Navigating Health Insurance ChoicesWritten by Expert Pharmacist
July 28, 2020
Contributor: Dr. Staci-Marie Norman, PharmD, DCES
Is there anything more confusing than choosing a healthcare plan? In my work as a retail pharmacist, dealing with insurance can be the hardest part of filling a prescription. Between deductibles, tiered co-pays, product formularies, and prior authorizations, a pharmacy trip can also be stressful for you.
Most people get health insurance from one of three ways, their employer, the government insurance exchange (or marketplace), and government programs such as Medicare or Medicaid. No matter who you are getting your health insurance through, you will need to consider what type of plan would fit you best.
There are generally two types of plans:
- Health Maintenance Organization (HMO) plans: HMOs will require you to use a set network of physicians. You are required to have a primary care provider, and if you need to see a specialist, your primary care provider will have to make a referral. HMOs are typically more inexpensive, with lower premiums and deductibles for doctors in the network. This choice is excellent if you want something affordable, and you do not mind picking a doctor from the network and getting specialist referrals.
- Preferred Provider Organization (PPO) plans: PPOs do not require a primary care physician, and you can typically choose to see a specialist without the need for a referral. But with more choice comes more expense, meaning premiums and deductibles are typically higher than an HMO.
Once you have picked between an HMO and a PPO plan, you then need to consider a high-premium/ low-deductible plan or low-premium/high-deductible plan.
- With higher premiums, there is less out-of-pocket risk if you see the doctor quite often or take multiple medications. For example, if you currently take one or two of the newer diabetes medication (ex. Invokana, Farxiga, Trulicity, Ozempic, Tresiba, or Humalog), a higher monthly premium with a small co-pay on prescriptions might be more cost-effective.
- A low-premium/high-deductible plan might be a more affordable option if you can afford to pay larger out-of-pocket expenses at the doctor’s office or pharmacy. This might be a good option if you typically only see your doctor for routine physicals and are on generic medications (ex. metformin, glipizide, glimepiride, pioglitazone), which are generally more affordable. Until you meet your deductible, you will be paying for the full amount at the pharmacy each month. Another consideration with the low-premium/high-deductible plans is health savings accounts (HSA) to offset the expense of the deductible. HSAs can be used for qualifying healthcare services such as deductibles, co-pays, prescriptions, and doctor visits. A single person contribution is $3,500 per year, and a family can contribute $7,000 per year. Some employers may even contribute up to 50 percent, and the money for an HSA comes out pre-tax, so your taxable income is lowered.
Thinking about medications specifically, remember to investigate drug plan options with the health insurance you are choosing. This is especially important if you have Medicare. Traditional Medicare (A and B) does not have prescription coverage built into the benefits. You must look at a Part D plan for prescription coverage, and be sure you put all your medications and your pharmacy into the calculator found at Medicare.gov. You will see the plans available for your pharmacy and the co-pay amounts of your covered medication before, during, and after the coverage gap. It will also let you know if you have a deductible.
Within the Medicare system, you do have the choice between original Medicare or Medicare Advantage (Part C) plans. With Medicare Advantage plans, one insurance company (such as Humana, Aetna, Blue Cross/Blue Shield) will manage all parts of your Medicare. Within the Medicare Advantage plans, you choose between an HMO or PPO and then between the high-premium/low-deductible or low-premium/high-deductible.
Even after doing all the research and choosing what looks to be the best fit, there may be surprises. From a pharmacy perspective, there are a few things that could change, such as medication co-payments. If you change plans, your co-pays will generally change at the first of the year.
Even if you don't change plans, your co-pays may change at the first of the year due to changes within your plan. And remember, at the beginning of the year, your deductible will need to be met before you see the co-pay you were expecting. For example, you have a $10 co-pay on a $100 medication, but your deductible is $150, the first time you fill the prescription, you will pay $100 (which will go towards your deductible). The second time you will pay $60 - the $50 remainder of the deductible plus your $10 co-pay. The third time you will pay $10.
Finally, you might be placed on a new medication. If the drug is not on the plan formulary, the insurance may ask your doctor to change it to a similar medication on the formulary or require prior authorization (PA). For a PA, the pharmacy will send your doctor a notice saying that the insurance company needs more information on why the doctor wants you to take the medication. The doctor then sends that information to the insurance company, who decides if they will or will not pay for the drug and what the co-pay amount will be.
Here is a cost savings tip! If you have commercial insurance (not Medicare or Medicaid) and are taking a brand name medication, go to the pharmaceutical company website for that drug and see if there are savings coupons. These can provide significant savings, especially if you have a high deductible or co-pay. Be sure to read the fine print because they typically have a maximum benefit per use.
Hopefully, this information makes navigating health insurance a little easier.
Dr. Staci-Marie Norman, PharmD, DCES received her bachelors from Purdue University (’94) and her Doctor of Pharmacy from the University of Oklahoma (’96). In 2000 Dr. Norman added to her credentials by becoming a Certified Diabetes Care and Education Specialist. She is currently the Clinical Coordinator and staff pharmacist for Martin’s Pharmacy. Dr. Norman is a national faculty member for the American Pharmacist Association, teaching certificate programs in both diabetes and cardiovascular disease. She serves on the advisory board that oversees development and revision of these programs. Along with teaching and development responsibilities for APhA, Dr. Norman serves as a peer reviewer for research grants and publication submission. Dr. Norman has also spoken for Abbott, Bayer, Lilly, Mannkind, and Lifescan as a diabetes specialist.