2026 Medicare Part D LIS Eligibility Changes & Redetermination Guidance for Part D Sponsors
Relevant to: Part D
Each week, we scan the latest CMS memos to find the most important ones that apply for PACE programs. Below is a summary of what you need to know.
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Introduction
The Centers for Medicare & Medicaid Services (CMS), in conjunction with the Social Security Administration (SSA), has released its annual guidance on the redetermination of Part D Low-Income Subsidy (LIS) eligibility for 2026. This important update details the processes for continued and ceased eligibility, encouraging applications for individuals who may no longer automatically qualify. Part D sponsors are advised on communication responsibilities, including outreach and the optional grace period for transitional assistance, while also outlining key enrollment periods and procedural expectations.
Key Dates and Deadlines
- July 2025 – CMS begins identifying LIS eligible individuals who will continue to automatically qualify for LIS in 2026. If not, their subsidy ends on December 31, 2025.
- Mid-September 2025 – Joint mailing from CMS and SSA to individuals who will no longer qualify for LIS automatically in 2026.
- Early October 2025 – Personalized letters to individuals who will have a change in their co-payment level for 2026.
- January 1, 2026 – Start of special enrollment period (SEP) for individuals losing LIS eligibility.
- March 31, 2026 – Deadline for individuals to take action if they do not regain LIS status and wish to change plans.
PACE Compliance
This memo is relevant to PACE programs because it outlines the processes and responsibilities for Part D Sponsors concerning the redetermination of Low-Income Subsidy (LIS) eligibility, which can impact PACE participants who are dual eligible and rely on subsidized prescription plans.
PACE organizations should note the following compliance requirements:
1. The process for redetermination and the communication from CMS to Part D sponsors that identifies individuals who will lose their LIS status in 2026 can affect PACE participants who depend on these subsidies.
– PACE organizations must monitor these communications closely to assist affected participants timely and effectively.
2. Optional Grace Period:
– PACE organizations that offer Part D plans must consider implementing an optional grace period of up to 3 months for individuals no longer automatically qualifying for LIS. This means aiding in the collection of premiums and cost-sharing.
– Ensure confirmation of an LIS application before granting the grace period. Provide guidance to impacted participants on how to submit best available evidence if needed.
3. Special Enrollment Period:
– PACE plans must notify their eligible participants about the Special Enrollment Period (SEP) which allows for plan changes from January 1, 2026, through March 31, 2026, if they lose their LIS status.
– Make sure all eligible participants are aware and assist them through the SEP application process.
4. Outreach Responsibilities:
– It’s crucial for PACE organizations as Part D sponsors to actively reach out to participants losing automatic LIS eligibility. Participants must be encouraged to apply for LIS promptly and assisted with this process if needed.
5. Best Available Evidence and Re-Deeming:
– Maintain compliance with CMS guidelines regarding the “best available evidence” for those losing deemed status.
– Implement consistent policies to ensure records are updated as provided in CMS guidance.
Required Actions
1. Review eligibility for individuals who have lost automatic Part D Low-Income Subsidy (LIS) qualification for 2026.
Identify those who need to reapply for the subsidy and prepare for outreach.
2. Implement the optional grace period policy for the collection of premiums and cost sharing for affected individuals.
Verify that individuals have reapplied for LIS before extending the grace period and communicate the potential for retroactive liability if eligibility isn’t regained.
3. Conduct outreach to members who are losing LIS qualification.
Use outbound scripts and model notices to encourage application for Extra Help, and assist members as necessary with the application process. Regularly reconcile records with CMS notifications to avoid outreach to individuals who regain eligibility.
FAQs
- “What is the process for redetermining Part D Low-Income Subsidy (LIS) eligibility for 2026?”
- “What options do individuals have if they no longer automatically qualify for LIS in 2026?”
- “What responsibilities do Part D sponsors have in aiding members who lose LIS eligibility?”
- “How can individuals apply for Extra Help if they lose automatic LIS eligibility?”
- “What is the optional grace period for individuals losing LIS eligibility?”
