Health insurance can be a puzzling topic for many of us. Insurance paperwork is often filled with words like copay, deductible, and coinsurance, industry jargon that can be hard to understand. But with a little knowledge, it’s possible to demystify these concepts so you can better understand costs and coverage, particularly when it comes to medications that may become a regular part of your monthly expenditures.
So, what exactly do these terms mean? With insurance, there may be a certain amount that you will have to pay for medicines before receiving them. It is usually a fixed rate called a copay . After you make the copay, insurance pays the rest of the financial obligation.
Some patients may pay a copay upwards of $50, while others may not have to pay a copay at all. If you have a higher copay, this usually means that you pay a lower monthly premium. Also, if you choose an out-of-network pharmacist, your copay may be higher. This is because that pharmacist may not have a contract with the insurance provider.
A deductible is an amount that you must pay before insurance starts to cover your services. The higher your deductible is, the lower your premium per month.
Coinsurance is the portion of your insurance you pay after paying the deductible. Essentially, the service provider or pharmacy will bill the insurance company and get paid. If the service is fully covered, you won’t receive a bill. Instead, you may receive an explanation of benefits which will break down what services your insurance covers. However, if your insurance doesn’t cover certain services however, you will receive a bill.
When your copay is higher than you expected, here are the most likely reasons why:
Most people stick with the same plan each year unless their company or state introduces new plan opportunities that they can take advantage of. If you have an ongoing prescription, you may have had no or low copay for a drug in November of the previous year. This is because as you have paid your premiums and had medical expenses throughout the year, you likely paid your deductible, reducing your copays. However, if you need that same prescription filled in January of the new year, you may have to pay more. When this happens, that means your deductible has reset. Once you reach a specific amount that year, your copays may lower once again.
If you happen to be suffering from a medical issue, your doctor may prescribe a specific drug to help with the problem. When you take a prescription to a pharmacist, in most cases, you will get the medicine you need and pay a copay if necessary. However, there are times when what your doctor prescribed may come into question and requires prior authorization before a pharmacist can fulfill your prescription.
What does prior authorization mean? An insurance company may deny payment for a drug until they are provided proof that it is medically necessary. Here are some reasons why they may require prior authorization or deny the drug altogether.
If the insurance company denies coverage for the drug, you or your pharmacist may be able to get your doctor to prescribe a similar medication that doesn’t require prior authorization.
Believe it or not, buying prescriptions can be similar to clothing or car shopping. Certain brands are high-end brands, and some are discount brands. If your insurance plan uses tiers, much more expensive drugs are specialty drugs. Your insurance may have a 3-tier, 4-tier, or 5-tier category for prescription drugs. The lower the tier, the cheaper the drug. If your drug is from a lower tier, you may not have to pay a copay. However, if it is from a higher tier, you may have to pay a higher copay.
Not all plans use tiers. In some instances, a drug isn’t covered even if your insurance company has such categories. This likely means that you will have to pay for the prescription entirely out of pocket or see if drug discount programs or rebates are available.
Have you ever been on a particular drug for an extended period that your insurance plan covered, but now you owe for it? Even though you may not have switched plans, your current insurance provider may have decided to only pay for drugs on its formulary. This means that you will have to get the generic form of the medicine. If you want to continue with the brand-name drug, you will either have to pay for it in full or pay a percentage of the cost. This can happen without warning at any given time.
Understanding these different insurance terms will help you to know how and why you are being charged for certain things. One thing to remember is that copays can change at any time for any reason. Even if you have the same insurance, there may be changes within the insurance that affect how much your personal responsibility is.
Did you know that 7 in 10 patients who encounter a prior authorization request from their insurance provider, don’t receive the originally prescribed medication their doctor had requested? 40 percent of the patients that receive prior authorization requests stop their treatment. But when you use Medly as your pharmacy, you can request us to initiate the prior authorization process. We follow-up with doctors and keep you updated to help get you the medication you need.
Beyond prior authorizations, Medly has made it a priority to research and understand the many pharmaceutical discounts, rebates and coupons that exist. We help to reduce your medication costs by finding savings that are sometimes hard to locate, like manufacturer’s coupons and copay foundation options.
If you have questions about your co-pay or other insurance payments, feel free to reach out to a Medly associate who can help.