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The Department of Health and Human Services (HHS) published a proposed rule on November 28, 2025 (the Proposed Rule) that would carve out account-based group health plans from the requirement to provide a Medicare Part D-creditable coverage notice to Part D-eligible individuals. This exclusion would be welcome relief for account-based plan service providers and plan sponsors who offer an individual coverage health reimbursement arrangement (ICHRA) or another type of account-based group health plan, such as a health care flexible spending account (FSA), health savings account (HSA), or traditional health reimbursement arrangement (HRA).
Foley has been involved in advocacy efforts for this change, as the ICHRA industry generally views the notice as unnecessary and confusing for ICHRA members. It is exciting to see that HHS agrees, at least tentatively, as discussed below. For some background on ICHRAs, please visit our alerts here and here.
In the preamble to the Proposed Rule, HHS recognizes that while account-based plans are expressly listed in the law as plans generally within scope, these types of plans do not actually offer prescription drug coverage, making the creditable coverage notice inapplicable. HHS uses ICHRAs to demonstrate this inapplicability of the notice and suggests that ICHRA creditable coverage notices are confusing to individuals, consistent with feedback from the ICHRA industry. ICHRAs will generally indicate that they do not offer creditable coverage (because they do not directly offer prescription drug coverage), while a notice from the ICHRA member's underlying health insurance plan may indicate that it offers creditable coverage, leading to potentially contradictory information. Similar issues can arise with other types of account-based plans.
If finalized, this exception would be a win for the industry. Account-based plan service providers and industry experts have long called for the removal of technical requirements that make little sense outside of a major medical plan context. This could also help with the passage of future ICHRA-friendly law or regulatory guidance. Foley has been involved in advocacy efforts to carve out ICHRAs from similar regulatory reporting, such as the Summary of Benefits and Coverage and Form 1095-B.
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