Breaking Down the Benefits of Prescription Drug Insurance
Prescription drug insurance plays a significant role in a comprehensive health insurance plan. Individuals who have this coverage pay a monthly premium and an annual deductible in order to take advantage of the benefits. There is usually a copay for each individual prescription as well. As prescription drug prices have increased, many insurance companies have placed more restrictions on how they will cover prescription drugs and medications. This means that Americans who are enrolled in a health plan with prescription drug insurance may begin to see out-of-pocket expenses rise.
How Health Plans Cover Prescription Drugs
Health plans cover prescription drug costs in a wide variety of ways. Although rules vary from state to state on how costs are covered, health plans are designed with similar benefits to cover prescription drug insurance.
Copays are a set amount that you pay for prescriptions and are typically based on tiers according to the health plan’s formula. For example, the health plan may charge $10 for Tier 1 generic drugs and $50 for Tier 3 non-preferred brand-name drugs.
Coinsurance allows you to pay a percentage of the prescription’s cost. The other cost is covered by insurance. The ratio is typically an 80/20 or 70/30 spilt, meaning you will pay 20% or 30%, and insurance will cover the rest. Many health plans with coinsurance require you to pay the full price of the prescription until you have met your deductible, after which you pay a percentage of the full cost. However, other plans require only the percentage until a pre-determined limit is met, then they’ll cover 100% of prescription costs.
- Prescription Deductibles can be separate from medical deductibles and will need to be met before any coverage starts. After the deductible is met, a copay will be applied.
- Integrated Deductible includes both prescription and medical costs. When the full deductible is met, prescription coinsurance or copays will apply.
- Out-of-Pocket Maximum. Health plans usually contain an annual maximum out-of-pocket limit. This is the most that you will have to pay for medical services, including prescriptions, before the insurance carrier picks up 100% of the cost. For out-of-network doctors, this limit and rules for what is included can be different.
As a consumer, prescription drugs and medications can be costly if you’re not careful. That’s why it is vital to choose a health plan that offers the best prescription drug insurance to offset the cost of the prescription drugs and medications you need.
At Schechner Lifson, we provide all forms of group employee benefits including health, life, disability, vision, and dental programs. Contact us to learn about our comprehensive set of insurance products and how we can help you.