The medications you need are a vital component of your health care, and the Affordable Care Act requires all of its insurance plans to cover them. Each insurance company is permitted to choose which drugs they cover and how extensive their coverage will be. Before you decide to enroll in a plan, it’s important to take a look at the plan’s drug list (its “formulary”) as well as the plan’s structure (“tiers”) to learn how much you can expect to pay for your medications. The coverage differences between plans can be enormous: a drug that costs you $30 in one plan could have a price tag of $1,000 in another. If you or your family members have specific medications that you know you’ll need, it’s essential to check a plan’s formulary before enrolling.
The Four Drug Tiers
Most health insurance plans separate the drugs on their formularies into four “tiers” or cost levels. Here’s an explanation of the four tiers, starting with the least expensive:
- Tier 1: This tier usually includes only generics, because these are always the most affordable.
- Tier 2: Brand-name drugs on your plan’s “preferred” list.
- Tier 3: Brand-name drugs for most conditions that are not included on your plan’s preferred list.
- Tier 4: Specialty drugs, used to treat rare or serious medical conditions
Important Questions to Ask Your Plan
When you’re sorting out the drug coverage offered by each plan, you need to look beyond the tiers and formularies. Here are a few key questions to ask:
Copay or Percentage?
Drugs in the lower tiers are often available for a flat copay amount, whereas higher tiers may require you to pay a percentage of the cost.
Does the plan make you pay your full deductible before they begin to provide any drug coverage? This payment structure may mean that you end up paying full price for most routine medications. Some plans have a separate deductible just for drugs, however, and will begin providing coverage after you meet that lower out-of-pocket amount.
Does your plan limit the amount of a certain drug that you expect to need? Some plans will only cover a certain dosage level of medication each month. If your doctor prescribes more than this amount, he or she may be required to file a special request with the insurance company. In the case of some Tier 4 drugs, the plan will cover only a 30-day supply each year, requiring you to pay for the other 11 months out of pocket.
Check Your Plan’s Formulary Each Year Before Re-Enrolling
Drug tiers and formularies change each year as insurance companies strive to balance their premiums and expenses in the new health insurance environment. For example, NPR reports that a certain class of expensive cancer drugs was placed in the highest tier by 57 percent of 2015 silver marketplace plans. In 2016, this figure had dropped to 50 percent. This means that in one year, seven percent of plans made these drugs more affordable for their members. Likewise, while 14 percent of silver plans put special HIV drugs in the highest tier in 2014, only 10 percent kept them in that tier in 2016.
There are indications that public pressure and evolving regulations will continue to move in the direction of making drugs more affordable to patients. California recently passed a law prohibiting insurers from placing all or most drugs for a given health condition in the highest tier, and the U.S. Department of Health and Human Services has warned insurers nationwide that such classifications could be discriminatory.
If you have questions or concerns about which prescription drugs your current plan covers or want to learn more about choosing the right plan during the next Open Enrollment, our Consumer Advocates are available year-round to answer questions.