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Understanding Your Prescription Terms

It's January, and we're all receiving our new health insurance cards and going over changes to our health benefits compared to last year. You may see some changes in how your health insurance covers your prescriptions, or the amount that they pay this year when you compare it to last year. Here are some explanations that might help you understand the changes.

Formulary vs. Non-formulary - Every health insurance company has a catalog of medicines that they refer to as "formulary" medicines. These are medicines that they can get at a cheaper cost. The lower cost could be due to the fact that the drug is more popular and therefore easier for pharmacies to obtain, or it could be because your insurance carrier has a special contract with the pharmaceutical company that supplies the drug. In any case, you'll pay less for formulary drugs than for non-formulary ones because your insurance carrier pays less for them. In many cases, there will be two drugs that work for the same condition. It's likely, however, that only one will be considered formulary by your insurance carrier (usually the one that has been prescribed the most). If your doctor can prescribe that drug for you over the other drug, you'll save money.

Generic vs. Brand Name - Brand name drugs are the ones you've heard of, meaning they're made by the larger pharmaceutical companies and they're advertised in magazines and on television. Generics are made by smaller companies and do not receive advertising. However, by law, the generics must contain the same ingredients as the brand name drugs. You save money by buying the less advertised and less attractively packaged drugs.

It's not unusual for your health insurance prescription coverage to have some changes at the beginning of each year. Be certain to review your coverage at the beginning of each year so that there are no surprises and so that you know all the ways you can save money on your health care this year.