4 Ways You Can Save Money on Your Prescription Costs

Prescription drugs can be very expensive, and costs continue to rise every year. Fortunately, it appears that prices are growing more slowly in the last few years than they did before, according to Medscape. In 2014, the increase in brand-name medication prices was 13.5 percent whereas in 2018, the increase was 5.5 percent. Even with slower price increases, global spending on medications is projected to exceed $1.1 trillion from 2019-2024. Medication costs can be tough on your wallet, so we have four easy tips to help you save money.

1. Understand Your Plan’s Formulary and Tier Levels

Do you know if your plan’s formulary covers your current medications? The formulary is also known as your insurance plan’s list of covered prescription drugs. Note that changes may be made to the formulary, so it’s good to ensure you have the most updated formulary list for your plan.

It’s also important to know which tier level your prescriptions are in. A medication’s tier level is simply its price category within the formulary. As a medication increases in tier level, it will generally cost more when you fill it. Similarly, the lower the medication’s tier level, the less you will pay when you have it filled.

So, what are some easy ways to prepare for your prescription expenses throughout the year? One, make sure your medications are on your plan’s formulary and two, know which tier they are in. We often hear from clients who are caught off guard by the cost of their prescriptions because they didn’t understand how their formulary coverage and tier levels could impact their prescription costs. Being an informed consumer can save you lots of money each year! Remember that our team is always here as a resource and we can review your plan’s formulary and tier level details with you.

2. Know the Difference Between Prescription Drug Coinsurance and Copays

Many plans feature coinsurance as a cost-sharing method for enrollees. So, what exactly is a coinsurance and what does it mean for you?

If your plan’s prescription benefits indicate that you will pay a coinsurance on your prescriptions, this means that you will pay a percentage of the cost of your medication(s) when you go to the pharmacy.

For example, let’s say your plan requires you to pay coinsurance when you fill your prescriptions. Each month, you go to the pharmacy and owe a $15 coinsurance on your medication. This is a percentage of the cost of the overall medication price. Now, let’s say the price of the medication increases. That means that next time you go to fill your prescription, your coinsurance may go up to $20. This is because you are paying a percentage of the overall cost of the medication.

A “copay” on the other hand, is a fixed amount that is set depending on the tier level your prescription is in.

In this instance, if your prescription benefits outline that you owe a $15 copay on prescriptions within a certain tier level, you will only owe $15 regardless of any fluctuations in the cost of your prescriptions within a given year. Many people prefer copays because they allow you to better estimate your annual prescription costs.

3. Use Your Plan’s Preferred Pharmacies

More and more prescription drug plans are now featuring “preferred pharmacies” as a way to lower copay amounts. If your plan provides a list of preferred pharmacies, you can choose to have your prescriptions filled at any of those locations and potentially save money by doing so. For individuals looking for a simple way to reduce costs, switching to a preferred pharmacy can be a great way to save.

4. Ask About Paying Cash

Ask your pharmacist if the cost of your prescription drug is lower when paying with cash as opposed to using insurance. In some cases, it is more cost-effective to pay cash. When you use cash to pay for your prescriptions, you can occasionally apply coupons which can sometimes save you more than if you used your plan. GoodRx is a great resource we regularly recommend to clients because they have many coupons from most reputable pharmacies. Keep in mind though, that if you don’t use your insurance to pay for your medications, the cost will not count toward your prescription out-of-pocket maximum or deductible.

If you are a RetireMEDiQ client and have questions about the items discussed in this post, contact our team of Client Advisors at client@retiremediq.com or 1-877-222-1942.

If you are not a RetireMEDiQ client and have questions about retirement or Medicare, please contact us at 1-866-600-5638 or advice@retiremediq.com.

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