Several high profile cases in the last year have demonstrated how the cost for life-saving drugs or treatment can increase dramatically without warning. The narratives of Epipen and the anti-parasitic drug Daraprim tell the heart-rending tale of patients abruptly unable to afford a drug that they desperately needed.
It’s advisable to keep these stories in mind when selecting or changing your health insurance, particularly during open enrollment season and any time you’re assessing your Medicare coverage.
To help make sure you aren’t bearing the brunt of dramatic cost increases for drugs, treatment or other items, it’s very important to understand the difference between copay and coinsurance, and why you would want one over the other.
The easiest way to understand copay vs. coinsurance is simply learn from the experience of another:
While comparing her options for Part D prescription drug plans, 65-year-old Janice noticed that she had the option of paying a $50 copay for one of her brand-name medication or a coinsurance payment of 20% percent on another plan. Since the cost of her prescription at the time was $150, she choose the plan with the 20% percent coinsurance payment after calculating that she’d save $20 per month on this medication.
Unfortunately for Jancie, just a few months after enrolling in the plan with coinsurance, the price of her medication spiked 300% to $450. With a coinsurance of 20%, the price of her medication increased to $90 a month. However, if she had chosen the plan with the copay, she'd still be paying just $50 a month.
By choosing a plan with a copay rather than the one with coinsurance, Medicare beneficiaries can insulate themselves from unexpected increases in prescription drug costs. The cost savings could be dramatic.
Take, for example, the case of Novalog, a diabetic medication. Over the course of one year, price of this brand name medication exploded from about $400 per refill to almost $1,300. Using Janice's choices of a $50 copay versus a 20% insurance, the difference in price would be $210.
Those kinds of prescription drug spikes aren’t something you see every day, but they are certainly happening more often, particularly as the Baby Boomer population ages.
Though navigating the world of Medicare can be very confusing, i65 and 65 Incorporated are here to help. For more information about coinsurance and other crucial Medicare topics, visit to vast library of Medicare-related topics at the 65 Incorporated website. You'll find free quizzes, infographics, articles and more from the consultative team led by Medicare expert, Diane J. Omdahl, RN, MS.