Question

Medications that are covered in a Plan's formulary have various levels of associated member cost-sharing (copayments or coinsurance). What are these drug levels called?

a Formulary prescriptions
b Drug tiers
c Out-of-Pocket expenses
d Deductible

Answer 1

Drug tiers are levels in a Plan's formulary that determine member cost-sharing, such as copayments and coinsurance. They help regulate healthcare costs and minimize moral hazard by requiring individuals to contribute financially to their healthcare expenses.

Step-by-step explanation:

The levels of associated member cost-sharing in a Plan's formulary are called drug tiers. These drug tiers dictate the copayments or coinsurance amounts a member must pay to access medications.

The purpose of this tiered structure is to manage healthcare costs and reduce moral hazard by ensuring that individuals have a financial stake in the cost of their medications. Various levels, such as a deductible, which is an out-of-pocket expense prior to insurance benefits kicking in, are also in place to share the financial responsibility between the insurer and the insured.

Copayments are a fixed fee for a specific service or prescription, while coinsurance is usually a percentage of the total medical costs. Insurance policies with these features aim to reduce healthcare consumption that is unnecessary by having the policyholders bear some of the costs, which studies suggest, results in lower overall healthcare usage without significant differences in health outcomes.