The Centers for Medicare & Medicaid Services (“CMS”) issued a final rule (“Final Rule”) on April 2, 2026 that would remove the requirement for account-based plans, including Health Reimbursement Arrangements (“HRAs”), to report creditable coverage status to individuals eligible for Medicare Part D prescription drug coverage and to CMS.
The Social Security Act requires entities offering prescription drug coverage, including group health plans, to provide notice to Medicare Part D-eligible individuals and CMS regarding whether the coverage equals or exceeds the actuarial value of standard prescription drug coverage under Medicare Part D. Under the final regulations from 2005, account-based health plans, including HRAs, have been required to report and provide notice.
The actuarial value of prescription drug coverage generally can be expressed as the percentage of the total average costs for covered Part D drugs for which a plan will pay. HRAs, in contrast, are accounts funded solely by an individual’s employer to reimburse the medical expenses of employees, their spouses, and their dependents. The financial benefit of these reimbursement accounts is difficult to compare against the actuarial value of a prescription drug plan.
Accordingly, under the prior notice requirements, individuals could receive contradictory notices—such as a non-creditable coverage notice from an HRA and a creditable coverage notice from a prescription drug plan—leading to confusion about whether individuals were actually enrolled in creditable coverage.
The Final Rule recognizes the difficulty in comparing the value of an HRA to the actuarial value of prescription drug coverage. CMS goes so far as to state that this fundamental difference prohibits an “apples to apples” comparison, leading CMS to eliminate the requirement that HRAs, including individual coverage HRAs (“ICHRAs”), provide creditable coverage notices.
The exclusion of HRAs from Part D notice requirements should ease the administrative burden for employers offering HRAs and TPAs administering HRAs. CMS confirmed that the notice requirements for group health plans that directly offer prescription drug benefit coverage remain unchanged.
