In 2013, almost 4 billion prescriptions were filled in the US. WOW! How many of those were yours? The cost for many of these prescriptions is covered under a health insurance plan. But, have you noticed that less of your prescriptions are covered by your health plan?
It’s a frightening trend: due to increasing healthcare costs and the complexity of medications, many Americans are learning that their prescriptions are no longer covered. Further, when you have to pay out of pocket, those costs may not count against your deductible or out-of-pocket maximum, making it 100% your responsibility. Some say that the ACA is causing us to be better healthcare consumers.
Let’s consider a familiar situation. Your doctor gives you a prescription and you assume it’ll be covered under your health plan. When you go to pick it up, the pharmacist informs you that it’s not covered by your insurance (or in a refill situation, your insurance is covering less than it used to).
The prescription industry is complicated so let me simply explain one part that can impact your budget:
Most health insurance plans have something called a “formulary or preferred drug list.” This is simply a list of the medications they’ll cover and to what extent.
One way insurance companies can keep their costs down is to remove medications from their formulary. If they cover fewer drugs, less comes out of their pocket. BUT, the money has to come from somewhere, and in most cases, it’s coming out of your pocket.
More recently, insurance companies have introduced “tiered formulary” plans. In this model, each medication or type of medication is slotted into a tier. Pricing and coverage is different in each tier – this gives you a financial incentive to select lower-cost drugs.
For example, under a 4-tier formulary, a Tier 1 drug will have a low co-pay or no co-pay at all. If you’re faced with a choice between a brand name in Tier 3 or a generic in Tier 1, you may lean toward Tier 1 based on the difference in your out-of-pocket costs.
Health plans usually have details about their formularies as well as alternatives available for a specific medication. Formularies change from time to time - drugs come on and go off, or change from one tier to another, or have a change in the co-pay amount. For medications not on the formulary, you would pay a larger percentage of or all of the cost of the drug.
TIP: because it can have such a big impact on your budget, be sure to check the coverage on your medications before choosing an insurance plan. Your insurance broker or HR department can help get this information before you make a buying decision. If you're eligible for and/or have access to an HSA (Health Savings Account), this can be a good way to help pay for your prescriptions and other qualified healthcare expenses.
In the end, if you find yourself having to foot the bill on your medications, there are ways to cut your costs. Click hereto read a recent article we wrote outlining 7 ways to save on your prescriptions.
Now it’s your turn! Have you had a medication fall off the formulary? Have you experienced increased co-pays? What did you do?