Prescription Drugs and California health insurance plans

Medication has become an increasingly important part of choosing your California health insurance plan and that's only going to continue.  There's currently a big distinction on the market in that some of the plans cover Generic only while others cover generic and brand name.  Of course, there's a cost difference between between two options.  Let's take a look at these options and how California health plans cover prescriptions to begin with.  First, what's the standard benefit treatment for prescriptions?

There are two approaches to prescriptions. 

For most PPO and HMO plans, medications are handled with copays.  A copay is fixed amount of money that you pay per medical service, in this case, it's generally a 30 day supply for a given medication.  Most plans on the California health insurance market currently make a distinction between generic and brand name drugs.  Generics copays are usually available right away before any deductible is met (see below for difference with HSA plans).  Brand names are usually subject to a separate brand name deductible (range of $250-$7500) and require a higher copay.  Some plans do not cover brand name drugs at all (even if no generic is available) but these plans appear to be leaving the market and will probably be phased out completely with the advent of Health Reform Jan 1st 2014.  Some plans will make a distinction between brand formulary and a higher tier which requires a higher copay amount.  We'll discuss the formulary in a second.

The other approach is to make the prescription copays subject to the main California health insurance plan's deductible.  This approach is found most often in HSA or Health Savings Account plans.  You will not get help for prescriptions until you meet the main deductible with HSA plans so keep this in mind. 

Most carriers have a mail order option available for prescriptions which can allow you to get a longer period of prescriptions (say 90 days) for less money out of pocket.  It's essentially a volume discount and this works well for maintenance medications such as cholesterol statins, etc. 

For people on Medicare, Part D is the plan designed to address prescription drug needs.  This is a separate plan offered by private carriers with benefit ranges standardized by Medicare. 

The formulary is an important concept for understanding prescription coverage in California health insurance plans.  A formulary is essentially a list of drugs that the carrier approves as both effective and more importantly, cost effective. 

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