Cost Threshold And Cost Limit By Plan Year
| Plan Year Ending | Cost Threshold | Cost Limit |
|---|---|---|
| 2006 | $250 | $5000 |
| 2007 | $265 | $5350 |
| 2008 | $275 | $5600 |
| 2009 | $295 | $6000 |
Cost Threshold
The cost threshold is a federally defined amount of gross covered retiree plan-related prescription drug costs paid by a qualified retiree prescription drug plan and/or by qualifying covered retirees. The amount up to the cost threshold is not eligible for subsidy. It is adjusted in the same manner as the annual Medicare Part D deductible and the annual Medicare Part D out of pocket threshold and is adjusted annually as defined in 42 CFR §423.104(d)(1)(ii) and (d)(5)(iii)(B), respectively.
Cost Limit
The cost limit is a federally defined amount of gross covered retiree plan-related prescription drug costs paid by a qualified retiree prescription drug plan and/or by qualifying covered retirees. The amount exceeding the cost limit is not eligible for subsidy. It is adjusted in the same manner as the annual Medicare Part D deductible and the annual Medicare Part D out of pocket limit and is adjusted annually as defined in 42 CFR §423.104(d)(1)(ii) and (d)(5)(iii)(B), respectively.
Threshold Reduction
The amount below the federally defined cost threshold is not eligible for the subsidy. Therefore Plan Sponsors must reduce the amount of gross covered retiree plan-related prescription drug costs. This ineligible subtracted amount is referred to as the threshold reduction.
The Plan Sponsor must calculate the threshold reduction at the retiree level within an application. The threshold reduction amount must be reported to CMS' RDS Center for each benefit option, for each month, and will be the sum of all threshold reductions for all retirees for that benefit option, for that month. Plan Sponsors must keep retiree-level data for audit purposes.
Limit Reduction
The amount in excess of the federally defined cost limit is not eligible for the subsidy. Therefore Plan Sponsors are not able to claim this excess amount of gross covered retiree plan-related prescription drug costs. This ineligible excess amount is referred to as the limit reduction.
The Plan Sponsor must calculate the limit reduction at the retiree level within an application. The limit reduction amount must be reported to CMS' RDS Center for each benefit option, for each month, and will be the sum of all limit reductions for all retirees for that benefit option, for that month. Plan Sponsors must keep retiree-level data for audit purposes.
