How Insurance Covers Prescription

For most people who receive a new prescription, their first thought is if their insurance plan covers the cost.  

How much will this drug cost? Can I afford it consistently? These are some of the first questions you may ask yourself.  

There are many reasons to research how your insurance covers medication. Learn more about the process below. 

How Insurance Covers Prescriptions 

There’s wide variation in how health plans cover prescription drugs and rules can vary from state to state. There are many reasons to research how your insurance covers medication 

• Copays: This is the set amount you pay for covered prescriptions. Copays are set in tiers according to the plan’s formulary. 

• Coinsurance: You pay a percentage of the prescription cost and insurance covers the rest. This is typically an 80/20 or 70/30 split, meaning you pay 20% or 30% and your insurance covers the rest. 

• Prescription deductible: Some health plans have a prescription deductible in addition to the medical deductible and it needs to be met before the plan starts to pay for covered prescriptions. A copay or coinsurance applies once the deductible is met, typically set according to the drug tier. 

• Integrated deductible: An integrated deductible includes both medical and prescription costs. Once the full deductible is met, prescription copays or coinsurance apply. Some plans cover prescriptions without a deductible, meaning that copays and coinsurance apply to prescription drugs right away, even if no deductible has been met. 

Does my insurance plan cover my prescription? 

Follow the steps below to find out if your plan covers your prescription.  

1. Visit your insurer’s website to review an inventory of prescriptions your plan covers 

1. Call your insurer to inquire what’s covered. Have your plan information available. It is all available on your insurance card, the insurer’s website, or the detailed plan description in your account. 

1. Check out any details your insurance firm sent you for the coverage you have. 

What are prescription drug tiers?  

The challenge for patients is often figuring out how their prescription drug coverage works. In a healthcare plan, the list of drugs that are covered is called a formulary. The formulary is divided into different levels of coverage based on the type or intended use of the medication. Each tier will have a defined out-of-pocket cost that the patient must pay before receiving the drug.  

Many plans determine what the patient costs will be by putting drugs into five tiers. These tiers are determined by: 

• Cost of the drug 

• Cost of the drug and how it compares to other drugs for the same treatment 

• Drug availability 

• Clinical effectiveness and connection to standard of care 

•  and other cost factors, including delivery and storage 

What are the prescription tiers? 

Drug tiers are a way for insurance providers to determine medicine costs. The higher the tier, the higher the cost of the medicine for the member.  

Tier 1: Preferred generic drugs 

 These are commonly prescribed generic drugs. For most plans, you’ll pay around $0 to $1 for drugs in this tier. 

Tier 2: Generic drugs 

These drugs are generic and cost slightly more than Tier 1 drugs. Typically, you’ll pay around $7 to $11 for drugs in this tier. 

Tier 3: Preferred brand drugs 

The following drugs are brand-name medications without a generic equivalent. They are the lowest-cost brand-name drugs on the list and may also include some high-priced generic drugs. In most cases, you can expect to pay around $37 to $45 for drugs in this tier.  

Tier 4: Nonpreferred drugs 

For most plans, you will be responsible for approximately 45% to 50% of the cost of these higher-priced brand-name and generic drugs, which are not in the preferred tier.ost in this tier.   

Tier 5: Specialty Drugs 

These drugs are the most expensive on the drug list. Specialty drugs are used to treat conditions such as cancer and multiple sclerosis. They can be generic or brand names. For most plans, you’ll pay 25% to 33% of the retail cost for drugs in this tier. For most plans, you’ll pay 25% to 33% of the retail cost for drugs in this tier. 

What if my drug isn’t listed on any tier? 

If the medication is not listed in any tier; it may not be covered under your insurance plan. You could be eligible for a discount through our drug discount program, or you may need to pay the full price for the medication. If you are prescribed a medicine that is not covered by your plan, you can ask your prescriber if there are other options available.  

You can ask for an exception if: 

• The drug you require is not included in the formulary, even though it is the most suitable treatment for you 

• The medication requires pre-authorization, may have quantity limits, or may necessitate step therapy. 

• The drug is covered, but you would prefer it to be covered at a higher level. 

What if a prescription isn’t covered by your insurance plan? 

If you find your insurance provider won’t pay for a new prescription or they stop covering a medication you already take, you can explore these options. 

1. Talk to your doctor about alternatives: If you notice one of your medications has been dropped from coverage or has gotten more expensive, ask your doctor about generics and alternative medications that may be more affordable. You may also be able to find a lower price for the prescription with GoodRx. 
2. Ask for an exception from your insurer: Speak with your insurer about making a formulary exception and providing coverage for the drug. Your doctor will most likely need to submit a supporting statement (sometimes called a letter of medical necessity) detailing why the drug is medically necessary and whether any alternatives would have an adverse effect. 
3. Apply for a patient program: Patient assistance programs help people save on specific medications — particularly costly, brand-name ones that are often not covered by insurance. These programs can reduce out-of-pocket costs to $0 per month for people with and without insurance.  
4. Reconsider your health plan during an enrollment period: Find a plan that has the medication on its formulary. If you are enrolling in an original Medicare or a Medicare Advantage plan, be sure to use the Medicare Plan Finder tool to identify the Medicare Part D prescription drug plan that covers the medications you need. 

Can I use my regular pharmacy to get my medication? 

Just like different health plans cover different medications, different health plans allow you to buy your medications from different pharmacies (called “in-network pharmacies”). Call your insurance firm or visit their website to find out whether your regular pharmacy is in-network under your new plan and, if not, what pharmacies in your area are in-network. You’ll also learn if you get your prescription delivered in the mail. 

If you’ve got additional questions, call 800.858.1772 to get the required information. 

 

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