With surging drug costs being passed to consumers, this means the U.S. spends more on prescription medications than any other country. On average, Americans spend about $1,432.30 per person per year on prescription drugs.

When you’re looking into healthcare coverage options, individual health insurance costs are likely top of mind, as are prescription insurance prices. Learn more about what type of prescription drug coverage you can expect and how you can find the best prescription insurance for your needs.

What type of prescription drug coverage do most health plans provide?

The vast majority of health insurance plans provide some coverage for prescription drugs. Prescription drugs can be expensive, which is why health insurance plans typically cover a portion of expenses related to medications. The exact type of coverage may vary depending on the plan and the type of medications you need.

In some cases, you may need to pay a copay before you can pick up your medications. In other cases, there may be a deductible you need to hit before your health insurance plan covers the rest. Most health insurance plans provide solid coverage for prescription medications, but you should always look at the details of your plan to understand your benefits.

How much do prescription drugs usually cost?

As you take a look at stand-alone prescription drug coverage, you might be wondering how much prescription drugs usually cost. They can vary significantly depending on the type of medications you need, where you get them from, and how long you require them. Many prescription medications are very expensive out of pocket, and that is why you should find a health insurance plan that provides prescription drug coverage, even if it’s not especially generous.

How can you avoid unexpected out-of-pocket costs when shopping for coverage?

Understanding how prescription drug coverage works is an important part of recognizing when and how you can plan for – or even avoid – unexpected out-of-pocket costs.

What prescription drugs are covered by my plan?

Not all health plans cover all prescription drugs. If you need a drug that’s not covered, it can cost you hundreds to thousands of dollars out-of-pocket. To avoid those costs, look at the list of prescription drugs covered by your health insurance plan. This list is called a formulary. Here’s how a formulary works:

• Your plan generally only covers prescription drugs included in your formulary.
• Formularies may include both generic and brand-name medications.
• You may still owe a copayment or coinsurance for formulary drugs.
• Some drugs on your plan’s formulary may be covered automatically with a doctor’s prescription. Others may be covered only for treatment of specific conditions or after you’ve tried a different, preferred drug first.

You can usually get the most recent copy of your plan’s formulary by calling your insurer or visiting their website. Before you buy a plan, you should look at the formulary to see if your drugs are covered, and talk to a licensed agent to make sure you understand what’s covered in all of your individual and family health plan options.

How much are my prescription drug costs?

The answer to this question will vary based on the kind of prescription drug coverage you have. But when it comes to drug coverage, health plans typically break it down into three main groups.

• Group 1 – Drug coverage before your deductible: If your plan covers your drugs before you meet your deductible, each drug will typically have cost sharing through either a copayment or coinsurance. Your out-of-pocket costs may vary depending on the drugs you take. For example, a low-cost generic drug might cost you only a $20 copayment, while you may have to pay 40% of the full price for a unique, brand-name drug.
• Group 2 –Drug coverage after your deductible: Some plans do not cover the cost of prescription drugs until you meet your plan’s annual deductible. According to the Kaiser Family Foundation, the average Affordable Care Act (ACA) plan deductible for 2024 was $3,057. So, pay attention to plans that require you to meet a deductible before coverage kicks in.
• Group 3 –Drug coverage after a special prescription drug deductible: Some plans may have special deductibles solely for prescription drugs. These deductibles are separate (and generally a lot lower) than your overall deductible for other medical care. Once you’ve paid out your prescription deductible, your drugs may be covered with a copayment.

Remember, no matter which category your plan falls into, some drugs may not be covered at all, or only in certain circumstances. Depending on the rules of your plan, you may be able to request a coverage exception. And if your health insurance plan uses “drug coverage tiers,” this can also affect how much you pay (see below). One way to potentially save money on prescription drug costs is to sign up for a health discount program, such as the GoodRX card. When using a prescription discount card, you can save up to 60% when you use in-network providers to fill your prescriptions. Speak with a licensed insurance agent at eHealth about how to sign up for a GoodRX card, or other ways you can save on prescription drugs.

What are prescription drug coverage tiers and how do they work?

Drug coverage tiers are a way to group different kinds of drugs and incentivize patients to use more cost-effective options when possible. In general, prescription drugs from higher tiers may cost you more out of pocket than drugs from lower tiers. The tier structure varies by health plan, but here’s a sample of how a health insurance company might categorize drugs into four different tiers:

• Tier 1 (generic only drugs) – Drugs from tier 1 typically have the lowest copayments.
• Tier 2 (non-preferred generics and preferred brand-name drugs) – Your copay for these drugs may be higher than your copay for tier 1 drugs.
• Tier 3 (non-preferred brand-name drugs) – You’ll usually pay a still-higher copayment for these than tiers 1 and 2.
• Tier 4 (“specialty drugs”) – These are drugs that are costly and used in treatment for rare or serious medical conditions. Tier 4 drugs will generally have the highest out-of-pocket costs.

Drug tiers are important because if most of the medications you take are listed on a higher tier for a particular plan, your out-of-pocket costs may be higher. Not all insurance plans use drug tiers, and not all drug tiers work the same way. Make sure you understand how your plan – or any new health plan you’re considering – covers its prescription drugs. If you have questions about understanding plan benefits, a trusted eHealth licensed insurance agent would be happy to help.

How can I lower my prescription drug costs?

Knowing what you’re buying when shopping for coverage is the best way you can work towards keeping your prescription costs as low as possible and avoid incurring unexpected expenses. As you shop, be sure to:

• Check the formulary: make sure any prescription drugs you currently take are covered before enrolling. Otherwise, your plan may not cover your medications and your out-of-pocket costs could be higher.
• Understand your plan’s coverage rules: pay special attention to whether your prescriptions will be covered with a simple copay, or whether you’ll need to fulfill your annual deductible first. Find out if any new plan you’re considering utilizes drug tiers, and how much you’d pay for drugs in each category.
• Take the time to shop around: different plans cover the same medications at different costs. Since you’re taking the same medications regardless of who your insurer is, it’s worth it to shop and compare prices. eHealth’s plan finder tool makes it easy to find health plans that cover your specific medications.

Compare and find affordable health insurance.

Get personalized help from a licensed broker: understanding your prescription drug coverage options can feel overwhelming. For real insight and personal help finding the right drug coverage, a licensed health insurance broker like eHealth can make it easier to shop for coverage that fits your situation. It doesn’t cost anything extra and it can save you money by matching you with a plan that truly meets your needs. To speak with a knowledgeable agent today, simply give us a call at the number on this page.

Are prescription drugs covered by a high-deductible health plan?

In general, prescription drugs are covered by a high-deductible health plan. Under this type of plan, you usually have to meet your deductible before your insurance plan begins to pay for your prescription medications. Then, after you hit your deductible, your health insurance plan should pay for your prescription drugs, but you may be responsible for a copay or coinsurance. 

You should take a look at the details of your health insurance plan to see if you are required to pay coinsurance with your prescription drugs.

Medicare prescription plans

Does Medicare cover prescriptions? Yes, there are Medicare prescription drug plans available. There are a few ways you can get coverage for your prescriptions under Medicare. The first option is a stand-alone Medicare prescription drug plan (Medicare Part D). These plans are offered in addition to traditional Medicare plans, but you need to have Medicare Part A and/or Medicare Part B if you want a Medicare plan that covers your prescription medications. Approximately 50.5 million Medicare beneficiaries enrolled in Part D plans for prescription drug coverage in 2023.

Another option is to get a Medicare Advantage plan, which is also called Medicare Part C. If you decide to take this path, you will get all of same benefits as Original Medicare (Medicare Part A and Medicare Part B) and some include prescription drug coverage, through a Medicare Advantage plan. 

Take a close look at each Medicare Advantage plan available, as not all of them provide coverage for prescription medications.

How to enroll in Medicare Part D

When trying to figure out how to enroll in Medicare Part D, remember that this has to be included in addition to Medicare Part A and Medicare Part B. There are a few options available. For example, you might want to work with a licensed insurance agent who can help you, or you might want to use our insurance finder tool to help you compare Medicare plan options. There is even a paper enrollment form that you can fill out.

Ultimately, because there are so many options available, it may be best to work with a licensed insurance agent who can walk you through the process.

Find Medicare health insurance that provides the prescription drug coverage you need

You should find a Medicare plan that provides you with the prescription drug coverage you are looking for. You can use eHealth’s insurance finder tool to compare plans, and our licensed insurance agents can help you navigate the health insurance application process and review the benefits and drawbacks of the options available. That way, you can find the right plan to meet your needs.

Frequently asked questions (FAQs)

Does insurance cover prescription drug costs?

Yes, most health insurance plans provide coverage for prescription medications, but the extent of coverage can vary depending on your specific plan. It’s essential to review your policy’s prescription drug formulary to understand which medications are covered and what out-of-pocket costs you may incur.

What can I do if my prescription medication is not covered by insurance?

If your prescribed medication is not covered by your insurance plan, don’t panic. There are several options available to explore:

• Talk to your healthcare provider about alternative medications that are covered by your insurance.
• Consider reaching out to your insurance company to inquire about coverage exceptions or appeals processes.
• Look into patient assistance programs offered by pharmaceutical companies, which may provide discounts or free medications to eligible individuals.

Are there government programs or assistance available to help with prescription drug costs?

Yes, there are several government programs and assistance options designed to help individuals manage their prescription drug costs:

• Medicare Part D: This prescription drug coverage program is available to individuals eligible for Medicare and provides assistance with the cost of prescription medications.
• Medicaid: Medicaid provides healthcare coverage to low-income individuals and families, including coverage for prescription drugs.
• State Pharmaceutical Assistance Programs (SPAPs): Some states offer SPAPs to help residents with the cost of prescription medications, particularly for those who are ineligible for Medicare or Medicaid but still have financial need.

What should I do if I cannot afford my prescription medication?

If you find yourself unable to afford your prescription medication, take action promptly:

• Speak with your healthcare provider about lower-cost alternatives or generic versions of your prescribed medication.
• Explore patient assistance programs offered by pharmaceutical companies or nonprofit organizations.
• Consider utilizing pharmacy discount cards or coupons to reduce out-of-pocket costs.
• Investigate community resources or charitable organizations that may provide assistance with prescription drug expenses.

Remember, you’re not alone in facing challenges with prescription drug costs. By being proactive and exploring available resources, you can take steps to manage your medication expenses effectively.

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