MedCost Benefit Services, LLC (MedCost) is issuing this Compliance eBlast to update clients and brokers regarding (1) changes to our Medicare Part D creditable coverage process, (2) how to obtain the MedCost Compensation Disclosure, and (3) a reminder about the Gag Clause Prohibition Compliance Attestation.
1. Medicare Part D Creditable Coverage Process
Group health plan prescription drug coverage is considered “non-creditable” when it does not provide, on average, as much coverage as Medicare's standard Part D plan. Employers who offer prescription drug coverage must distribute a notice of creditable coverage status to Medicare-eligible individuals before October 15, coinciding with the Medicare Part D open enrollment period, which generally runs from October 15 to December 7 each year. The purpose of this notice is to ensure that Medicare-eligible individuals who delay enrollment in Medicare Part D are aware that they may incur late enrollment penalties unless they enroll in other creditable coverage.
The Inflation Reduction Act (IRA) made several significant changes to the structure of the Medicare Part D program beginning in calendar year 2025, most notably the substantial reduction in the annual out-of-pocket (OOP) threshold for prescription drug costs from $8,000 in 2024 to $2,000 in 2025. The annual OOP threshold was subsequently increased to $2,100 for 2026 and will increase to $2,400 for 2027.
In addition, CMS has finalized further changes affecting the determination of creditable prescription drug coverage for employer-sponsored group health plans. For 2026, non-retiree drug subsidy (non-RDS) group health plans using the simplified determination methodology could use either the prior methodology or the revised methodology, under which the plan must be designed to pay, on average, at least 72% of participants’ prescription drug expenses. Beginning in 2027, the prior simplified determination methodology will no longer be permitted. Under the revised simplified determination methodology, a non-RDS group health plan must be designed to pay, on average, at least 73% of participants’ prescription drug expenses, in addition to providing reasonable coverage for brand-name and generic prescription drugs and biological products and reasonable access to retail pharmacies. The 2027 changes also codify the IRA's redesigned Part D benefit, including elimination of the coverage gap phase, the reduced annual OOP threshold, and no enrollee cost sharing in the catastrophic phase.
As a result of these continued changes to the federal Medicare Part D creditable coverage process, MedCost has reevaluated our Medicare Part D creditable coverage informal determination service to provide clients with access to a more streamlined, compliant, and sustainable service option. Effective immediately, MedCost will now be offering access to the services of Lumelight for Medicare Part D determinations. Lumelight is an industry leader in Medicare Part D determination services that utilizes proprietary mathematical systems to assess plan creditability.
To access the Lumelight service, clients will need to click the button below and then follow the on-screen prompts to create a user account and access the Lumelight Creditable Coverage Calculator. Analysis for each Prescription Drug Plan Offering through Lumelight costs $300.
Clients are not obligated to use Lumelight and may choose to engage another vendor for Med D determinations.
If you have further questions, please contact your Client Services team directly.
2. Compensation Disclosure Document
Compensation Disclosure is a federal transparency requirement under ERISA that requires brokers, consultants, and certain service providers to disclose the direct and indirect compensation they receive for services to group health plans, along with other information. For third-party administrators (TPAs), brokers, and plan sponsors, this helps ensure visibility into fees and compensation arrangements, enabling plan fiduciaries to make informed decisions and meet their compliance obligations. The 2026 Consolidated Appropriations Act extended this disclosure requirement to TPAs.
MedCost’s current disclosure document, in accordance with the 2026 Consolidated Appropriations Act revisions, is available from your Account Executive upon request.
3. Gag Clause Prohibition Compliance Attestation
As a reminder, group health plans are required to complete and submit the annual Gag Clause Prohibition Compliance Attestation (GCPCA) by December 31. The GCPCA requirement was established under the Consolidated Appropriations Act, 2021. It generally prohibits group health plans and health insurance issuers from entering into agreements that directly or indirectly restrict access to, or the sharing of, certain cost and quality-of-care information with health care providers, provider networks or associations, TPAs, or other service providers that offer access to provider networks.
In prior years, MedCost completed this filing on your behalf. MedCost discontinued this service after the 2025 filing as previously communicated, so clients are now responsible for completing and submitting the attestation by the deadline.
The information in this Compliance eBlast is intended to provide a summary of our understanding of recent regulatory developments which may affect our clients’ plans. It should not be construed as specific legal advice or legal opinion.