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Is Your Health Insurance Plan Special?

It may be if it covers specialty drugs. Why is this an important component of a health insurance plan? You checked the drug formulary: no problem. Everything is covered.

Be careful. Prescription drugs have long been an important component of any health insurance plan. Most prescriptions (primarily generic substitutes) in employer sponsored plans have a co pay in the $10-$20 range, however, more recently in health insurance exchange plans, there are now drugs that are subject to hefty co insurance payments or aren’t covered at all.

A co payment isn’t a surprise for most participants; tier programs for prescription drugs have become a part of most health insurance plans. Prescription drugs fall into one of three tiers with copayment of $10, $20 and $50 respectively. The tier approach was designed to manage costs for both employers and insurers, however it is unlikely that tiers will stop the rise in drug costs for anyone, especially the participants of health insurance exchange plans.

Where are specialty drugs on the health insurance exchange formulary? Often nowhere. And if they can be found, they have a coinsurance percentage, not copayment attached. Frequently, individuals use specialty drugs for multiple sclerosis, rheumatoid arthritis and other illnesses. Many are ‘biologic” which are used to treat rheumatoid arthritis when other treatments aren’t effective. Most specialty drugs aren’t available in a regular drugstore and are often delivered overnight in ice pack containers. While individuals have seen some specialty drugs on tier programs at employer sponsored plans, this is not always the case where health insurance exchange plans are concerned.

In a 2014, Avalere Health conducted a study to determine where specialty drugs fell in the metal hierarchy of plans in the health exchange system. Silver plans generally require that individuals pay 30 % of covered medical expenses. In the case of certain classes of specialty drugs, a fifth of the 123 formularies studied required 40% coinsurance payments for some classes of specialty drugs. Another 60% of the plans placed them in the highest tier which would require the highest coinsurance payment in the plan. Specialty drugs are among the fastest growing prescription drugs and some newer drugs could, in fact, be absent from the health insurance exchange formulary altogether.

If you’re planning on enrolling in a health insurance plan for the first time this November, pay careful attention to the formulary, especially if specialty drugs are or may become a part of your medical care. Also, many individuals who purchased insurance through the federal exchange online at may want to revisit their coverage if they are anticipating a specialty drug prescription for themselves or a family member before an automatic renewal takes place.

For additional information, contact EAB HealthWorks.