Employers: Are your health plan drug copays set appropriately?

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Employers: Are your health plan drug copays set appropriately?

As prescription drugs become more expensive, employers may look to add deductibles or increase copays as a strategy to reduce cost. When looking for short-term savings, employers could lose sight in the value of setting copays to drive employee behavior. Whether the employer is choosing a set plan from a carrier or has the ability to set their own copays, here are some basic ideas for employers to consider:

  • Percentage copays: It is not ideal to increase percentage copays over time as they alert employees to the drug price, possibly encouraging them to shop around for the best price. Include a reasonable maximum out-of-pocket amount for percentage copays so it doesn’t discourage members from getting a high dollar medication.
  • Proper copay spreads: The average consumer typically changes their spending habit around a $25price difference. Keep this in mind when setting brand versus generic cost share. 
  • Do not implement zero dollar copays: Free or low copays may lead to waste and/or stockpiling of drugs. Free doesn’t necessarily equate to adherence to therapy or employee engagement. It is recommended that employees have some share of the cost even if an employer is trying to encourage the use of generics.  
  • High copays are not the answer – High employee cost share amounts do not always lead to plan savings. Studies by the Kaiser Family Foundation show that employers with high drug cost share could increase the risk that a patient may not maintain a proper drug therapy regimen. Improper drug therapy regimen can lead to lengthier treatment periods or hospital stays, resulting in higher cost.

Prescription drugs are becoming an increasing part of an employer’s insurance cost. Companies and organizations can work with their broker or consultant on setting copays to drive behavior over immediate savings. Setting copays to influence behavior may help lead to bigger savings in the future. 



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