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Is Co-Insurance less expensive (or better) than Co-Payment?
The out of pocket cost differences between Co-Insurance and Co-Payment will depend on the medications that you are using and how they are organized in a specific Medicare Part D plan.
Before we look at a few examples, let us review the two "cost-sharing" options:- Co-Insurance means that you will be responsible for a certain percent of the prescription costs (usually 25%) and the insurance company will responsible for a certain percent of the prescription cost (usually 75%). So for a covered medication costing $100 a month retail - you would pay $25 a month.
- Co-Payment refers to a fixed dollar amount assigned to a logical grouping or tier of medications, for instance, a tier may include either generics or preferred brand name medications. Companies group their covered medications into these logical classes or tiers within the Medicare Part D formulary or drug guide. This logical grouping of medication may vary from company to company. Therefore, a medication that is grouped as a Tier 2 medication on one Medicare Part D plan, may be grouped as a Tier 3 medication in another plan. Naturally, the costs of the different Co-Pays also varies from plan to plan. For instance, the Co-Pays for a Generic Medication Tier may vary from $0 to perhaps $7+, depending on the plan.
Here are a few examples of how the two "cost-sharing" options could compare:
- Example 1. Lipitor: may have a retail cost of $70
- Co-Insurance (25%) - you pay $17.50
- Co-Payment (Preferred Brand-Name Tier) - you pay $20 to $30 (depending on the plan)
- Example 2. Cellcept: may have a retail cost of $160
- Co-Insurance (25%) - you pay $40
- Co-Payment (Preferred Brand-Name Tier) - you pay $20 to $30 (depending on the plan)
- Example 3. Premarin: may have a retail cost of $32
- Co-Insurance (25%) - you pay $8
- Co-Payment (Preferred Brand-Name Tier) - you pay $20 to $30 (depending on the plan)
- Example 4. Linsinopril: may have a retail cost of $7.52
- Co-Insurance (25%) - you pay $1.88
- Co-Payment (Generic Tier) - you pay $0 to $10 (depending on the plan)
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As can be seen by these four examples, although the retail price may vary, the Co-Payment for this class or tier of medication remains the same and the Co-Insurance figure fluctuates as a percentage of the retail price.
Therefore, the most affordable alternative between Co-Payment and Co-Insurance plans will depend on the retail costs of medication that you are using and the placement of those medications within the tiers of a plan's formulary.
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Last updated on: 10/14/2012
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