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| Top 5 Reasons for Health Insurance |
1. Major Illness
2. Routine Checkups
3. Emergencies
4. Prescriptions
5. High Cost of Treatment
2. Routine Checkups
3. Emergencies
4. Prescriptions
5. High Cost of Treatment
Prescription Plans
If your doctor has prescribed medication for you recently, you may be well aware of the rising costs
of prescription drugs. These costs can eat up a large portion of your budget, especially if you
develop an illness (like diabetes) that requires regular medication.
Fortunately, most health insurance plans have provisions for prescription drugs. But many of them
don't go far enough to protect you when you become ill and need medications. Prescription drug
plans are insurance policies that cover the costs of prescription medications. If your current health
insurance policy provides insufficient prescription drug coverage or none at all, you may want to
consider a prescription drug plan.
Traditional prescription drug plans
Traditionally, prescription drug plans were a benefit found in your health insurance policy, whether
offered through an employer-sponsored group health insurance plan or through a private policy.
The benefit typically reimbursed a percentage of your costs for certain prescription drugs after an annual deductible had been
paid. This type of coverage had a number of flaws, including:
 | Patients had to pay 100 percent of the deductible before any of their costs were covered | |
| Patients had to pay for prescriptions out of pocket, then wait weeks or even months for reimbursement | |
| Patients still had to pay as much as 20 to 50 percent of their prescription costs, even after the deductible was met | |
| Many drugs, such as contraceptive prescriptions, were not covered at all | |
| Patients had to cope with cumbersome paperwork to submit claims | |
| The system was unmanaged and led to rising health-care costs |
Managed prescription drug plans
In response to the needs of consumers and rising health-care costs,
the insurance industry instituted many management controls, including:
| Computerized claims processing | |
| Use of prescription drug card programs | |
| Networks of prescription drug providers | |
| Mail prescription programs | |
| Cost-control methods through the use of generic drugs | |
| Education of doctors and patients about health care | |
| Computerized drug-use control and reporting |
As a result of these changes, more prescription drug plans have moved
to the use of a co-payment system where the patient pays a fixed fee for
each prescription filled (e.g., $10), has no deductible, and handles no claim forms (claims are submitted electronically at the
To decrease the cost of drugs, many health plans implemented a formulary, which is a list of preferred drugs that the plan has
decided are the most effective and least costly pharmaceuticals to treat specific conditions. If your physician orders a
nonformulary drug, there is usually a medical review process to determine if there is a comparable drug on the plan's
formulary. If your physician agrees to the change, a generic or less expensive drug in the same class may be substituted.
Another result is that patient information (including details regarding potential drug interactions) is readily available through a
computer database to pharmacists who are networked. There are some tradeoffs to this system, such as the inability of some
patients to obtain more than a 30-day supply of a medication or take a high-priced brand-name drug. But overall, the
managed approach to prescription drug plans has been effective.
Prescription drug plan as a separate insurance policy
To many, the term prescription drug plan refers to the coverage provided by your typical health maintenance organization or
other health-care plan. But a prescription drug plan can also be a completely separate and distinct insurance policy. You might
purchase such a plan if you had no prescription drug coverage at all, or if you wanted to supplement your current health-care
plan. You might seek an individual prescription drug plan, or in some cases, your employer might offer a separate prescription
drug plan. Here are some advantages of these plans:
| Prescription drug card programs are easy for employees to use | |
| Employees may get no benefit from their primary health plan if they never reach the deductible | |
| Processing claims is easier for the insurer, making coverage less expensive for enrollees | |
| Prescription drug plans may cover certain types of drugs not covered under the employer's primary health plan |
It's important to understand what your health insurance plan covers. You can then decide whether you need a separate
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