There’s no denying it. Prescription drugs can cost a lot of money. In fact, a Consumer Reports article stated: “In 2016 total drug costs went up 6.3 percent compared with the year before, about three times the rate for other goods and services, according to the Department of Labor. The amount consumers have to pay out of pocket is also rising, from about $25 billion in 2000 to a projected $67 billion in 2025.” With no end in sight to these cost increases, we have four tips to help you save money on your prescriptions.
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 drugs. On the rare occasion that changes are made to the formulary, this information will be communicated in your Annual Notice of Change.
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 drug increases in tier level, it will generally cost more when you fill it. Similarly, the lower the drug’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 drugs are on your plan’s formulary and two, know which tier they are in. We often hear from retirees 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!
2. Know the Difference Between Drug Coinsurance and Copays
Our experts have observed that more 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 drug(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 drug price. Now, let’s say the price of the drug 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 drug.
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. Keep in mind though, that if you don’t use your insurance, this amount will not count toward your out-of-pocket maximum or deductible.
If you are a RetireMEDiQ client and have questions about the items discussed in this post, call us at 1-877-222-1942.