You can provide prescription coverage for your employees that would cover everything, but depending on your insurance provider you could pay a very high premium.
Conversely you could choose a formulary that would cover only a few prescriptions or not cover medications for arthritis or MS, or even birth control. This type of program would control costs but you would have very upset employees.
2 very common formularies used:
– National formulary – 8,760 drugs
– Provincial formulary – varies by Province BC covers 5,085 drugs
These formularies are used by governments, some Unions and Associations.
There are other formulary options which cover as few as 4000 drugs and as many as 13,500 drugs. We feel that a employee benefit plan should offer coverage in the 13,500 range. This will provide your employees adequate coverage.
Many agents are recommending and selling benefit plans with a reduced drug formulary option. The reduction in coverage obviously will reduce your costs and claims. Is this the right advice from the agent? By changing the drug coverage which employee is affected and how?
We know there are other forms of cost containment options that will give your employees the coverage they need without reducing the integrity of your plan design.
1. Deductibles for extended medical
- Per person or by family
- Dispensing fee deductible on prescriptions, this makes an employee shop around to buy as dispensing fees vary from $4.50 to $12.00
2. Cost sharing
- Co-insurance on drug coverage – lowering the coinsurance so the employee is responsible for a larger portion. Example from 80% to 70%
3. Drug maximum cap
- Instead of having an unlimited allowance on drugs, set an annual maximum. (We do not like this option)
These measures are not always necessary. But we believe employees should be made aware and take responsibility for the rising costs associated with their benefit plan. Through education we can show employees how to reduce some of the fees they pay for services they use. The years of unlimited corporate resources is over for awhile.
Another option available is a POOLED priced benefit plan. Our company has been providing pooled benefits within 3 exclusive pools for the last 30 years. This type of plan allows you to purchase your benefits at wholesale pricing, and can create a cushion for high claiming years that will not drastically affect your premiums. This gives small to medium size business the protection they need with a plan design they want.