What is a Drug Formulary and Why Should I Care?

What is a drug formulary?

A drug formulary is a list of medicines covered under a health insurance plan.  A formulary may also specify tiers of medications and corresponding levels of co-pay or co-insurance.

The drug formulary will vary from plan to plan.

Why Should I Pay Attention to my Health Insurance Plan’s Drug Formulary?

It is important to know the specifics of your plan’s drug formulary — particularly if your health care regimen includes taking expensive medications on a regular basis — so you can accurately anticipate the out-of-pocket expenses you may incur for medications.

Under the Affordable Care Act (ACA) you cannot be denied coverage for pre-existing medical conditions, nor can you be charged a higher premium for coverage based on your current medical status.

However, insurers have leeway when it comes to which medications they will cover.

Drug Formularies in 2014 Health Insurance Plans

Some carriers are taking measures — particularly for those plans sold on the exchange — to keep costs down through drug formularies which:

• Narrow the list of covered drugs
• Limit quantities
• Require prior authorizations
• Insist on “fail first” or “step therapy” protocols that require doctors to prescribe a certain drug first before moving on to another — even if it’s neither the physician’s nor the patient’s preferred medication

This can be a really big deal for people with certain medical conditions, and can mean greater-than-expected out-of-pocket costs.

Understand Your Plan’s Drug Formulary

Before buying a health insurance plan, make sure you look carefully at the drug formulary to be sure it fits your needs.

Maybe you don’t currently take expensive medications, so having a plan with a more limited drug formulary will not present a big risk.  But if you do take expensive medications, you need to know whether or not they will be covered, and at what rate.

Understand too, that by limiting a plan’s drug formulary, a carrier can offer coverage at a lower price.  Do not be deceived by a lower monthly premium that could ultimately mean large bills for costly medications.

We can help you understand the details of a plan’s coverage.  Give us a call.

Please be patient as we manage a high volume of calls and emails.