How EGWPs Work
An Employer Group Waiver Plan (EGWP) is a Medicare Part D plan offered by an employer to its retirees. The employer contracts with a PBM to administer the EGWP and receives a subsidy from CMS based on the plan's expected drug costs. The subsidy reduces the employer's cost of providing prescription drug coverage to retirees.
EGWP vs. Creditable Coverage
Employers who offer retiree prescription drug coverage have two options: offer an EGWP (which receives a CMS subsidy) or offer creditable coverage (which is at least as good as standard Medicare Part D but does not receive a subsidy). EGWPs are typically more cost-effective than creditable coverage because of the CMS subsidy.
EGWP Administration
Compliance Note
EGWPs are subject to Medicare Part D regulations, including formulary requirements, cost-sharing limits, and coverage gap provisions. Employers who offer EGWPs must comply with these regulations and must provide required notices to retirees. Work with a PBM that specializes in EGWP administration to ensure compliance.