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Private Drug Insurance: Your coverage explained

About 65% of Canadians get prescription drug coverage from a private health insurance plan. This coverage can be part of a group health benefits plan provided by an employer, or purchased on an individual basis if you are self-employed or require supplementary coverage to an existing plan.

Drug coverage varies from insurer to insurer. But learning how private drug plans work, what prescriptions may be covered and what options you have if a drug isn’t covered can help you get the most out of your private drug plan.

How do private drug plans work?
Which prescriptions are covered?
What are my options if a drug isn’t covered?

How do private drug plans work?

Private drug plans vary, depending on the insurer. Each private insurer determines how much drug coverage they offer and what sort of payment system they will use. In some cases, you may have to pay a small portion of the cost called a deductible or a coinsurance. The drug benefits may also have a cap, meaning the plan will pay for your prescription drugs up to a certain amount, after which you will be responsible for the cost..

As new medications and drug therapies are being developed, private insurers are enhancing their drug coverage options. For example, many insurers now offer a generic drug list and a brand-name drug list. If you choose generic drugs, your out-of-pocket costs may be lower than those who choose brand-name drugs. Specialized drugs, such as those for cancer treatment, are often classified as high-cost drugs, and may have a higher deductible. With the recent success of new medications such as biologics in health care, private insurers are beginning to offer coverage for them, but they are also classified as a specialized drug.

Which prescriptions are covered?

Private insurance plans usually cover most prescription medication expenses, as long as the medication is listed in the formulary (drug list). To determine whether a medication is listed in the formulary, contact your plan administrator and provide them with a drug identification number (DIN). You can find out the DIN for a drug by consulting the Drug Product Database. In some cases, when the drug is not included in the formulary, an alternative (generic, if available) may be suggested by a pharmacist.

What are my options if a drug isn’t covered?

If your medication isn’t listed in the drug plan’s list of drugs, known as a formulary, and no alternative is available, some plans may have a special authorization program. If this type of program is available, your physician may need to submit a letter explaining why the drug is needed and for what illness. It is up to the insurance company’s discretion to approve or reject this request.

Drug benefits provided by private health insurance plans offer different coverage, payment methods, reimbursement, and lists of covered drugs, so be sure to research what your plan covers. To determine the specific details of your drug benefits, contact your plan administrator or customer service centre directly.

Remember, publicly funded drug plans, such as those offered by your provincial or federal government, may be able to provide additional coverage if you meet the eligibility requirements.

Key Websites:

• Health Canada: Drugs and health products

Related Articles:

• Publicly Funded Drug Plans: Know your options
• Drug Coverage: The Special Access Programme (SAP)
• Drug Lists: What do they tell you?
• Insurance Know-How: Defining payment terms

References