Should you buy prescription health insurance?

If your health insurance policy does not cover prescription drugs, or you don’t have a health insurance policy, it could be in your best interests to get a separate policy strictly for prescription medications. If you don’t have coverage for medications, your only option is to pay full price for them. But medications vary wildly in price, so there are a few questions you’ll need to consider before deciding whether you need prescription drug coverage or not. And if you decide you do need it, there are more questions that will help you find the best policy for your needs and budget.

Do you need prescription drug coverage?

If you’re taking a medication that costs $100/month, and you’re likely to keep taking it for at least a year, there is almost surely a prescription drug policy out there that will save you money. On the other hand, if the only time you use prescription medications is when you need antibiotics for a couple of weeks, you might be better off just paying full price for whatever medications you need.

It also depends on whether the drugs you take are available in generic form. If you take beta blockers for high blood pressure, for example, you may be able to get a generic version of them through a discount pharmacy like Target or Wal-Mart. These prescriptions cost $4-9 per month, which is probably less than you would pay between the cost of a prescription drug policy and the copay on the drugs themselves (it would even be less than the co-pay, in many cases).

In these situations, the coverage might cost more than just paying for the drugs straight out.

If you do need it…

If you’ve determined that you do need prescription drug coverage, there are some things you should be aware of in choosing a policy.

Prescription drug policies do not exclude for pre-existing conditions – there’s no reason they should, since they make their money off your continuing need for medication. If somehow you find one that does exclude medications under certain circumstances, keep shopping.
These policies are typically “tiered.” That means you have different co-pays based on how expensive the medications are. Generic drugs will be at a low co-pay (even no co-pay in some cases), most brand name drugs will be at a higher co-pay, and the newest (and therefore most expensive) brand name drugs will be at the highest co-pay. This is why it’s good to know what your medications cost if you pay for them yourself; sometimes that third co-pay is a significant percent of the full price, and combined with your monthly policy fee, it might actually be cheaper to just pay outright.
Plans may exclude certain drugs or classes of drugs. You know what you need medication for, so check the fine print and ask questions until you’re sure you understand what is and isn’t covered.
Plans may dictate where you can buy your medications. Make sure there are plenty of covered pharmacies in your area.

If you take medications regularly, add their retail costs (if you bought them outright with no insurance) per month together to get what having no insurance coverage costs. Then look at the various plans you find. Add the co-pays for the medication together with the monthly coverage fee. If it’s lower than your retail cost, you should choose and insurance plan. Compare other plans via the same method – adding everything together to see what the total monthly cost will be. Choose the cheapest one after you’ve made sure there are no odd restrictions on the plan that make it a bad choice for you.