Scrutinize your insurance options wisely for the best deal on drugs

 

We talk a lot on this blog about the 65 million Americans without prescription drug insurance, and the millions of additional seniors who fall into the Medicare doughnut hole every year. But for those of you fortunate enough to have an employer-sponsored health insurance plan, we know that life isn’t a bowl of cherries for you, either.

As Sandra Block writes at USA Today:

The average employee’s health care costs, including premiums and out-of-pocket expenses, will increase 8.9% in 2009, according to Hewitt Associates. That’s well above the rate of inflation and average salary increases… For that reason, it’s more important than ever to scrutinize your employer’s health care options during open enrollment season. Don’t assume the plan you used last year is still the best choice…

Specifically, when it comes to prescription drugs, Block advises:

1. If you’re moving to a plan that offers “co-insurance” rather than co-payments for prescription drugs, prepare for your costs to go up.

Many employees are accustomed to making co-payments of $5 to $25 for everything from prescription drugs to doctor’s visits. But increasingly, employers are replacing co-payments with co-insurance in an effort to control costs, particularly for prescription drugs … Under a typical co-insurance model, Abbott says, a plan may cover 90% of the cost for a generic drug, 75% for a brand-name drug that’s on the plan’s preferred list and only 50% of the cost of a non-preferred brand-name drug.

Co-insurance is designed to reduce the cost of prescription drugs by encouraging workers to use generic drugs or the lowest-cost brand-name drugs. Some plans have adopted a hybrid formula that charges a flat co-payment for generic drugs and co-insurance for brand-name drugs … If you’re accustomed to paying $10 or $15 every time you fill a prescription, a switch to co-insurance could raise your out-of-pocket costs … You can save money by using generic drugs whenever possible.

2. Use the provider’s mail-order option for buying drugs.

Most plans offer mail-order delivery of prescription drugs, and these programs can save you a lot of money … Because you’ll receive a larger supply “typically 90 days” you’ll save money on co-payments, she says. You may receive a discount on the price of the drugs, too.

3. Consider contributing to a flexible spending account or health savings account if it’s offered.

Most employers offer flex accounts, which let you use pretax dollars to pay out-of-pocket medical and dental costs. These accounts can help reduce the cost of co-payments, co-insurance and deductibles, but less than a quarter of workers contributed to an FSA in 2008 … You must decide when you enroll in your plan how much you want to contribute during the year.

Of course, the reason most people don’t use flex accounts or health savings accounts is that if you don’t end up using the money you’ve contributed during the plan year, you lose it. So I’d advise you only to use these accounts if there is a predictable level of out-of-pocket expenses that you end up hitting year after year.

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