Have you ever wondered why the amount that you pay at the pharmacy counter varies so much depending on the prescription that you’re filling? Generics, certain brand name prescription drugs and even some types of medications can all have wildly different coverages. In most cases, what you pay for a drug is dependent on your insurer’s tier pricing.
Understanding How Drug Tiers Affect Your Wallet
What Are Drug Tiers?
Your health insurance company’s formulary is a list of all the different drugs that their plans cover. Within the formulary, there are drug tiers. These tiers determine the level of coverage your prescription drug plan offers for a specific type of medication. Many prescription drug plans use a 4-tier system, while some insurers have an additional 5TH or even 6th-tier system. Your insurer’s formulary and tier system are available on the company website or in the documents you received when you enrolled in your prescription drug plan.
Tier 1 Prescriptions:
This tier is usually the cheapest and generally includes generic medications.
Tier 2 Prescriptions:
This tier includes brand name drugs that are preferred by your health insurance company. Just as your health insurance company provides better coverage for in-network healthcare providers, it provides better coverage for preferred drugs. It can also include more expensive generic medications.
Tier 3 Prescriptions:
This tier includes brand name drugs that are not preferred by your health insurance company. These drugs are still covered, but you will likely pay more out of pocket than you would for a preferred drug.
Tier 4 Prescriptions:
This tier, includes specialty drugs, such as those used for cancer treatment. These drugs have a much higher out-of-pocket cost.
Tier 5 Prescriptions:
This tier, which is not included in all prescription drug plans, includes highest cost specialty drugs.
Tier 6 Prescriptions:
This tier many companies will use and not charge their insureds a copay at all, using a tier-6 medications for “maintenance medication”.
Why Is Tier Pricing Used?
The primary purpose of tier pricing is to help health insurance companies manage their costs. In most cases, the drugs listed on a plan’s formulary are both effective and the most economically priced for treating a condition. To promote the use of generics or more cost-effective brand name drugs, health insurance companies may cover a larger portion of the costs for Tier 1 and Tier 2 drugs.
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Understanding Tier Pricing Can Help You Save Money
Understanding your drug plan’s formulary and tier pricing and knowing what to expect at the pharmacy counter can help you save a lot of money on your prescriptions.
After you’ve reviewed your drug plan’s tiers, talk to your doctor about what conditions you’re currently receiving treatment for and what medications you are on. Your doctor can help you find the most cost-effective prescriptions that will provide effective treatment for your conditions. Additionally, in most cases, generics can be substituted for brand name drugs, helping you pay the lowest price available.
Share Your Insurance Plans’ Formulary With Your Doctor
You have every right to share your insurance plans’ formulary with your doctor. Being pro-active in your own costs. You and your doctor could converse about lower tiered medications your insurance plan formulary covers, to see if the medication could be the right medication for you. Saving you on your monthly medication costs. You could also speak with your broker about your medications before you purchase a health plan, choosing a plan with lower tiers for the medication you take, making sure your doctor also takes the plan.
Nevada Insurance Enrollment Is Here to Help
Understanding how health insurance companies cover different types of drugs can be confusing. At Nevada Insurance Enrollment, our health insurance agents are here to help you find an insurer that will cover your prescriptions, ensuring that you save as much money as possible on the cost of your prescriptions. Contact us today to discuss your options.
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