What Everybody Ought To Know About Prescription Insurance


Last week a reader asked for help with a problem.  “My insurance company is not going to pay for my prescription for F_______.  Can The Insurance Barn help?”

I emailed both an explanation and advice to the insured.  It was something like this.

MY INITIAL EXPLANATION

The Insurance Barn is an agency and not an insurance company.  Insurance companies pay the bills for medical treatment.  Insurance agencies only arrange the contracts between individuals and insurance companies.

Once you have selected which health insurance company you wish, the insurance agency (The Insurance Barn) will help you complete and submit you applications.  It will coordinate any underwriting requirements and facilitate communications between the applicant and underwriter during the approval process.  However, the role of the insurance agent is greatly diminished 10 days after the health insurance policy has been delivered.

At that point in time, the applicant becomes a customer of the insurance company rather than the insurance agency.  An insurance agency, like The Insurance Barn, will only facilitate minor changes in your policy that you request and explain terms in your contract with the insurance company when you are confused.  The insurance agency does not have the power to force an insurance company to do anything.

ADVICE

This gentleman was obviously frustrated with his health insurance plan not paying for his prescriptions.  I told him that there are a few things that he should do.

  1. Understand The Brand Name Drug Deductible – Many Major Medical policies require the insured to pay full retail price for brand name drugs each year before they will pay a benefit for those drugs.  This early in the year, it is highly likely that you have not gotten enough brand name drugs to have paid the full deductible that you agreed to in your policy.  (Before any soft-hearted individual writes a comment about how unfair this separate deductible for brand-name drugs is, keep in mind that it is a cost sharing device that is also embraced by the government in the Medicare D plan.  It may not be right to treat brand name drugs different from generic drugs but it is the way things work.)
  2. Understand Prescription Plan Limits - If the problem is not a misunderstanding of the separate deductible for brand name drugs, understand that many major medical plans have limits for prescription benefits.  Some plans do not cover prescription medications at all.  Some only cover prescriptions after you have met your plan’s Major Medical deductible.  Other plans limit the amount they will pay for prescriptions during the year. (The PPACA only eliminated “lifetime” limits for now.  Annual limits still exist.  They are slowly being phased out but it will take a few years.)
  3. Understand Prescription Plan Exclusions - Some insurance companies will not pay for some medications unless they are educated by your doctor why you are not able to take a less expensive drug that does the same thing.  When this happens, it is not a huge problem to work around.  There is no reason to panic.  The insurance company is actually looking out for you (even though having your claim denied at the pharmacy is generally not the best way to let you know there is a problem.)  All you need to do is contact the customer service number on your ID card and ask them how to go about filing an appeal for the drug in question.  It is likely that all they need is a statement from your doctor explaining why you need a more expensive drug than what is normally used.   If the doctor’s statement make sound medical sense, your prescription will probably be paid for.  If, on the other hand, the doctor’s prescription was made only because he gets a kick-back or other non-medical reason, the drug will not be paid for.
  4. Read Your Policy When You Get It - Several times a month I warn people about holes in health insurance coverage on this blog.  I advise people to read their health insurance policies and take steps to fill in the holes in coverage they leave.  I know that it sounds like a sales-pitch, however, I firmly believe in the need to supplement a Major Medical policy.  In this case, the drug was for a pain-killer for a cancer patient.  A Critical Illness policy would have paid a  lump sum of several thousands of dollars when he was diagnosed with cancer.  That money could be used to pay for his cancer medication while he was finding out and correcting the problem with his major medical insurance.  (It is too late for this person to get a Critical Illness supplement but I did recommend that he have his children and siblings look into supplementing their health insurance portfolio with a Critical Illness policy since they are genetically more at risk for cancer than someone who does not have a blood relative with cancer.)
  5. Contact Your State Department Of Insurance – If you have done the previous things and still feel that you are right and the insurance company is wrong, contact your State Department of Insurance before you pay for an attorney.  Many states have consumer affairs departments that have the power to force an insurance company to live up to the terms of your policy.  Just make certain that you have read your policy before you call your state’s Department of Insurance and file a complaint.  If your claim is based on an assumption and not on the terms that are written in your policy, you will lose.  Departments of Insurance can only make the insurance companies do what is written in your policy.  They cannot make them do something just because it is something you think the insurance company should be liable for.

ANOTHER POSSIBLE EXPLANATION

Apparently, there is an increasing number of doctors who are questioning the use of pain killing opioids.  I just finished reading an article in the New York Times, “Tightening The Lid On Painkiller Prescriptions.”  If what the article says is true, it would not surprise me if the health insurance companies were joining the fight and making some painkiller medications harder to get.

The Insurance Barn would like to help you with your insurance issues.   If you live in one of the states in which I am already licensed (TX, IN, MI, TN) and want to do some comparison shopping for your Major Medical insurance, click on the link.  If you live in a state other than one I am already licensed in or you have a question about your insurance portfolio, contact me with the form on the right-hand side-bar.  I will try to get you an answer within 24 hours.

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