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Medicare Part D is a voluntary prescription drug program for Medicare beneficiaries. Medicare Part D includes an employer subsidy (the Retiree Drug Subsidy), which is designed to encourage employers to provide prescription drug coverage to Medicare-eligible retirees even though Medicare Part D is available.
The Retiree Drug Subsidy (RDS) is available to certain employers that sponsor group health plans covering retirees who are entitled to enroll in Part D but elect not to do so. To participate in the RDS program, eligible employers must submit an application to the Centers for Medicare & Medicaid Services (CMS) prior to the beginning of the plan year.
In general, the RDS is equal to 28 percent of each qualifying covered retiree’s costs for prescription drugs otherwise covered by Medicare Part D that are attributable to costs between the cost threshold and cost limit.
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