Insurance: How Does it Work and Why am I Still Paying For My Medication??

By Faizan Baig, Chris Tse, and Steven Guan

In healthcare, one of the most confusing aspects to navigate is insurance. Whether you are a patient, pharmacy technician, or pharmacist, insurance can be a huge pain! But let’s dispel some of the mystery today! But before we get ahead of ourselves, we should explain some common insurance terms:

1. Plan Sponsor

   • This is your employer or organization that offers a group health plan to its employees and members. The employer will subscribe to an adjudicator, or insurance company that will then manage the claims as per your health/drug plan.

2. Adjudicator

   • The health insurance company that manages your group health plan. This is a company that will take care of claims that are submitted by you, the patient, and will reimburse you for each claim.

3. Copay

   • Not all plans provide 100% coverage where you do not end up paying for health care services. Some plans will include a copay, which is a partial payment from the patient, and is usually a percentage of the health service cost. For example, some plans offer 70% coverage and 30% copay. If your medication costs $100, then you would be expected to still pay $30 out of your pocket.

4. Deductible

   • Insurance plans may also require you to pay a deductible before allowing claims to be reimbursed or covered by the insurance company. In this case, you must meet the deductible amount, and pay out of your own pocket until it is satisfied. After which, you would then be covered. Deductibles usually reset either every quarter or annually.

   • Example: the Ontario Drug Benefit (also known as ODB, described below) has an annual deductible of $100. This means that a patient covered under the ODB plan will pay the full cost of the medication until $100 is paid. Afterwards, the ODB will cover any drug on its formulary (see next description). Note that since ODB has a co-pay of $4.11, each prescription will cost $4.11 minimum.

5. Formulary

   • A list of medications that an insurance plan will cover (unfortunately some medications are excluded from formularies and will therefore not be covered). Some insurance plans will also have conditions which need to be met before a medication is covered.

   • Example: again we will use the ODB for an example (they have so many rules!!). Ciprodex is an antibiotic medication on the ODB formulary, but it requires a special condition to be met before the adjudicator (the government) will pay for the medication.

6. Dispensing fee

   • We covered this in last week’s article! Read here.

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One myth of insurance is that it covers all costs. The real answer is… It depends. Not all insurance is made equal but we will explain the differences between government insurance (Ontario Drug Benefit and Trillium), private insurance, and brand name cards. There are also several federal drug insurance plans but for the sake of brevity, we won’t discuss these in our article.

Ontario Drug Benefit (also known as the ODB)

• This is the government plan which covers most patients. Coverage is provided to the following patients:

  1. Patients age 65 and older

  2. Living in a long term care home, home for special care or Community Home for Opportunity

  3. Patients who are 24 years of age or younger and not covered by a private insurance plan, also known as OHIP+

  4. Receiving professional home and community care services

  5. Receiving benefits from Ontario Works or the Ontario Disability Support Program

  6. Enrolled in the Trillium Drug Program

• A low income senior is someone with income of $19,300 or less, or a senior couple with combined income of $32,300 or less

Plan Sponsor	Adjudicator	Copay	Deductible
Government	Government	Low Income = $2 High Income = $6.11	Low Income = $0 High Income = $100

Trillium Drug Program

• The Trillium Drug Program is an extension of the government drug plan which covers patients who spend 4% or more of their after-tax household income on prescription-drug costs.

Plan Sponsor	Adjudicator	Copay	Deductible
Government	Government	$2	4% of household income after taxes

Private insurance

• This includes any insurance that you are a part of, whether it be through work where the company offers benefits, or privately, if you choose to get your own coverage. Private insurance coverage varies GREATLY between providers. Some plans are very generous while others are not so lucky. As a general rule, a good private drug plan is one which covers 80% of drug costs.

Plan Sponsor	Adjudicator	Copay	Deductible
Individual or Company	Can Vary	Variable	Variable

Cash

• Straight forward, you do not have any insurance coverage and you pay out of pocket for all medical expenses, including prescriptions.

Brand name cards

• Some pharmaceutical companies will offer ‘brand name cards’ which will cover the cost difference between their brand name drug and the generic medication. If the brand name medication costs $100 and the generic medication costs $30, the brand name card would then cover the $70 difference between the two and leave you to pay the $30 remaining for the medication. Essentially, you get to pay generic cost for a brand name medication. These cards can be coupled with both government coverage and private coverage, which can then make the brand name medication even more affordable to the patient.

We know insurance can be one of the most frustrating parts of your pharmacy experience, whether you are a patient or a part of the pharmacy team. Hopefully this quick guide to insurance cleared up a few things! If you have further questions, please reach out with our Contact form!