Prescription drug coverage describes the way your plan pays for prescription medications that you need. All health insurance plans have a formulary, or an approved list, of prescription drugs that they will cover. You can appeal to the insurer to get an exception for a specific drug, but it is easier to pick a plan that covers prescriptions you know you need.
How prescription drug coverage works
Every health insurance provider has a prescription drug list, also called a formulary, of what’s covered. These are typically the most common generic and brand name medications. If you need a medication that isn’t listed, you can ask your doctor to submit a formulary exception, or an appeal to have the insurer help cover the cost of a specific drug.
Typically, the drugs are further divided into three or four tiers; the lower tiers are less expensive than the higher tiers. The drugs on the list may change during the year, while typically positive changes can be implemented at any time.
Your plan will also stipulate whether a drug has quantity limits — how much of the drug can be prescribed per order or copay or how many you can get in a months supply — and if the drug requires prior authorization — extra information from doctor as to why you need that particular drug. This usually happens with specialty medications, like growth hormones, HIV medications, or substance dependency-related medicines.
Insurers may also provide a mail-order service for you to have medications delivered directly to your home or list any acceptable pharmacies. Having prescriptions filled via mail order usually doesn’t cost extra.
Additionally, your health insurer might also partner with a pharmacy or offer a prescription savings card to offer further discounts. If not, you can find a pharmacy discount savings card on your own online or by asking your doctor.
How much will my prescription cost?
Whether you need medication for a chronic illness or short-term antibiotics for a cold, prescription drugs can cost a lot of money when paid out of pocket. Fortunately, your health insurance may cover a portion of the costs. How exactly the costs of medications are covered will depend on your plan.
If you have a copay plan, then the insurer may charge you a set copayment based on the tiers. For example, prescription drugs in Tier 1 may cost a $10 copay, Tier 2 $15, and Tier 3 $20.
Other plans, like those for catastrophic coverage, may count prescription drug costs towards the deductible while coinsurance plans may require you to pay for a percentage of the cost of the drugs. The deductible is the amount you need to pay out of pocket before expenses are covered by your insurance. If prescription drugs count toward your deductible, you’ll potentially be able to reach it faster, meaning your plan will start paying for medical costs sooner.
Prescription drug coverage is often included in the cost of your health plan. In fact, all individual plans purchased on the marketplace cover prescription drugs in some way. When you’re shopping for a plan, whether during Open Enrollment or choosing between plans from employer-based insurance, you can check the benefits to see how a potential plan covers prescription drug medications.
What are standalone prescription drug plans?
Most health insurance companies do not offer a standalone prescription drug plan, which usually refers to Medicare Part D. Medicare is a federal government program that offers health insurance primarily for Americans over age 65, and Part D is its prescription drug coverage plan that is bought in addition to other types of coverage. Just like non-Medicare health plans, drug coverage, including the list of covered drugs, can vary based on the particular plan you choose.
You can read more in depth about how to get Medicare prescription drug coverage here.