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Family Health Insurance Terminology
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Understanding Terms Associated With Prescription Drug Plans Can Help You Choose YoursOct 2008
When purchasing family health insurance, it's important to know what your family's medications could cost you.
To compare family health insurance plans is difficult enough, but when you get to the rules and regulations for prescription coverage it gets downright confusing. However, by calculating your re-occurring prescription drug charges for each of the family plans you are considering, and then adding in your monthly premium, you will get a much better idea of what each plan would cost you and your family. You may even find that the lower monthly premium is not always the least expensive way to go.
First, you need to learn the terms. Find out if your prescription is on the "preferred" list. Or, is it "non-formulary"?
- Formulary: The list of medications that a drug plan will cover. A formulary may list both generic and name-brand medications, and they are required to include at least 2 drugs in each medical category, specifically those that are most often prescribed. For example, any formulary should have at least 2 drugs that lower cholesterol.
- Non-Formulary medication: This medication may have been labeled "too expensive" or "too rarely prescribed" to be on the formulary. Sometimes a plan will cover a portion of the cost for the drug, while others may not cover any cost of a non-formulary drug. If there isn't a "preferred" alternative, you might be able to get a physician's exception from your insurance company.
- Prior Authorization: Permission from your insurance company obtained before a prescription can be filled. If the medication is dangerous or very costly, the insurance company might ask you for prior authorization. By having your doctor contact them and prove that the medication is necessary, the insurance provider insures that it is being prescribed correctly and safely.
- Lifestyle drug:Medications that may not be considered necessary to cover by your health insurance plan or employer. Medications like birth control, hormone replacements, and erectile dysfunction drugs can fall under this category.
- Generic drug: An alternative to a brand-name medication that we might see advertised on tv. These alternatives can contain the exact same active ingredients, in the same dosage, but at a much lower price. Pharmaceutical companies recoup the cost of the development and advertising of their drugs through the costs of their medications, so big name medications are naturally more expensive.
- Tiered plan: A categorization of co-pay amounts that is based on type of prescription. All the above-mentioned categories are set into a tiered plan. This type of prescription drug plan will charge the very least amount for the generic medications in the formulary, and a little more for name-brand drugs in the formulary. The third tier would be for non-formulary medications. If there is a fourth tier, you might find injectable medications and lifestyle drugs with the highest out-of-pocket costs.
- Mail-order medications: Prescriptions that can be mailed to the patient, usually in a larger supply at a lower cost. For example, if you regularly take an arthritis medication, you may be able to buy it from a mail-out pharmacy to get a 3 month supply at a lower cost.
Facts on:
Family Health Insurance
Did you know...
you may be able to use a mail-out pharmacy to get prescriptions at a lower cost?
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If you are confused about your medications and under which of these categories they may fall, compare health insurance plans, and be know what you need before making a final family health insurance purchase. Remember that a lower monthly premium could mean that fewer medications are covered, and the out-of-pocket costs might not be worth it.
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