Jane Dotson
Prescription medications can be costly, and health insurance plans often cover only a portion of the expenses. Before the Affordable Care Act (ACA), about 20% of individual/family health insurance plans did not cover prescription drugs. Since then, drug coverage has become a standard feature of private insurance. However, not all medications are covered, and the type of coverage depends on the plan and the medications required. Some plans may require prior authorization or trying a less expensive medication first. Medicare, for example, covers a limited number of outpatient prescription drugs, and there are stand-alone prescription drug insurance plans available for those with grandmothered or grandfathered plans that don't cover prescription drugs or limit coverage to generic drugs.
| Characteristics | Values |
|---|---|
| Prescription drug coverage | Since the Affordable Care Act (ACA), prescription drug coverage has become a standard feature of private insurance. |
| Cost of prescription drugs | Prescription drugs can be expensive, with Americans spending an average of $1,432.30 per person per year. |
| Insurance coverage impact | Insurance coverage for prescription drugs impacts the amount of drugs people obtain, how much they spend out of pocket, and the total amount spent on their behalf. |
| Health plan formularies | Health plans have a list of approved medications (formulary) that are typically less expensive for the insured individual. |
| Prior authorization | Some medications require prior authorization, meaning a healthcare provider must submit the prescription to insurance before coverage is approved. |
| Dosing requirements | Health plans may check prescriptions to ensure the quantity and dosage align with FDA recommendations before approving coverage. |
| Step therapy | Some plans may require trying a less expensive medication before approving coverage for a more expensive drug. |
| Medicare coverage | Medicare Part B covers a limited number of outpatient prescription drugs, usually those administered in a medical setting. Medicare Part D provides prescription coverage for Medicare enrollees. |
| Deductibles and copays | Health insurance plans may have special deductibles for prescription drugs, and copayments may be required when obtaining medications. |
| Drug pricing variability | Drug prices vary and are subject to change, and the cost of covered prescriptions depends on the specific plan. |
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What You'll Learn
- Prescription drug coverage has become a standard feature of private insurance
- Medicare Part B covers a limited number of outpatient prescription drugs
- Some medications require prior authorization to be eligible for coverage
- Health plans will help pay the cost of certain prescription medications
- If your health insurance company won't pay, you have the right to appeal
Prescription drug coverage has become a standard feature of private insurance
Private insurance plans now typically cover a portion of prescription medication expenses. However, the type of coverage varies depending on the plan and the type of medication needed. Some plans may have special deductibles solely for prescription drugs, which are separate from overall deductibles for other medical care. Once a deductible has been met, drugs may be covered with a copayment. It is important to note that some drugs may not be covered at all or only in certain circumstances.
Health plans will often have a "formulary," or an approved list of prescription medications that are covered. Formularies may include both generic and brand-name medications. Some drugs on these formularies may be covered automatically with a doctor's prescription, while others may be covered only for the treatment of specific conditions or after trying a different, preferred drug first.
In addition to private insurance, there are other avenues for obtaining prescription coverage. Medicare Part D, for example, provides prescription coverage for Medicare enrollees and requires the purchase of a private prescription plan. Stand-alone prescription drug insurance plans are also available, offered by insurance companies, pharmacies, drug manufacturers, or advocacy/membership organizations.
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Medicare Part B covers a limited number of outpatient prescription drugs
Private health insurance plans differ in the medications they cover. Before the Affordable Care Act (ACA), around 20% of individual/family health insurance plans did not cover prescription medications. The ACA set a standard of essential health benefits, which includes prescription drug coverage on all individual and small group health plans with effective dates of 2014 or later.
Grandfathered and grandmothered plans are not required to cover the ACA's essential health benefits. These are plans that took effect before 2014, with grandmothered plans specifically referring to those that took effect before the end of 2013. If you have one of these plans, or if you are uninsured, you can purchase stand-alone prescription drug insurance plans or discount plans from insurance companies, pharmacies, drug manufacturers, or advocacy/membership organizations.
In most cases, you pay up to 20% of the Medicare-approved amount for covered Part B prescription drugs after meeting the Part B deductible. However, your coinsurance amount may vary depending on the price of your prescription drug. Part B does not cover self-administered drugs in a hospital outpatient setting, and you will have to pay 100% of the cost of non-covered prescription drugs in such settings unless you have other drug coverage.
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Some medications require prior authorization to be eligible for coverage
Private health insurance plans vary in their coverage of prescription medications. Some plans cover prescription drugs, while others may only cover generic drugs, and some may not cover any prescription drugs at all.
Prior authorization is a cost-control tactic used by insurance companies to determine how necessary a medication is for treating a patient's condition. Some medications require prior authorization by the insurance company before they can be covered by a health plan. This means that a physician must submit the prescription to the insurance company for approval before coverage is granted. The insurance company may then decide that a lower-cost alternative, such as a generic medication, would be equally effective in treating the patient's condition. This process can cause delays in patients receiving their medication, and in some cases, patients may never pick up their prescriptions due to the time it takes.
If a medication requires prior authorization, a physician or healthcare provider must submit a request to the insurance company. This request may take the form of a prior authorization form, which includes information about the patient's medical condition and healthcare needs. The insurance company will then review the request and make a decision. This process typically takes 5-10 business days, but patients can request an expedited review if they require urgent care. If a request is denied, patients have the right to appeal the decision and have it reviewed by an independent third party.
The list of medications that require prior authorization can vary for each health plan, and this list may be found in the plan documents, which may be available online. Patients can also contact their insurance company directly to find out which prescriptions are covered by their plan.
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Health plans will help pay the cost of certain prescription medications
Before filling certain prescriptions, you may need prior authorization, which means your healthcare provider must submit the prescription to your insurance before coverage is approved. Your health plan may also check your prescriptions to ensure that the quantity and dosage are consistent with the FDA's recommendations before approving coverage. Some plans may require you to try a less expensive medication first before covering a more expensive drug.
The formulary is the list of drugs that your health plan will cover. Insurers are allowed to develop their own formularies and adjust them as necessary, although they must comply with various state and federal rules. Within the formulary, drugs are divided into tiers, with the least expensive drugs typically in Tier 1 and the most expensive in Tier 4, 5, or 6. Some drugs on your plan's formulary may be covered automatically with a doctor's prescription. For others, you may need a prescription and for them to be used for the treatment of specific conditions.
If your health insurance company won't pay for your prescription, you have the right to appeal the decision and have it reviewed by an independent third party. If your plan does not cover prescription drugs, or you are uninsured, stand-alone prescription drug insurance plans and discount plans are available.
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If your health insurance company won't pay, you have the right to appeal
Private health insurance plans typically cover prescription drugs, with some offering more comprehensive coverage than others. Health plans will often help pay for the cost of certain prescription medications, with drugs listed on a health plan's "formulary" or approved list tending to be less expensive for the consumer.
However, if your health insurance company denies your claim for prescription drug coverage, you have the right to appeal the decision and request a review. Here are the steps you can take to appeal the decision:
Internal Appeal
You can start by filing an internal appeal with your insurance company, requesting them to conduct a full and fair review of their decision. This involves submitting a formal request and providing relevant documentation, such as Explanation of Benefits forms, letters, and any additional information or correspondence related to the claim. It is important to note that there are time constraints for internal appeals, typically within 180 days or 6 months from receiving the claim denial. In urgent cases, you may request an expedited internal appeal, and the insurance company must expedite the review process.
External Appeal
If your internal appeal is denied or you are still unsatisfied with the outcome, you have the right to pursue an external appeal. This involves seeking an independent third-party review of your case, where individuals who are not affiliated with your insurance company will conduct their own assessment. You usually have four months from the denial of your internal appeal to request an external review. During this process, your insurance company no longer holds the final decision-making power over the claim.
Understanding Your Coverage
It is important to thoroughly review your insurance plan's coverage details, including the summary of benefits, limitations, and exclusions. Understanding what is specifically covered under your plan can help you navigate the appeals process more effectively. You can refer to your insurer's website, call their customer service, or consult your insurance documents to clarify any doubts about your coverage.
Seeking Assistance
Appealing a claim denial can be a complex process, and you have the right to seek assistance throughout the process. You can contact your insurer to clarify any questions or concerns you may have about the denial and the appeals process. Additionally, your state may offer a Consumer Assistance Program that can provide guidance and support. If your insurance is provided through your employer or your spouse's employer, you can reach out to the human resources or benefits department for help.
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Frequently asked questions
Private insurance plans usually cover prescription medications, but the extent of coverage varies. Some plans may require you to pay a copayment or coinsurance, while others may have deductibles specifically for prescription drugs. The specific medications covered depend on the insurance provider and plan.
You can check your insurer's website or call them to see if your prescription is covered. You can also refer to the Summary of Benefits and Coverage provided by your insurance company.
If your prescription is not covered, you can look into stand-alone prescription drug insurance plans or discount plans offered by insurance companies, pharmacies, drug manufacturers, or advocacy organizations. You can also appeal the decision and have it reviewed by an independent third party.
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