Compliance News | October 13, 2020

Medicare Part D 2021 Numbers: What You Need to Know

The Medicare Part D 2021 deductible and other standard benefit design parameters will be higher than in 2020.

The Retiree Drug Subsidy (RDS) amounts that the federal government pays to sponsors of group health plans that provide prescription drug coverage to Medicare-eligible retirees will also increase in 2021.

Charts in this Update compare the 2021 numbers to the 2020 numbers. This information is helpful for plan sponsors when reviewing next year’s retiree health coverage.

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Health compliance news highlights

  • The Medicare Part D 2021 deductible will increase by just over 2 percent.
  • The out-of-pocket threshold (TrOOP) will increase by just over 3 percent.
  • The Retiree Drug Subsidy’s cost threshold will increase by just over 2 percent while the cost limit will increase nearly 3 percent.

Will the higher TrOOP lower reinsurance payments from CMS?

Some plan sponsors contract with a Medicare Part D Prescription Drug Plan or Medicare Advantage-Prescription Drug Plan.

These plans are also known as Employer Group Waiver Plans (EGWPs).

EGWPs must meet two parts of the standard benefit design: They may not have a deductible higher than the standard deductible, and they must observe the catastrophic threshold.

CMS pays a reinsurance subsidy to plan sponsors that contract with EGWPs.

We expect that high-cost drug therapy price increases will likely be equal to or greater than the increase in the TROOP amount for most patients. That will generate similar or larger reinsurance payments for most plan sponsors.

Questions about the Medicare Part D 2021 numbers?

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This page is for informational purposes only and does not constitute legal, tax or investment advice. You are encouraged to discuss the issues raised here with your legal, tax and other advisors before determining how the issues apply to your specific situations.

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