Calculate How Much Health Insurance Pays for Prescription Drugs

How Health Insurance Covers Prescription Drugs

Health insurance plans use several methods to cover prescription drugs:

• Formulary: A list of covered drugs your plan considers medically necessary
• Copay: A fixed amount you pay for each prescription
• Coinsurance: A percentage you pay after meeting your deductible
• Deductible: The amount you pay out-of-pocket before insurance starts covering costs
• Maximum Out-of-Pocket: The most you'll pay for covered services in a year

Your plan may have different coverage tiers (preferred, generic, non-preferred) with different cost-sharing requirements.

Key Terms to Understand

Copay

A fixed amount you pay per prescription (e.g., $10 per pill)

Coinsurance

A percentage you pay after meeting your deductible (e.g., 20% of drug cost)

Deductible

The amount you pay before insurance covers costs (e.g., $1,500 per year)

Formulary

The list of covered drugs your plan considers medically necessary

Maximum Out-of-Pocket

The most you'll pay for covered services in a year (e.g., $7,500)

How the Calculation Works

The calculator determines your insurance coverage based on:

1. Whether you've met your annual deductible
2. Your plan's coverage tier for the medication
3. The cost of the medication

The calculator shows how much you pay and how much your insurance pays for each prescription.

Example Calculation

Let's say you have a $500 prescription for a drug that costs $100 per pill. Your plan has:

• $1,500 annual deductible
• 20% coinsurance after deductible
• $10 copay per prescription

If you haven't met your deductible:

• You pay $10 copay
• Insurance pays $90 per pill

If you've met your deductible:

• You pay 20% of $100 ($20) plus $10 copay = $30 per pill
• Insurance pays $70 per pill