What is a prescription copay?
The prescription copay is a fixed amount for every medicine on a particular tier in your insurance plan’s formulary. The formulary in your plan is a list of generic and brand-name prescription drugs that your insurance plan covers. The formulary is divided into several tiers that determine the copay amount you must pay, regardless of the drug’s retail price.
How is Prescription Copay Determined?
Your plan’s formulary is essential. Not all plans cover every drug. It is advisable to check your plan’s formulary against the list of medications to see if your prescription is covered. The formulary is divided into four groups or tiers.
The various tiers are divided by the insurance company to cover different price points. Each tier indicates how much your prescription copay will be for a covered drug within the tier.
Why Prescription Copay is Not Always The Best Way to Go
Now here is the kicker: Just because your insurance plan covers your prescription does not mean you’re not overpaying for your medicine. The copay amount is determined by the tier that your medicine belongs to. The amount has nothing to do with the actual retail price of the drug. Your insurance plan sets the prescription copay.
All too often, the copay amount is more than what you would pay for a drug if you just paid cash. According to researchers at the University of Southern California, out of 9.5 million claims analyzed over a single year, almost 2.2 million of them involved copay overpayments.
That is 2.2 million, or 23% of people paying more for their prescriptions because their copay was higher than the cash price of the drug itself. The average overpayment was $7.69, but one in five cases saw people overpaying $10 due to their copay amount. If you add the amount up, people paid overpaid a $135 million in this small study alone!
Where does all the extra money go? This difference between the retail price and copay is split between your insurance provider and what’s called a Pharmacy Benefit Manager. The sad reality is that this is an entirely legal process.
However, the legality of this does not make it right. There is a better solution to help patients who have medical insurance protect themselves from overpaying. It’s called myRxMedSaver.