How to Cut the Costs of Prescription Drugs
Paying cash for generics sold at Walmart, Costco and Target may be cheaper than your insurance co-pay.
I have to pay much more out of pocket for prescription drugs than I did in the past. What can I do to reduce these costs? --S.R., Tampa
Prescription drug costs spiked 13.6% from 2014 to 2015 for a family of four with employer coverage, according to the Milliman Medical index. That’s why it’s important to compare out-of-pocket costs for your drugs when picking a plan each year and to review the differences in co-pays within each plan.
Generic drugs can cost up to 85% less than brand-name versions. Ask your doctor if you can switch. And generic prices can vary even within the same category, says John Lee, a senior director at Walgreens. Your pharmacist should be able to point you to the least-expensive option. Paying cash for generics sold at Walmart, Costco and Target, or through the Walgreens prescription savings club, may be cheaper than your insurance co-pay.
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Most insurers now have preferred pharmacies, which have lower co-pays than other in-network pharmacies. For instance, you might pay a $1 co-pay for a preferred generic instead of $10; $4 for a non-preferred generic instead of $33; and 35% of the cost instead of 50% for non-preferred brand-name drugs. Your insurer may have a preferred mail-order pharmacy that charges no co-pay for certain generics. Filling the prescription for 90 days rather than 30 can also reduce your co-payments.
As the "Ask Kim" columnist for Kiplinger's Personal Finance, Lankford receives hundreds of personal finance questions from readers every month. She is the author of Rescue Your Financial Life (McGraw-Hill, 2003), The Insurance Maze: How You Can Save Money on Insurance -- and Still Get the Coverage You Need (Kaplan, 2006), Kiplinger's Ask Kim for Money Smart Solutions (Kaplan, 2007) and The Kiplinger/BBB Personal Finance Guide for Military Families. She is frequently featured as a financial expert on television and radio, including NBC's Today Show, CNN, CNBC and National Public Radio.