2023 Employer Health Benefits Survey

DISTRIBUTION OF COST SHARING

• The large majority of covered workers (91%) are in a plan with tiered cost sharing 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. Commonly, there are different tiers for generic, preferred and non-preferred drugs. In recent years, plans have created additional tiers that may be used for specialty drugs or more expensive drugs such as 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-seven percent of covered workers are in a plan with three, four, or even 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/SO plans have a different cost-sharing pattern for prescription drugs than other plan types. Compared to covered workers in other plan types, those in HDHP/SOs are more likely to be in a plan where payment is the same regardless of the type of drug (8% vs. 3%), and more likely to be in a plan that has no cost sharing for prescriptions once the plan deductible is met (8% vs. 2%) [Figure 9.2].
  • Small firms are more likely to have no cost sharing after the deductible is met compared to large firms (6% vs. 2%) [Figure 9.2].

TIERS NOT EXCLUSIVELY FOR SPECIALTY DRUGS

• Even when formulary tiers covering only specialty drugs are not counted, a large share (84%) 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 be included in these averages. Cost-sharing statistics for tiers covering only specialty drugs are presented further down in this 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 second-most common [Figure 9.3].
  • Among covered workers in plans with three or more tiers of cost sharing for prescription drugs, the average copayment is $11 for first-tier drugs, $36 second-tier drugs, $66 for third-tier drugs, and $125 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 rate is 20% for first-tier drugs, 26% second-tier drugs, 38% third-tier drugs, and 28% for fourth-tier drugs [Figure 9.6].
• Six 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 in both tiers [Figure 9.3]. The average copayment is $15 for the first tier and $36 for the second tier. [Figure 9.6].
• Five 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, 19% have copayments and 80% have a coinsurance rate [Figure 9.3].

COINSURANCE MAXIMUMS

• Coinsurance rates for prescription drugs often include maximum and/or minimum dollar amounts. Depending on the plan design, coinsurance maximums can significantly limit the amount an enrollee must spend out-of-pocket for higher-cost drugs. Even in plans without explicit coinsurance maximum amounts, the overall plan out-of-pocket maximum limits enrollee cost sharing on covered services, including prescription drugs.
• These coinsurance minimum and maximum amounts vary across tiers and plan designs.
  • For example, among covered workers in a plan with coinsurance for the third cost-sharing tier, 21% have only a maximum dollar amount attached to the coinsurance rate, 8% have only a minimum dollar amount, 38% have both a minimum and maximum dollar amount, and 32% have neither. For those in a plan with coinsurance for the fourth cost-sharing tier, 47% have only a maximum dollar amount attached to the coinsurance rate, 1% have only a minimum dollar amount, 23% have both a minimum and maximum dollar amount, and 28% have neither [Figure 9.7].

SEPARATE TIERS FOR 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. In 2016, we revised our survey questions to obtain more information about formulary tiers that are exclusively for specialty drugs. We are reporting results only among large firms because small firm respondents had large shares of “don’t know” responses to some of these questions.
  • Ninety-seven percent of covered workers at large firms have coverage for specialty drugs, lower than the percentage in 2022 [Figure 9.8]. Among these workers, 58% are in a plan with at least one cost-sharing tier just for specialty drugs [Figure 9.9].
  • Among covered workers at large firms in a plan with at least one separate tier for specialty drugs, 42% have a copayment for specialty drugs and 50% have coinsurance [Figure 9.10]. The average copayment is $110 and the average coinsurance rate is 26% [Figure 9.11]. Sixty-five percent of those with coinsurance have a maximum dollar limit on the amount of coinsurance they must pay.

REDUCED COST SHARING FOR MAINTENANCE DRUGS

• Some plan reduce or eliminate cost sharing for drugs that treat chronic illness, such as insulin products for diabetics, in order to encourage enrollees to take them as prescribed. Forty-seven percent of covered workers in large firms are enrolled in a plan that reduces or waives cost sharing for prescription drugs needed to maintain health for one or more chronic illnesses in 2023 [Figure 9.12].

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.