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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
Before purchasing family health insurance, know what your family's medications will cost you.
Comparing family health insurance plans is hard enough, but when you get to the prescription coverage it's down right confusing. By calculating your reoccurring prescription drug charges for each family plan you are considering, and adding in your monthly premium, you can get a much better idea what each plan would cost your family. You may find the lower monthly premium is not the least expensive way to go.
First, learn the terms. Know if your prescription is on the "preferred" list? Is it "non-formulary"?
- Formulary- a list of medications that a drug plan covers. A formulary may have both generic and name-brand medications, and they are regulated to include at least two drugs in each broad medical category that are most often prescribed. For example, they should have at least two drugs that lower cholesterol.
- Non-Formulary medication- this medication may have been deemed too expensive or too rarely prescribed to be on the formulary. Some plans will cover a portion of the cost, some plans may not cover any cost of a non-formulary drug. If there is no "preferred" alternative, you may be able to get a physician's exception from your insurance provider.
- Prior Authorization- permission from the insurance company obtained before the prescription can be filled. If a medication is dangerous or extremely costly, insurance company may ask for prior authorization. By having doctors contact them and prove the medication's necessity on a case-by-case basis, the insurance provider are ensured 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 (as an option when they chose coverage amounts). Medications such as those for birth control, hormone replacement, and erectile dysfunction may fall under this category.
- Generic drug- an alternative to the brand-name medications we see advertised on television. These alternatives may contain the exact same active ingredients in the same dosage, but at a much lower price. Pharmaceutical companies recoup the cost of development and advertising through the cost of their medications, so the big name medications are naturally more expensive.
- Tiered plan- a categorization of co-pay amounts based on type of prescription. All the above-mentioned categories are differentiated in a tiered plan. This type of prescription drug plan will charge the least amount for generic medications in the formulary, and a little more for name-brand formulary. The third tier would be for the non-formulary medications. If there is a fourth tier, you may find injectable medications and lifestyle drugs there with the highest out-of-pocket costs.
- Mail-order medications- prescriptions that can be mailed to the recipient, usually a larger supply at a lower cost. For example, if you routinely take an arthritis medication you may be able to use a mail-out pharmacy to get a three-month supply of the pills 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 unsure about your medications and under which category they may fall, call the insurance companies and be confident before making a final family health insurance purchase. Remember that a lower monthly premium may mean fewer medications are covered, and the out-of-pocket costs may not be worth it.
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