On Monday, April 6, 2015 the Centers for Medicare & Medicaid Services (CMS) announced the Cost Threshold and Cost Limit amounts that apply to Plan Sponsors participating in CMS' Retiree Drug Subsidy (RDS) Program, with qualified prescription drug years that end in 2016, as well as the parameters for Medicare Part D plans in 2016.
The amounts for RDS plan years ending in 2016 changed from the amounts for RDS plan years ending in 2015. The Cost Threshold and Cost Limit amounts are $360 and $7,400, respectively. The originally announced Cost Thresholds and Costs Limits for RDS plan years ending in 2006, 2007, 2008, 2009, 2010, 2011, 2012, 2013, 2014, and 2015 continue to apply for those RDS plan years.
For detailed information about the Cost Threshold and Cost Limit amounts for specific plan years, refer to Cost Threshold And Cost Limit By Plan Year.
CMS also announced on April 6, 2015 that the Medicare Part D Benefit Parameters for 2016 (for example, initial coverage limit) have been adjusted.
Impact of Adjustments
The year in which a Plan Sponsor's RDS plan year ends, as specified in the Plan Sponsor's application, determines the applicable Cost Threshold and Cost Limit amounts for that application. This principle applies to both calendar year plans and non-calendar year plans. The newly announced Cost Threshold and Cost Limit amounts are used in determining the amount of subsidy payments for RDS plan years ending in 2016.
Plan Sponsors of RDS plans ending in 2016 that were using the 2015 Cost Threshold and Cost Limit as a basis for submitting costs to CMS' RDS Center, should adjust their interim cost data in their next cost submission to reflect the new 2016 Cost Threshold and Cost Limit amounts.
Please keep in mind that final cost reports, whether submitted for purposes of reconciling interim payments or submitted by Plan Sponsors that had selected an annual payment frequency, must reflect the applicable Cost Threshold and Cost Limit amounts that correspond to the application plan year end date.
In addition, revised RDS regulations that took effect June 9, 2008, state that the valuation of defined standard prescription drug coverage for a given plan year is based on the initial coverage limit, cost-sharing, and out-of-pocket threshold for defined standard prescription drug coverage under Medicare Part D at the start of such plan year or that is announced for the upcoming calendar year. More specifically, under the revised regulations, any actuarial attestation submitted to CMS' RDS Center within 60 days after the publication of the adjusted amounts can be based on either the adjusted amounts, or the previous year's amounts. Any actuarial attestation submitted more than 60 days after the publication of the adjusted amounts must apply the adjusted amounts.
For more detailed information on the Cost Threshold and Cost Limit amounts for 2016, and the Medicare Part D Benefit Parameters, review CMS' 2016 Announcement.
The 2016 RDS Cost Threshold and Cost Limit amounts and the Medicare Part D Benefit Parameters begin on page 40 of this document.
If you need more information, contact CMS' RDS Center.