How Does Open Enrollment Affect Prescription Drugs?

Google “open enrollment and prescription drugs” and all you’ll find are references to Medicare.

That’s because Medicare gets it right. It lets you choose or change your prescription coverage separately from your medical plan, if you want.

With employer-sponsored or privately insured medical coverage, you usually get whatever prescription coverage comes with the medical plan you choose.

So if prescription coverage really matters to you, it should factor into your medical plan decision during open enrollment.

The medical plan-Rx connection

Like all insurance, medical plans strike a balance between premiums and the coverage level itself. A plan with higher premiums pays sooner and/or more for eligible expenses.

The prescription coverage that comes with a medical plan reflects that balancing act. Higher-priced medical plans (for instance, PPOs and HMOs) usually offer richer prescription plans. Sometimes a single prescription plan is tied to more than one of your medical plan choices, but it’s still part of the equation.

To determine how (and how much) you (and the plan) will pay, almost all prescription plans today classify the drugs they will cover into “tiers” or categories. Tier 1 drugs (usually generic) are the least expensive.

How prescription plans differ from each other

Higher-priced medical plans typically offer fixed copays for prescriptions, especially for those in less-expensive tiers. For example, you might pay $10 for Tier 1 drugs, $20 for Tier 2, and a percentage of the actual cost (coinsurance) for Tier 3 (sometimes with a minimum and maximum limit).

High-deductible health plans (which often come with a health savings account) and other lower-cost medical plans require you to first pay an annual deductible amount, after which you pay coinsurance, for both medical care and for prescriptions.

During open enrollment

Consider both your medical and your prescription needs. Do you take medications regularly? Do you require a specialty drug, or a drug with no generic option?

If you don’t expect to require a lot of medical care, and your prescription needs aren’t that high, then you can probably balance your choice between premium costs and the predictability of copays.

In other words, which matters most—how much you pay each paycheck, or knowing in advance what you’ll pay if and when you do need care or prescriptions?

Do keep in mind, if you pay higher premiums for predictability but don’t use much care or fill many prescriptions, you’ll be paying more for coverage you don’t use.

The choice is clearer if you do expect a lot of health care expenses and/or prescriptions—which plan will cover those expenses better and how much can you afford to pay out of pocket?

Do this before you decide

If prescription coverage is a factor in your medical plan choice, first make sure you know if and how your specific drug(s) will be covered—and if you have another option.

Every prescription plan maintains a formulary—or list of approved and covered drugs—that you can check, usually on your plan’s website.

Formularies change from time to time. Drugs can switch tiers or be dropped from coverage, so it’s important to keep tabs on how your drug is classified.

Then, once you know how much your medication will cost through your insurance options, find out what your cost will be without insurance.

Prescription drug prices vary wildly in the same geographic area and even within the same pharmacy chain.

By checking for the lowest actual cost, you may discover you’ll pay MORE by using your prescription coverage—no matter what plan you have.

And that can be a game-changer during open enrollment.