Every employer that provides pharmacy coverage must assess on an annual basis if their pharmacy plan(s) are "creditable" under Medicare rules. To be "creditable," a plan's prescription drug coverage must be at least as rich as the standard Medicare Part D plan for the upcoming plan year. Employers must notify all Medicare Part D-eligible persons covered by the prescription drug plan of its creditability status by October 15.

Effective 2025, the Centers for Medicare & Medicaid Services (CMS) made significant changes to the standard Medicare Part D plan design, which includes a $2,000 maximum out-of-pocket amount ($2,100 for 2026). This, along with other benefit improvements, means employers' plans have to meet a higher creditability threshold for 2025 and beyond.

For 2026 only, CMS is allowing employers to make a choice to use the current simplified methodology (released by CMS in 2009) or the revised methodology to determine creditability for non-Retiree Drug Subsidy (RDS) group health plans.

Beginning calendar year 2027, CMS will no longer allow the existing simplified determination methodology, requiring non-RDS group health plans to determine creditable coverage through actuarial equivalence testing or the revised simplified determination methodology. Under this revised methodology, group health plan coverage must pay at least 72 percent of participants’ prescription drug expenses, compared to 60 percent under the existing methodology. CMS revised this due to changes in Part D, as the 60 percent value no longer accurately reflects the value of the Part D benefit. Group health plan coverage must average at least 72 percent of participants’ prescription drug expenses to meet the actuarial value requirement of standard Part D coverage, as mandated by section 1860D-13(b)(5) of the Act.

As a courtesy, Cigna Healthcare is providing creditability testing for both methodologies to help make informed decisions for 2027.

Keep in mind

• Determining the plan's creditability status is not as simple as asking “Does an employer plan have an out-of-pocket maximum lower than $2,100?” For integrated medical and pharmacy benefit plans creditability determinations, employers must estimate the participants' out-of-pocket expenses for pharmacy benefits (e.g., deductible, coinsurance, copayment, out-of-pocket maximum).
• As a courtesy, Cigna Healthcare publishes materials on the creditability of standard plan designs to assist in determining creditable coverage.
• Please note that Cigna Healthcare courtesy testing does not represent a formal actuarial attestation or legal advice, and any final creditability determinations are the sole responsibility of the employer.
• While employers must notify Medicare-eligible participants of their plan's creditable coverage status, they are not required to offer creditable coverage.¹

Why is this important?

If the pharmacy benefits provided by the employer's plan are not creditable, a Medicare-eligible person can enroll in another creditable plan offered by their employer or their spouse's employer, or enroll in a Part D plan, to avoid paying penalties on their Part D premiums for the rest of their lives. If a Medicare-eligible beneficiary goes without creditable coverage for more than 63 days, when he or she later enrolls in a Part D plan, they will be assessed premium penalties at a rate of 1 percent per month for the time that they went without creditable coverage.

To assist your clients in determining their creditability coverage status,² please use the following spreadsheets:

• 2026 Integrated plans creditable coverage testing spreadsheet
• 2026 Non-Integrated plans creditable coverage testing spreadsheet

For letters to send to clients, please see below:

• 2026 Integrated plans creditable coverage client letter template
• 2026 Non-Integrated plans creditable coverage client letter template

IMPORTANT: Do not use this information for creditable coverage determinations for a plan applying for retiree drug subsidies.