How Do I Know What Prescription Drugs Are Covered in My Health Plan?

Curious about what prescription drugs are covered in your plan? Our benefits guru, Bud Bowlin, weighs in on drug insurance.

PEO Considerations

Hi Bud,
As a reader of your weekly column, I really value your knowledge on health insurance, so I thought you may be able to help me get a straight answer to why the medicine my doctor prescribes is not covered by my health plan? Paying out of pocket for prescriptions for my family is something I just can’t afford to keep doing, so I would appreciate any insight you can share on how to avoid this and learn what prescriptions are covered in my health plan… before I’m in line at the pharmacy next buying them!
Thanks,
Confused Over Drug Insurance

Dear C.O.D.I

,
If I had a dollar for every time I heard, “My health plan is telling me I have to pay for this medicine out of my own pocket”… It’s certainly a common point of frustration and confusion! Employees expect certain prescriptions to be covered, but often health insurance plans have limitations.
Good news is there is an easy way to find out what is covered. This information is provided in what’s called a “formulary” within your Summary of Benefits Coverage. A formulary, or drug list, is a list of both generic and brand name prescription medications that are covered under a health plan that provides prescription drug coverage. Almost all insurance carriers post online a listing of the specific drugs for your particular area of the country.
You may be wondering, who decides which drugs will make the list? Generally, a group of physicians and pharmacists, along with other specialists, nurse practitioners, and physician assistants are employed by the insurance company to base their decisions on clinical evidence, cost/benefits analysis, FDA data, and peer reviews. Decisions vary based upon which area of the country the formulary is being created for.
When employees consider health insurance plans during Open Enrollment period, it’s always a good idea to check availability of any prescribed meds the family is taking with the new health plan formulary before final selection.
A few additional terms surrounding formularies that you should be aware of:

  • Step Therapy Criteria – When a lower cost, and just as effective drug, is available in lieu of a more expensive drug, the health plan may require the patient to first try the lower cost alternative before they will approve the more expensive drug. If a patient has already tried the lower cost alternatives without success, then the doctor and patient can request the insurance carrier to cover the more expensive one.
  • Prior Authorization – Sometimes the health carrier will request the doctor to provide additional info concerning a specific drug request. This is referred to as Prior Authorization. This process is normally written into the Formulary guidelines for every insured to read.
  • Formulary Change Notice – It should be noted that changes occur frequently to formularies. Most insurance companies give a 60 or 90-day notice of these changes, which are brought about by the introduction of new drugs, conversion to generic of some drugs and different treatment methods.

As consumers, we need to be aware and informed about our health plan’s formulary. Prescription drugs account for almost 10% of our nation’s health care costs. Spend your money wisely!

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