As you may have heard by now, the Health Insurance Marketplace has four price tiers that are meant to help shoppers figure out what their out-of-pocket costs will be once the insurance provider has paid its share of the expenses. Those four levels are Platinum, Gold, Silver and Bronze. As you might have guessed, Silver and Bronze are the two cheaper price brackets. It is these two that I would like to focus on in this discussion about pharmacy benefits.
While Bronze plans are decidedly cheaper than Silver, if you take any brand name prescriptions, you might want to consider going with a Silver plan, as it could very well cost you less in the long run. Here’s why:
Bronze plans are cheaper because they cover less. Through Covered California, the Bronze plan has an average yearly deductible of $5,000 for both medical and pharmacy benefits. That means that in order for a Bronze plan subscriber to receive any copayment on their brand name drugs, they would have to spend $5,000 first.
The Silver plan, however, has both a medical deductible and a pharmacy deductible. The medical is $2,000 and the pharmacy is $250. Once an individual spends $250 on prescription drugs, they get $50 co-payment towards brand name drugs.
Below we’ve put together a little table to show you how much it would cost a 40-year-old in California to buy prescription drugs each year on both the Silver and the Bronze plans:
While it’s true that you can save money in the long run on the Health Insurance Marketplace’s Silver plan, health savings accounts help the individual save even MORE money over time—and they encourage the individual to stay healthy.
Any money not used on medical expenses throughout the year continues to grow in your savings account and is yours to keep. Not only that, but it’s all tax-deferred. While you can take the money out for non-medical purposes, we encourage you not to, as there will be a 20 percent penalty fee—and you never know, you may need all that money for medical expenses later on down the road.
However, if you reach the age of 65 and haven’t needed any major medical care, you are THEN free to withdraw the money penalty-free. So, not only are you saving tax-free money—and not only does that money remain yours forever—but you’re not paying money for medical expenses that you may never need.
HSAs are a win-win-win situation all around. To learn more about the long-term savings benefits of having a health savings account, visit http://www.hsaforamerica.com/hsa-info.htm#savings.
Wiley Long is President of HSA for America, and a passionate advocate for consumer-based solutions that will improve price transparency and lower health insurance and medical costs for people purchasing individual and family health insurance plans.