Prescription Drugs

Not all medications are created equal

Insurance companies hold down the costs of healthcare by creating a list of drugs called a “formulary” that are clinically- and cost-effective. They encourage plan members to choose medications from the formulary by offering low copays. If a member chooses a non-formulary drug, the copay is higher.

Each insurance company has a slightly different formulary. It is good practice for employees to check and see if their medications are on the formulary of the insurance company being considered.

There are often four categories of medications:

• Tier 1: Generic ($)

  Insurance companies encourage members to use generics when possible, so they are the least expensive option.

• Tier 2: Preferred brand (formulary) ($$).
  

  These are often the older, time-tested brand name drugs and have lower costs. Insurance companies hope members will use preferred brand drugs instead of non-preferred drugs. These are the medications that our on their formulary.

• Tier 3: Non-preferred brand (non-formulary) ($$$).
  

  These are often the newer medications and thus are more expensive. The insurance company will cover these medications, even though they are not on the formulary.  When member uses the plan, there will be a higher copay than for formulary medications.

• Tier 4: Specialty ($$$$)
  

  These are the newest and most expensive medications  and often include injectable drugs.

Prescription drug copays

Traditional insurance plans offer copays for prescription medications.  When a plan member chooses a plan that is more expensive, the copays for prescription drugs are lower.  There are no copays for prescriptions with an HSA-based plan until the plan deductible has been met. The member pays the regular cost of medication up to the deductible then pays the copay or a percentage of the medication.

Important Note: Plan members can go on the insurance company website to find their medications and determine if they are on the formulary or not.  If the members currently takes a non-formulary medication, they can show this list to their doctor and ask if there is a formulary drug that is both clinically and cost effective