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Drug Plan Enrollment Explained

This Open Enrollment Season post (part 2) is about drug coverage. Annually, employer-sponsored health insurers ask employees to select their coverage for next year. From October 15 - December 7 each year, Medicare Open Enrollment allows Medicare recipients to enroll in a Medicare prescription drug plan, switch to a different one, drop prescription drug coverage, change from a Medicare Advantage plan without drug coverage to a Medicare Advantage plan with drug coverage, or vice versa. Also, the Affordable Care Act has its own open enrollment period extending to December 15 for coverage starting Jan 1. In all cases, special enrollment is available to anyone needing to make enrollment changes mid-year for any significant, life-changing reason. 

Prescription drug coverage is recommended for every insured, even people not on any prescription medication or those who take a generic and can easily manage without coverage. This is because the costs of most drugs for serious, sudden-onset illnesses are extremely high, and the out-of-pocket costs can be catastrophic without coverage. Those with low income can be afforded some subsidies, but those with a job and income can face huge expenses. 

Drug plans cover only prescription drugs self-administered at home. Over-the-counter drugs are not included in health insurance. Infusion medications that cannot be self-administered at home are covered under medical insurance; for example, in Medicare, they are covered under Part B (outpatient) or Part A (inpatient).

 A “formulary” is a list of all the drugs covered by a drug insurance plan. Individuals on any drugs should look them up on a plan's formulary to make sure they are covered before enrolling. 

Generic drugs are copies of brand name drugs that manufacturers claim have the same intended use, dosing, safety, administration, quality, strength and efficacy. Many people have complained over the years that some generic drugs are not as effective or produce unwanted side effects that the brand name version did not. Before enrolling, review a plan's requirements for showing that the generic is not working. In some cases, a patient must try and fail many generic alternatives for at least 4-6 weeks each, and their physician must document negative side effects and assist in their appeal for coverage of the brand name version. This is called “step therapy,” and some people report it to be exhausting and very difficult to complete. 

Prior authorization may be required for the more expensive drugs. 

Tiers are levels of prescription drugs, arranged by cost, that the plan will cover. Review a plan's tiers before enrolling. Tier 1 usually includes cheap generics and have the lowest copayment. Tier 2 (also called preferred) drugs are a little more expensive and have a slightly higher copayment. Tier 3 (also called non-preferred) drugs carry higher copayments and are usually where brand name drugs are listed and require prior authorization. Some plans also have a 4th tier, called a specialty tier, where very high-cost brand name drugs may be listed. 

Make sure to note how many pills are covered per prescription. This is called a quantity limit. Do not assume it is going to be a 30-day supply in whatever dose the physician's prescription states. Some drugs may be covered at only 10 pills per month or less, especially if they are brand name drugs for conditions not usually experienced daily such as migraine medications.

Experimental or investigational drugs are typically excluded from coverage, as are non-covered or off-label indications. Indications are the conditions under which a drug plan will cover a drug. For example, some drugs are on a formulary but only for certain uses. Other uses for the same drug may not be covered. It is important to read the indications in the formularies before assuming a drug is covered.

Formularies can change at any time. 

Medicare recipients may choose a stand-alone drug plan, a supplemental drug plan, or a Medicare Part D plan plus a drug savings program. Individuals can work with their pharmacy to apply all available coverage and discounts to find the lowest out-of-pocket cost.

Finally, if a catastrophic illness happens and the drugs are not well covered under existing drug coverage plans, options may not be lost. The financial impact could be significant enough to qualify for a special enrollment period for a material change in financial circumstances. An individual could then enroll in a better plan under emergency circumstances mid-year. It is important to seek assistance and advocacy for appeals and enrollment changes when needed. 






In some cases, there may not be a generic drug the same as the brand-name drug you take, but there may be another generic drug that will work as well for you.