Understanding How Drug Tiers Affect Your Wallet
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.
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 can include more expensive generic or less expensive 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.
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:
With this tier many companies will use and not charge a copay at all, using a tier-6 medication for “maintenance medication”. You’ll need to check your plan details.
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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.
Understanding Tier Pricing Can Help You Save Money
Understanding your drug plans’ 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 plans’ 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 some but not all cases, generics may be substituted for brand name drugs, helping you pay the lowest price available.
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Share Your Insurance Plans’ Formulary with Your Doctor
You have every right to share your insurance plans’ formulary with your doctor. Be pro-active in your own out of pocket 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, along with saving you money on your monthly medication costs. You should also speak with your broker about your medications BEFORE you purchase a health plan to see if there is a lower tiered plan offered. Important to ensure 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 and help save you the most money. Contact us today to discuss your options.
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What Is a Health Insurance Carrier?
A health insurance carrier provides plans to cover medical expenses, like doctor visits and prescription medications. Understanding your insurer’s network, plan types (HMO, PPO), and costs (premiums, deductibles) is key to choosing coverage. In Nevada, carriers collaborate with Nevada Health Link to offer ACA-compliant plans, ensuring access to preventive care and essential benefits. Learn how to select a dependable health insurance company and manage costs effectively.
What is a Prescription Drug Deductible?
In the world of health insurance, “deductible” is a common word. It refers to an amount of money that you pay out of your pocket before the insurance company begins to pay. A prescription deductible is the portion you’d pay first, then after you’ve paid the deductible, you may only have to pay a co-pay when you pick up your medication.
If you are single, you would only have to meet your prescription deductible. If you have two or more people in your family, each member may have to meet their own prescription deductible which could be up to 2 deductibles in the family. A prescription deductible is different and separate from the medical deductible, unless otherwise stated. One deductible is for medical, ie: hospitalization, doctors, etc., and the other deductible is for filling your prescriptions.