Americans spend more on prescription drugs than the rest of the world pays, so it’s important to know what you’re getting out of prescription drug insurance. With Americans spending an average of around $1,300 per year on medications, it’s advantageous to know what type of insurance plans maximize coverage and cost efficiency.
Typical Prescription Drug Coverage
Most health insurance plans cover prescription drugs, which can be fairly expensive, especially for rare health conditions. Plans vary in terms of prescription drugs that are covered, so you need to find a plan that covers your specific medication needs.
How Prescription Drug Coverage Tiers Work?
Health insurance companies categorize prescription drugs into four tiers, which relate to costs and copayments. Tier 1 covers generic drugs and usually offers the lowest copayments. Tier 2 covers non-preferred generic drugs and preferred brand-name drugs. It comes with a higher copayment than Tier 1.
The other two tiers have higher costs than the first two tiers. Tier 3 covers higher-priced non-preferred brand-name drugs while Tier 4 covers specialty drugs for rare or serious conditions, which are the most expensive medications. The organization of drugs in these tiers helps you know upfront what to expect in terms of out-of-pocket costs.
How Much Do Prescription Drug Costs?
Costs vary among different insurers and plans, which is why it’s best to shop around until you find the plan that meets your needs. Insurance companies base prescription drug plan costs on the following three groups:
- Group 1: Prior to paying your deductible, there will be cost sharing via copayment or coinsurance.
- Group 2: After paying your deductible, the prescription drug coverage kicks in.
- Group 3: Special deductibles for prescription drugs are offered in plans, usually at a lower cost than typical healthcare deductibles.
How Can I Lower My Prescription Drug Costs?
Healthcare plans include what’s called a formulary, which is a list of prescription drugs that are covered. Be sure to review the formulary before signing up for a plan so that your coverage matches your personal needs. Medications that are not on the formulary may become out-of-pocket expenses.
It’s best to understand how your plan’s coverage works in various scenarios involving different types of medications. Find out about costs for copays and deductibles before you commit to a plan. It pays to shop around with different quotes before you make your final decision on a prescription drug plan.
How to Enroll in Medicare Part D?
The prescription drug section of a Medicare plan is Part D. You first need to examine Parts A, B, and C to consider your options. Part C is also called Medicare Advantage. Nearly 50 million Americans use Part D for prescription drug coverage. The best way to match your needs with appropriate coverage is to work with a Medicare expert.
Get the Right Coverage for Your Prescription Drug with Medicare Advisors Today
You should make a definitive decision on prescription drug insurance, particularly once you are eligible for Medicare. Contact us at Medicare Advisors for more information on your Medicare options. Our team of knowledgeable agents can help you find coverage that fits your state of health.