Medicare Part D notice and distribution changes for 2025

Employers may have become comfortable rubber stamping their Medicare Part D notice for annual redistribution as part of business-as-usual, but the Inflation Reduction Act’s (IRA’s) impact on the program will have some unanticipated consequences for employers if they aren’t paying attention. A Medicare Part D out-of-pocket cap of $2,000 was signed into law through the IRA in 2022 and will take effect in 2025. This cap is a significant reduction from the current cap and as a result, changes what is considered creditable and non-creditable coverage.

With this in mind, it is the right time to reexamine your company’s and/or your clients’ Medicare Part D notice due to the limit changes for 2025. The annual Medicare Part D notice is required to inform plan participants whether the employer plan is creditable or not creditable, and the limit change impacts the creditability.

The IRA is poised to reduce out-of-pocket costs for Medicare Part D, provide more predictability and consistency with drug costs and ensure broader access to necessary medications. Yet, the reality is that many employers do not fully appreciate (or do not realize at all) the extent to which the IRA is impacting Medicare Part D.

In turn, it is critical to closely examine not only what the notice says, but how it is distributed. The IRA’s impact on the insulin cost cap, drug price negotiation, inflation rebates and other key components could include details that affect your distribution strategy.

Reassessing the Medicare Part D notice and distribution requirements

Let’s dive into the requirements surrounding this plan notice, as well as some key considerations and best practices.

1. Employers providing a group health plan with prescription coverage are required to notify plan participants that are eligible for Medicare coverage.
2. The notice will inform the plan participant whether the employer’s plan is considered creditable or non-creditable.
3. Creditable means the plan is at least as good as Medicare coverage.
4. If the coverage is non-creditable the employee may later face penalties for not enrolling early enough into Medicare.
5. The notice is required to be distributed by Oct. 15 of each year.
6. The Medicare Part D enrollment period is held Oct. 15 – Dec. 7 each year.
7. Mailing this notice to the home address on record for all eligible employees blankets the distribution. Doing so ensures that the notice is received by all current and potential plan participants who may be eligible for Medicare.

Optimize distribution strategies and methods for Medicare Part D notices

Having a well-thought out and documented distribution method is essential. As you reevaluate your benefit plans every year with your consultants and prescription providers, you should also seize the opportunity to button up your distribution methods. Take into consideration the timing, distribution channels and record maintenance.

If your new plan year begins on Jan. 1, consider how your open enrollment communications strategy aligns with this distribution requirement. The main consideration is timing. Will your pre-enrollment communications drop in advance of the Oct. 15 Part D notice issuance deadline? If your answer is yes, then you can factor this notice into the materials mix as a matter of convenience and cost savings. Of course, this consideration falls flat if your pre-enrollment communications mindset is paperless

A well-executed distribution strategy ensures that employees are well-informed to make the right decisions regarding their Medicare coverage options, while keeping your plan compliant. If the plan’s creditability is affected by the new Medicare out-of-pocket cap, consider issuing advanced notice to your eligible employees through additional channels such as email or intranet alerts. Also consider adding a cover letter with the Medicare Part D notice to ensure employees understand why they are receiving the notice, whether it is of interest to them based on their Medicare eligibility and what they should do if the employer coverage is considered non-creditable.

Our team at Baker Tilly Vantagen specializes in employee benefits communication, print and fulfillment services. We tailor Medicare Part D notice distributions to convey the importance of the information on behalf of the employer. We can assist you with seamlessly preparing one-time annual mailings and ongoing new hire distributions seamlessly.

If you would like a quote for the print, fulfillment and mailing of your 2025 Medicare Part D notice, please contact us.