HSA-type Insurance Prescription card filter:Higher cost of medication with Rx card
December 6, 2012 6:17 AM   Subscribe

HSA-type health insurance from Oxford, Paying more for prescription medication than out-of-pocket

Recently, my health insurance was changed to HSA-type from EPO-type. It has $4000 deductible towards doctor's visits, prescription medications and hospital visits. Thereafter co-pays kick in. My income is about $68K. The question is 2-fold.

1. I take prescription medications for my chronic condition. The cost of medication with Medco is higher with my insurance prescription card than me just buying the same medication from CVS or Walmart out-of-pocket. Medco told me that if I buy out-of-pocket then that amount will not be reimbursed towards my insurance deductible. The total annual difference will be about $500. I think its very unfair that I pay the insurance premiums and yet pay more for my medication! I am curious what I can do about it? Is there any way to complain about this, like some government body?

2. With this new change in health insurance, my small business employer informed me that this $4000 will go towards tax deductions and I am still confused about it, on how and what amount? It will be great if someone can flash some light on it
posted by zaxour to Health & Fitness (10 answers total)
There are two components to an HSA plan.

1. The insurance plan.
2. The Health Savings Account (HSA)

You'll open an HSA account and you'll deposit money into it every pay-period. You don't have to contribute all $4,000 annually, you can do however much makes sense. An HSA account is contributed to with pre-tax money, like a 401(k). So it's not really a tax deduction, it's just money you won't be taxed on.

An HSA account can be contributed to year-over-year. So you can put in $1000 in year 1, another $1000 in year two, whatever works for you. It will roll over and you will never lose the money. You can use the money for doctor's visits, prescriptions, glasses, etc. Anything that's an approved, medical expense.

My HSA has a deductable of $1,600 annually. I contribute $50 per pay-period to my HSA account. I had a major medical incident this year, and had to pay about $800 out of pocket between making up for the short-fall in my HSA account, and the various co-pays. The total bill was $15,000. So I'm not complaining.

In your case you can contribute to your HSA account in pre-tax dollars, pay for your prescriptions out of pocket, and just not have them count towards your deductible. If you're not going to incur $4,000 worth of medical expenses in the average year, it doesn't matter if that $500 counts towards the deductible. It would only matter if you typically exceed that amount.

So contribute to your HSA and use the money to buy your prescriptions cheaply from Wal-Mart or CVS. At least you're still buying your prescriptions with pre-tax money.

Frankly, your plan sucks, and it may make sense for you to go on the open market and get a better one.
posted by Ruthless Bunny at 6:31 AM on December 6, 2012 [2 favorites]

You can run into problems with OTC medications with HSA debit cards - a/k/a they won't work.

Get a script from your doctor for any meds you plan to buy OTC and keep it on file for tax purposes. Do this every year you are on the meds. Get a checkbook, not a debit card, from your HSA and pay for the OTC medications with that. That way you can pay for your OTC medications out of your HSA and not run afoul of any fascist restrictions on how you use your money.

Also, take RB's advice and shop around. A $4,000 deductible at your income level is atrocious. However, premiums are so high for an individual that you might be better off taking a chance that you won't spend $4,000 per year, esp. if you are young.
posted by Currer Belfry at 7:08 AM on December 6, 2012

#1 sounds fishy. I had a private pay BC/BS plan with a $20K family deductible in 2010. I never, ever found a drug that was cheaper on the open market than at the BC/BS contracted rates. Never. Oxford is either completely incompetent at negotiating drug prices or something somewhere is not processing properly. I would definitely go up the ladder at the insurance company. Somebody there above the customer service phone rep level should care that they are paying more for drugs than basic retail.
posted by COD at 7:35 AM on December 6, 2012

I did have a thought.

Medco typically provides for 90 days worth of drugs, whereas the prices at CVS and Wal-Mart might be for 30 days.
posted by Ruthless Bunny at 8:03 AM on December 6, 2012

The cost of medication with Medco is higher with my insurance prescription card than me just buying the same medication from CVS or Walmart out-of-pocket. Medco told me that if I buy out-of-pocket then that amount will not be reimbursed towards my insurance deductible.

I'm with COD; this doesn't make sense. The reason they won't let you put out-of-pocket drug costs towards your deductible is that it should always cost more to buy drugs that way. They're doing it to "encourage" (read: force) you to use their negotiated prices. So something is really wrong if you can get a better deal by not using their rates.

Whether or not this is a battle worth fighting really depends on whether this prescription is going to be the difference between hitting your deductible for the year or not. If you're likely going to be under $4k either way, I'm not sure I'd obsess over it — I'd just pay for it using the HSA debit card (so it'll get paid for out of your pretax HSA funds), and if it doesn't get counted towards the deductible that year, whatever. At least with my insurance, the HSA card and the insurance deductible are loosely coupled (i.e. you can pay for stuff using the HSA card and that's entirely between you, God, and the IRS; the insurance company doesn't give a shit).

At least in my and my coworkers' experience, the only time any of us have hit our HSA/HDHP deductible was for serious stuff requiring a hospital stay. Either we're well under it — so it doesn't really matter what got counted — or we're going to blow so far through it that a few hundred bucks is going to literally be a rounding error. YMMV, of course, but I think that's basically how the HSA/HDHP combinations are supposed to work and be viewed.
posted by Kadin2048 at 8:03 AM on December 6, 2012

I was thinking the same thing as Ruthless Bunny about the 90 day Medco vs 30 day retail - I fell into the same thinking until I actually looked at it - especially as the savings on one was very small (like $2 less over the 90 days) and me doing math in my head made a rounding error.
posted by neilbert at 8:16 AM on December 6, 2012

@ Ruthless Bunny,
I have no idea about this HSA account. Is it OK to contact you by Mefi mail for more info? My employer is rather small and have to insure only 3 employees so there is not much room for negotiation.

@ Currer Belfry,
I am 35 but have a chronic condition (Ulcerative colitis) so you never know when things go bad and you need major medical expense. I do take a LOT of care that things remain stable, still there is always a worry about a flare.

The cost difference between medco and CVS, yes Medco gives 90-days supply whereas CVS 31 days but to give an example, 90 days supply of drug A costs ~$293 through Medco and CVS gives me 30 days supply for $77 using a coupon from goodrx.com. Thats a saving of about $50 for 3 month supply (and I take 4 prescription medications).
posted by zaxour at 8:29 AM on December 6, 2012

Sure memail me, I'll tell you what I know.
posted by Ruthless Bunny at 9:03 AM on December 6, 2012

And also another thought I had was the Formulary. This is the list of drugs that Medco has negotiated special pricing on.

When I visit my doctor, I bring the formulary with me so if there are two drugs that do the same thing, we can pick the one on the formulary and I can save money.

For example, at my old job, I paid $133 for my Micardis for my high blood pressure. Now, I pay $17 per month for it. That works for me! Unfortunately, it took a lot of trial and error to settle on Micardis, so formulary or no, I'll pay what I have to for it.
posted by Ruthless Bunny at 9:08 AM on December 6, 2012 [1 favorite]

I agree that sometimes with-insurance prescriptions cost more than CVS / Target / etc; they have many generics for $4 per month without insurance, and all generics were $10 per month on my previous insurance plan.

I don't know how to fix the problem, but this is definitely something that happens.
posted by insectosaurus at 10:01 AM on December 6, 2012

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