Tackling Medicare Part D Insurance Lingo
December 19th 2005
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Medicare |
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Part D is an
insurance policy; it is purchased from an insurance company, pure
and simple! Although the government created the guidelines of the
plan and pays the insurer about three times the amount that you pay,
insurers are to follow the minimum rules or their actuarially
equivalent.
Here are the
terms that you need to understand. These terms may not be included
in all plans, but many.
Insurer: The
insurance companies that you will purchase your prescription drug
plan from.
Formulary: A
listing of the drugs covered by your insurance plan.
Co-Brand: Many
insurance companies are using the plans of major health-specific
insurers. So, this term just means other entities or companies that
market the same plan.
Co-Pay: The fixed
dollar amount that that you will pay for a prescription. Example
(EX): $10 per a supply of a prescription.
Co-Insurance:
Your share of the cost of a prescription, in the expression of a
percentage of cost. EX: 32% per prescription.
Supplies of
prescriptions: Depending on the insurer, a monthly supply may be
considered 30 or 31 days. A multiple supply simply will be
multiplied by the allotted number of months of said supply; the
maximum is usually three times what is considered monthly: EX: A
three-month supply of the above co-pay would be $30; the above
co-insurance would be 32% of a three month supply.
Tiers: Are levels
of cost for different drugs, depending upon the insurers formulary.
When you purchase a policy, your monthly price is indicated, tiers
do not affect this premium, you are included in all tiers. EX: A
plan may offer drugs in tier 1 for $6 co-pay per monthly supply.
Commonly, these are generic drugs. Tier 2 drugs may have a co-pay of
$30; these usually are brand names and sometimes referred to as
preferred brands. Tier 3 drugs might have a co-pay of $60; these
usually are higher priced brand names and sometimes referred to as a
non-preferred brand. Tier 4 might have a cost of 32% co-insurance;
these may be referred to as specialty brands.
NOTE: Not all
plans have 4 tiers. Most have fewer. I have seen as many as five or
the insurer may have created a different cost of drug outline that
may be referred to a generic, preferred brand and non-preferred
brand, and or specialty brand. And others may simply express your
cost of drug levels in co-insurance percentages. Most companies work
with the tier method, but not all.
TOTAL OUT OF
POCKET COST: It is difficult for those buying insurance policies to
comprehend this category, but stay with me and hopefully it will
become clear. Let us assume that one is insured to cover the first
dollar to a total of $2,250 of prescription drug cost. This simply
means that your insurer is paying this total amount, including the
$250 deductible, for a calendar-year period. What most people don’t
understand is that the total amount of the cost of the prescription
is applied to your allotted amount. EX: Using the above figures, let
us say you have a co-pay of $10 for drug A, and another drug that
has a co-insurance of 32 percent for drug B. We shall assume that
the retail price of A is $25 and B is $100. You would pay $10 for A
and $32 for B. So, how much is deducted from your total? If you
think $42, you would be wrong. The entire “retail” cost of the
drugs, $125, will be deducted from your “pool of money,” or $2,250.
Some insurers, but not many will pass their pre-negotiated pharmacy
discounts to you.
STEP THERAPY: is
a term used by some insurance companies, its meaning: If you are
taking a certain drug or drugs, the insurer has the right to request
that you attempt to use a different drug that treats the same
medical condition, before it covers the drug that you requested.
Example: If Drug
A and B both have the same benefits for your medical condition, you
may be asked to take Drug B first. If Drug B does not provide you
with the same medicinal benefit, then the insurer will allow you
Drug A, your initially requested drug. Remember, always work closely
with your physician, and make sure that he or she is aware of this
request from the insurer.
QUANTITY LIMITS (QL):
Many insurers will limit the amount of certain drugs that will be
dispensed.
PRIOR
AUTHORIZATION (PA): Many insurers will require that certain drugs
need PA, if approval, by the insurer is not accepted, the drug will
not be covered.
NOTE: Some
insurers may require both PA and QA for certain drugs. You can
always ask for a QL waiver; in fact, you may request a drug that is
not within the insurers formulary, key word request.
PREFERRED
PHARMACY: Most insurers will include a list of pharmacies that they
“prefer” you to use.
NON-PREFERRED
PHARMACY: A list of pharmacies that the insurer request that you do
not use. In fact, if you do, you will usually have to pay an
additional cost above your co-payment or co-insurance amount. Some
exceptions apply, check with your plan.
NOTE: PPs and
NPPs are sometimes referred to as in-network and out-of network.
By Dan Rohan
Dan’s columns are currently published in a number of
states, with a heavy concentration in central Florida. Dan is published
somewhere 5 days per week; his column is published as “Senior Advocate”
and syndicated as “Senior Focus.”
Contact Dan
Attention Editors: If your publication or Internet
site would like to carry Dan's weekly column - Contact Dan for all
Information. "Senior Focus" is also available to the general public -
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