Understanding Prescription Insurance

In 2008, more than 3.6 billion prescriptions were filled, affirming medications as an integrated part of everyday life for many people. If a health insurance plan does not cover medications or has a limit on prescriptions, the out-of-pocket costs can become expensive. Prescription insurance helps fill a gap in health insurance coverage. Although many options are available, it is best to have a solid understanding of prescription insurance before making a purchase.

Benefits

• The National Council on Patient Information and Education states, "Among those with health insurance, one out of 10 individuals 65 years old or younger and one in three persons over age 65 of age do not have prescription drug coverage." Supplemental prescription coverage can grant an overall decrease in pricing on medication. Available options also cover preferred medications, a real advantage when no generic varieties are available. Additionally, medication insurance helps save on partially covered and continuously prescribed drugs. These savings lead to a reduction in the amount spent on deductibles, out-of-pocket expenses and co-pays.

Drawbacks

• Prescription policies are paid in addition to any health insurance. Although plans serve as supplemental coverage, potential policyholders should consider their budgets to confirm their affordability. Prescription insurance policies are not available at every health insurance company, driving customers to seek plans through private companies. Also, some local pharmacies accept only specific plans, so it is best to check before purchase.

Types of Coverage

• Prescription insurance is typically available from two sources: medical insurance companies and companies with concentrations in supplementary insurance. Medical insurance companies usually subcontract with another company to administer prescription benefits for policyholders. The companies place limits on coverage and tiers on co-pays to save money. Private insurance companies offer an alternative to this method by offering more coverage options. These plans also pay portions of the already existing plans, yielding savings for the consumer.

Costs

• Prescription insurance is not as widespread as health insurance, but many companies are starting to offer these plans. Plans offered through existing coverage in major health insurance companies are usually the most expensive. Insurance companies specializing in specific policy areas, such as prescriptions, can offer more affordable options.

  Plan pricing depends on demographics, such as age, location and health problems. Moreover, some coverage options have special availability qualifications, such as income limits, age requirements and enrollment in government programs. It is best to compare pricing and check all options before making a decision. Many companies offer pricing over the phone, through the state and online.

Considerations

• Prescription insurance is not health insurance and does not offer any health coverage. It will only cover prescription drugs. Doctor visits are paid out-of-pocket or through previously obtained health insurance. Furthermore, the many assortments of the prescription policies cause confusion.

  Details from plan to plan differ considerably. Discounts on drugs depend on what the plan covers. If the plan does not cover a specific medication, multiple plans are needed for a significant savings. Certain prescription insurance policies have tiers on pricing, which can range from small to significant discounts.