Prescription Insurance: Coverage, Benefits, Pros, And Cons

Medication tablets

Often following a trip to the doctor, they will prescribe you medication. Whether to help with pain following surgery or to deal with the flu, you need prescription medication to improve your health and reduce symptoms of current problems you're suffering from. However, one of the biggest issues with the health industry within the United States is how much prescription drugs cost. If a medication has generic alternatives, you can often purchase the medication for very little money.


If there is no generic alternative, a single prescription fill-up might set you back hundreds of dollars. That is expensive and might be the difference between you buying groceries one month or going without food to buy the medication. To help offset the cost of prescriptions, there are several prescription insurance plans available to you. The most common is known as Medicare Part D. It's designed to help cut down on what you pay for most prescriptions. Before you opt into this form of Medicare, though, it is important for you to know both the pros and cons of Medicare Part D and other prescription insurance plans.


What Is Prescription Insurance?

Rosuvastatin calcium tablets

Prescription insurance is designed to help offset the cost of medications you purchase throughout the course of a year. There are different forms of prescription insurance, and many are broken down into different tiers or phases. If you have a specific insurance provider, you need to consult with them about what kinds of medication tiers they offer. Each company is a little different, so it is critical to understand what these tiers are. As Medicare Part D is the most commonly used form of prescription insurance used in the United States, it is easiest to explain what to look for looking at the individual's phases of Part D.


Prescription Options

Medical prescription


While there are advantages to prescription insurance, it is often difficult to know exactly the phase you should select. Often times, you will not have complete prescription insurance, which is why it is important to consider all options and to look into what each cover. The more research you put into drug coverage and the kinds of medications you take (or may end up needing in the next 12 months), the better off you'll be at choosing the right kind of insurance.


Medicare Part D will cost, on average, around $32 a month, although this amount varies. It may shift based on what kind of premium you offer. If you increase your monthly premium, you'll end up paying less out of pocket when you go to purchase a prescription. Likewise, if you opt for a lower premium, you'll pay more out of pocket when you go in for the prescription. If you make more than $85,000 annually as an individual or $170,000 as a married couple, you'll pay more for your Medicare Part D premium.


Phases Of Medicare Part D

Doctors and nurses

Phase 1 of Medicare Part D is the initial coverage. With this form of prescription insurance, you pay around 25 percent of the cost of your medication until both you and Medicare pay out $2,960. This is an average, and it changes based on what you make and whether you cover just yourself or you have children under your plan, so if you're shopping around for prescription insurance, look at what it costs for everyone under the insurance plan.


Phase 2 is known as the "Donut Hole." This occurs after you and your Medicare payments reach over $2,960 in prescription medications for an entire year. When this happens, you reach a "coverage gap" (the hole in the donut).


When this happens, the amount you pay for your prescription drugs jumps up to 45 percent for brand named drugs and 65 percent for generic drugs (do note this exact percentage may shift from year to year, and as Congress may change prescription insurance coverage annually, these numbers may shift slightly.  So, check with the updated Medicare coverage for the year to determine the exact amount you'll end up paying in the coverage gap).


Phase 3 is "catastrophic coverage." This form of coverage kicks in after both you and Medicare have paid up to $4,700 in total prescription drugs in a single year. When you hit this phase, you will officially move out of the "donut hole." When you hit this rate, the amount of money you pay drops substantially where you pay only five percent of drug costs for the rest of your enrollment year.



Prescription Insurance Tier Coverage

Man holding stethoscope

There are four different tier breakdowns when it comes to drug coverage. When selecting a coverage plan, you typically must choose which tier you want to fall into. The right tier depends on your current health and what kinds of drugs you are likely to require over the course of the year. At the end of the enrollment year, you can change the tier you are in.


Tier 1

Tier 1 is generic drugs only. With this kind of insurance, you will not have any coverage for name brand drugs, but you'll pay little when getting generic prescriptions. This kind of coverage is often suitable if you are a healthy individual. The kinds of medications you might need usually will have generic alternatives, for which this coverage is desirable.


Tier 2

Tier 2 will include some preferred brand names. With this tier, you may already know a handful of drugs you must take over the course of the year. With a Tier 2, you can choose which drugs you want to be covered. The copay for the name brand drugs will be higher than what you pay for generic drugs on Tier 1, but this option works when you already know what you will need a prescription for.


Tier 3

Tier 3 is a combination of non-preferred brand-name drugs. With this form of insurance, you will pay more for the brand name drugs than if you had selected the brand under Tier 2, but you'll receive more expansive coverage. This is desirable if you will probably need different medications but do not know what drugs to select. At the end of the year, if you have found you are taking certain drugs, you can switch to Tier 2 and include those as "preferred brands."


Tier 4

Tier 4 is the specialty drug tier. These are drugs required for serious medical conditions. These specialty drugs are often expensive and, while you receive a sizeable coverage percentage on these drugs, you'll still likely spend more on the medication than what the prescription insurance coverage of Tier 3 allows.

It is important to always consult with your insurance provider to see exactly what is provided on individual plans or tiers. This way, you'll know exactly what kind of coverage you will receive under each plan.




The Pros

Medication tablets in hand

The main benefits of prescription insurance coverage are that you will pay less for your prescription medication. Medication is not cheap even if you go with generic drugs when available. If you need to take more than a single prescription over the course of a year, you may end up paying hundreds, if not thousands, of dollars without prescription insurance.

Even though you likely must select an individual tier or phase or another grouping of medication (based on your insurance provider and what Medicare D plan you opt into), having this kind of coverage is better than nothing, and at the end of the year, you can alter the insurance you have to better fit your needs.




The Cons

Alcohol and drugs

Medication in the United States is expensive. In fact, it is more expensive to purchase prescription medication in the United States than nearly any other country in the world. So, while even generic prescription medication can help make it a little more affordable, there is still a substantial out-of-pocket expense for most medications outside generic brands. On top of this, you need to choose which tier or phase (however your insurance provider refers to it) that works best for you.

The problem with this is that you're trying to see into the future and guess what sort of coverage will work best for you over the course of the subsequent year. That's difficult to do. So, while there are advantages if you're able to guess accurately, you'll still pay far more for the medication, even with insurance, than what you'd pay in other countries.




Conclusion


Prescription medication is often expensive. Even if you need generic medication, without insurance, you'll pay a substantial amount. That is why you need to reduce your expenses and cut costs. One of the best ways to do this is with the aid of prescription medication insurance. Prescription insurance can help offset the price of medication over the course of the year although you will need to guess ahead of time what form of insurance works best for you. While hopefully, you won't need any medication over the next year, having this insurance ahead of time may help you save hundreds, if not thousands, of dollars.

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