to pay, on average, at least 72% of participants' prescription drug expenses
The last requirement represents one of the most important changes for employers and brokers.
Existing methodology: 60%
Revised methodology: 72%
That's a meaningful increase.
What Happens in 2026?
CMS established 2026 as a transition year.
For calendar year 2026, non-RDS group health plans may use either the existing simplified determination methodology or the revised simplified determination methodology.
That gives employers and brokers additional time to understand how their plans perform under the revised methodology.
But it also creates an opportunity to get ahead of the change.
Rather than waiting until the revised methodology becomes the standard, employers can begin evaluating their prescription drug plans now.
Why Brokers and Employers Should Pay Attention
The increase from 60% to 72% means you shouldn't simply assume that because a plan was creditable in the past, it will continue to satisfy the applicable requirements going forward.
For brokers, this makes creditable coverage testing an increasingly important part of the renewal process.
For employers, it means understanding the status of each prescription drug plan and maintaining documentation supporting that determination.
CMS also requires entities offering prescription drug coverage to provide creditable coverage disclosures to Part D-eligible individuals at specified times. Separate disclosure to CMS generally must be completed annually within 60 days after the beginning of the plan year, as well as following certain changes or termination of coverage.
Don't Wait Until Renewal to Find Out
The best time to understand how these changes affect your plans is before you're up against a deadline.
Creditable helps brokers and employers simplify Part D creditable coverage determinations, document the results, and keep the information organized.
Instead of chasing carriers or relying on manual spreadsheets, you can know where your plans stand and have the documentation to support it.
Test your plans and prepare for the new requirements at joincreditable.com.
This article is for informational purposes only and should not be considered legal, tax, or actuarial advice.
Sources: CMS Final CY 2026 Part D Redesign Program Instructions · CMS Creditable Coverage Resources