There’s no denying it. Prescription drugs can cost a lot of money. In fact, a Chicago Tribune article reported “average branded prescription drug prices have nearly doubled over the last five years.” With no end in sight to these cost increases, RetireMED®iQ has three tips to save money on your prescriptions.
Understand your plan’s prescription formulary and tier levels
Does your plan's formulary cover your current medications? The formulary—also known as your insurance plan’s list of covered drugs—can change each year. This means that the medications that were on the formulary this year may not be included next year. But don’t worry–if changes are made, this information will be communicated in your Annual Notice of Change.
However, making sure your prescriptions are on your plan’s formulary isn’t the only way to be a smart consumer. You should also 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 through 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 did not know what to look for as they considered their plan renewal, or they simply didn’t understand how their formulary coverage and tier levels could impact their prescription costs. Being an informed consumer can end up saving you lots of money each year!
Know the difference between drug coinsurance and copays
Our experts are seeing 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 a coinsurance when you fill your prescriptions. Each month, you go to the pharmacy and owe a $15 coinsurance on your medicine. 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 medicine 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.
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.
Statistics show that health care will most likely be your biggest expense in retirement. We can work with you to maximize your health plan and make the most of your health care dollars—giving you the peace of mind you deserve in your retirement.
If you have questions about your prescription costs and how RetireMED®iQ can help you make the most of your health coverage, call us at 1-844-388-6565 or visit www.retiremediq.com/getstarted.