The Centers for Medicare and Medicaid Services (“CMS”) has issued final regulations relieving account-based plans, including health reimbursement arrangements (“HRAs”) and Individual Coverage HRAs (“ICHRAs”), from the requirement to provide notices of creditable coverage to Medicare Part D eligible participants and CMS.
Background. Most group health plan sponsors offering prescription drug coverage to Medicare Part D eligible individuals must disclose to these individuals and to CMS whether the plan coverage is creditable or non-creditable. Prescription drug coverage is “creditable” when it is at least actuarially equivalent to Medicare Part D coverage. Individuals who fail to enroll in Medicare Part D prescription drug coverage when first eligible may be subject to late enrollment penalties if they go at least 63 consecutive days without creditable coverage.
In 2025, CMS issued proposed regulations that would exempt account-based plans from this notice requirement. See the Alert of January 23, 2026. CMS reasoned that since account-based plans are designed to provide cost-savings through pre-tax reimbursements and supplement other coverage, applying creditable coverage concepts is inapplicable and burdensome for these plans.
CMS Regulations. The final regulations are applicable to coverage beginning in 2027 and formally exempt all account-based plans from the Medicare Part D creditable coverage disclosure requirements. CMS confirmed that the Medicare Part D notice requirements for group health plans that directly offer prescription drug benefit coverage remain unchanged.
Takeaway. CMS’s exclusion of account-based plans from the Medicare Part D notice requirements should ease the administrative burden for employers offering HRAs and ICHRAs and reduce confusion for many participants caused by these notices. It is important to note, however, that Medicare Part D notices must continue to be provided by HRAs for 2026.
