EpiPens are grabbing national headlines for their soaring prices. The life-saving drug device treats anaphylaxis, a potentially fatal allergic reaction to certain foods, bee stings, medications, or latex. Amidst the rising calls for hearings and policy change, should be personal commitments to making informed decisions during the upcoming Open Enrollment Period.
Prescription Drugs and Health Plan Choices
Simply put, the prescription drugs you and your family members take should influence your choice of health plan. With over 50% of adults taking prescription drugs on a regular basis, and with these drugs accounting for more than 20% of the U.S. healthcare spend, attention should be paid to this often overlooked, but critical, element of plan selection.
Whether or not a drug is covered by a particular plan is governed by the “formulary” attached to that plan. Formularies are lists of drugs, often found in PDF’s on carrier websites, that show whether or not a drug is covered, and at what “tier level”, along with any restrictions. The tier level is important, as it drives what the individual will actually pay for that drug. For example, tier 1 drugs often have a very low co-pay, perhaps $10. Meanwhile, tier 4 drugs may require the individual to pay 50% of the drug’s cost.
The price an individual pays differs, sometimes dramatically, from the wholesale and retail prices often raised in the press. And at the end of the day, as individuals (as opposed to employers, especially self-insured employers), we care about what we actually pay out of pocket for a drug – not what occurs behind the scenes.
Formularies differ, sometimes considerably. I have a son with peanut allergies and have bought EpiPens for years. Last year, our health plan didn’t cover the EpiPen at all. So we paid $600 out of pocket. This year, the EpiPen is covered and we paid $100 for the exact same product. This shows the significant difference between the two formularies attached to our plans this year versus last.
The issue applies equally to seniors, especially with Medicare Advantage and Medicare Part D plans. An article in the AARP Bulletin in November 2015 by Patricia Barry entitled “Save Money on Medicare in 2016” described the significant difference in cost a covered senior would pay for common drugs under different formularies attached to these Part D plans. In the most extreme example, the monthly difference between the highest and lowest cost for Procrit was $535. My personal experience was a swing of $500 a year. Imagine that on a monthly basis!
So how does one protect themselves from the shock of drugs that aren’t covered, or that are covered, but at a high out of pocket cost?
The first thing to do is check with your physician about generic alternatives as these are:
1) much more likely to be covered by a plan
2) will cost significantly less
The second thing to do is check the formularies of all available plans for the drugs you take on a regular basis.
Some health insurance shopping platforms are bringing transparency to this critical plan element through “shop by drug” functionality. This lets users enter the drugs they take to see if their drugs are covered by each available plan and, if so, at what tier level and cost. This addresses the challenge of identifying and searching dozens of formularies. Platforms like GetInsured.com and Take Command Health serve the individual under-65 market, while Medicare Pathfinder serves the senior (over 65) market. Such platforms make easy work of identifying the “right” health plans based on the drugs you take and the doctors you see, all in the context of the costs and coverages of each plan.
So as we approach open enrollment, let’s use the EpiPen debate as a teaching moment to better inform ourselves and find the right plan.