2017 Employer Health Benefits Survey

DISTRIBUTION OF COST-SHARING

• A large share of covered workers (91%) are in a plan with a tiered cost-sharing formula for prescription drugs [Figure 9.1]. Cost-sharing tiers generally refer to a health plan placing a drug on a formulary or preferred drug list that classifies drugs into categories that are subject to different cost sharing or management. It is common for there to be different tiers for generic, preferred and non-preferred drugs. In recent years, plans have created additional tiers which, for example, may be used for lifestyle drugs or expensive biologics. Some plans may have multiple tiers for different categories; for example, a plan may have preferred and non-preferred specialty tiers. The survey obtains information about the cost-sharing structure for up to five tiers.
• Eighty-three percent of covered workers are in a plan with three, four, or more tiers of cost sharing for prescription drugs [Figure 9.1]. These totals include tiers that cover only specialty drugs, even though the cost-sharing information for those tiers is reported separately.
  • HDHP/SOs have a different cost-sharing pattern for prescription drugs than other plan types. Covered workers in HDHP/SOs are more likely to be in a plan with the same cost sharing regardless of drug type (15% vs. 2%) or in a plan that has no cost sharing for prescriptions once the plan deductible is met (13% vs. <1%) as compared to covered workers in other types of plans [Figure 9.2].

AVERAGE COST-SHARING NOT INCLUDING TIERS EXCLUSIVELY COVERING SPECIALTY DRUGS

• Even when formulary tiers covering only specialty drugs are not included, a large share (77%) of covered workers are in a plan with three or more tiers of cost sharing for prescription drugs. The cost-sharing statistics presented in this section do not include information about tiers that cover only specialty drugs. In cases in which a plan covers specialty drugs on a tier with other drugs, they will still be included in these averages. Cost-sharing statistics for tiers covering only specialty drugs are presented in the next section.
• For covered workers in a plan with three or more tiers of cost sharing for prescription drugs, copayments are the most common form of cost sharing in the first three tiers and coinsurance is the next most common. Among those with a fourth tier, the difference between the percentage with a copayment and a coinsurance requirement is not statistically significant [Figure 9.3].
  • Among covered workers in plans with three or more tiers of cost sharing for prescription drugs, the average copayments are $11 for first-tier drugs, $33 second-tier drugs, $59 for third-tier drugs, and $110 for fourth-tier drugs [Figure 9.6].
  • Among covered workers in plans with three or more tiers of cost sharing for prescription drugs, the average coinsurance rates are 17% for first-tier drugs, 25% second-tier drugs, 38% third-tier drugs, and 28% for fourth-tier drugs [Figure 9.6].
• Eleven percent of covered workers are in a plan with two tiers for prescription drug cost sharing (excluding tiers covering only specialty drugs).
  • For these workers, copayments are more common than coinsurance for both first-tier and second-tier drugs. The average copayment for the first tier is $11 and the average copayment for the second tier is $30 [Figure 9.3].
• Seven percent of covered workers are in a plan with the same cost sharing for prescriptions regardless of the type of drug (excluding tiers covering only specialty drugs).
  • Among these workers, 21% have copayments and 79% have coinsurance [Figure 9.3]. The average coinsurance rate is 19% and the average copayment is $11 [Figure 9.7].
  • Twenty-one percent of these workers are in a plan that limits coverage for prescriptions to generic drugs [Figure 9.9].
• Coinsurance rates for prescription drugs often have maximum and/or minimum dollar amounts associated with the coinsurance rate. Depending on the plan design, coinsurance maximums may significantly limit the amount an enrollee must spend out-of-pocket for higher cost drugs.
• These coinsurance minimum and maximum amounts vary across the tiers.
  • For example, among covered workers in a plan with coinsurance for the first cost-sharing tier, 25% have only a maximum dollar amount attached to the coinsurance rate, 8% have only a minimum dollar amount, 18% have both a minimum and maximum dollar amount, and 49% have neither. For those in a plan with coinsurance for the fourth cost-sharing tier, 52% have only a maximum dollar amount attached to the coinsurance rate, 4% have only a minimum dollar amount, 12% have both a minimum and maximum dollar amount, and 33% have neither. [Figure 9.8].

SPECIALTY DRUGS

• Specialty drugs, such as biologics that may be used to treat chronic conditions or some cancer drugs, can be quite expensive and often require special handling and administration. We revised our questions beginning with the 2016 survey to obtain more information about formulary tiers that are exclusively for specialty drugs. We are reporting results only among large firms because a substantial share of small firms were unsure whether their largest plan covered these drugs.
  • Ninety-seven percent of covered workers at large firms have coverage for specialty drugs [Figure 9.10]. Among these workers, 47% are in a plan with at least one cost-sharing tier just for specialty drugs [Figure 9.11].
  • Among covered workers in a plan with a separate tier for specialty drugs, 45% have a copayment for specialty drugs and 46% have a coinsurance [Figure 9.12]. The average copayment is $101 and the average coinsurance rate is 27% [Figure 9.13]. Eighty percent of those with a coinsurance have a maximum dollar limit on the amount of coinsurance they must pay.
• Some covered workers are also required to meet a deductible before the plan covers specialty drugs. Among covered workers enrolled in a plan with a deductible and specialty drug coverage, 29% must meet the general annual deductible and 15% must meet a separate drug deductible before specialty drugs are covered [Figure 9.14].

SEPARATE ANNUAL DRUG DEDUCTIBLES

• In addition to other cost sharing, some covered workers are also required to meet a separate prescription drug deductible before the plan covers some or all drugs. Fifteen percent of covered workers are in a plan with a separate annual deductible for prescription drugs [Figure 9.15]. These prescription drug deductibles are separate from any general annual deductible and may apply to all or a select number of tiers.
  • For 57% of covered workers in firms with a separate deductible for prescription drugs, the deductible applies to all drugs on each of the formulary tiers [Figure 9.16].
  • The average annual deductible among covered workers in firms who face a separate annual deductible is $149 [Figure 9.16].

Generic drugs

Drugs that are no longer covered by patent protection and thus may be produced and/or distributed by multiple drug companies.

Preferred drugs

Drugs included on a formulary or preferred drug list; for example, a brand-name drug without a generic substitute.

Non-preferred drugs

Drugs not included on a formulary or preferred drug list; for example, a brand-name drug with a generic substitute.

Fourth-tier drugs

New types of cost-sharing arrangements that typically build additional layers of higher copayments or coinsurance for specifically identified types of drugs, such as lifestyle drugs or biologics.

Specialty drugs

Specialty drugs such as biological drugs are high cost drugs that may be used to treat chronic conditions such as blood disorder, arthritis or cancer. Often times they require special handling and may be administered through injection or infusion.