Not on Medicare Yet? Beware New Twist to Drug Co-Pays

Employers' co-pay accumulator programs change the way out-of-pocket drug costs are calculated if you use coupons or discount cards.


If you are not yet on Medicare and use a drug manufacturer’s discount coupon or co-pay assistance card to save money on medicine, check your health plan before you fill your next prescription. Otherwise, you could be in for an unpleasant surprise at the pharmacy counter. You might be subject to a co-pay accumulator program, which is a new restriction that prevents your discount card or coupon from counting toward your deductible.

Some experts say co-pay accumulators drive down drug prices as patients seek cheaper drugs. But the programs also add complexity for people who are ill and dealing with health issues, says Dan Klein, president of the Patient Access Network Foundation, which provides charitable co-pay help.

Co-pay accumulator programs began appearing in 2016 in employer-provided private health plans and in Affordable Care Act marketplace plans. The programs change the way your out-of-pocket costs are calculated if you use a manufacturer’s discount card or coupon to reduce your prescription costs.

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Patients can download discount coupons or cards from a drug company’s website or get them from their doctors. You use them with your insurance; in some cases, you pay as little as $5 or $10 for your medication. But the total cost for the medicine counts toward your deductible, substantially lowering your out-of-pocket costs for future refills.

If a plan has a co-pay accumulator adjustment program, you still can use a co-pay assistance card or coupon. But the drug’s full cost won’t count against your deductible. And most assistance cards have a dollar limit on how much they will pay. After that, you still have to pay your full deductible before your plan’s cost-sharing kicks in, says Anna Hyde, vice president of advocacy and access at the Arthritis Foundation.

Let’s say your health plan has a $4,000 deductible and your arthritis drug costs $3,000 a month. At the start of the year, you use your co-pay assistance card at the pharmacy, which covers most of the cost of the drug, and you make your usual co-payment, Hyde says.

But within three months, you reach the limit on your co-pay assistance. When you pick up your medicine in April, you owe $3,000—the drug’s full cost. Without the accumulator, you would have already met your deductible while using the discount card. When the assistance ran out, you’d only pay your plan’s cost-sharing for your drug—sometimes as low as 5%. With the co-pay accumulator, you owe the full deductible, which can be thousands of dollars.

About 30% of large employers have a co-pay accumulator program now, according to a survey by the National Business Group on Health.

Drug Cost Assistance on Rise

Co-pay assistance from manufacturers or from co-pay charitable foundations has become more popular in recent years, as more people are living with chronic conditions such as cancer or Parkinson’s, which require the regular use of costly drugs, and as high-deductible insurance plans have become more common. About 43% of workers with private coverage had a high-deductible plan in 2017, government figures show.

But Medicare beneficiaries can’t use co-pay cards or other co-pay assistance with their insurance, so co-pay accumulator programs aren’t a concern after enrolling in Medicare. Medicare beneficiaries are permitted to get co-pay assistance from charitable organizations, such as the PAN Foundation, the HealthWell Foundation or the Patient Advocate Foundation. The charitable help applies to Part D’s out-of-pocket spending requirements to reach catastrophic coverage, under which beneficiaries pay only 5% of a drug’s cost.

If you are not yet on Medicare and are concerned your health plan may have a co-pay accumulator, call your provider directly or check your insurance plan documents, says Carla Dellaporta, director of education for NeedyMeds. The programs often aren’t listed on the summary of benefits page and may be labeled differently across plans.

Mary Kane
Associate Editor, Kiplinger's Retirement Report
Mary Kane is a financial writer and editor who has specialized in covering fringe financial services, such as payday loans and prepaid debit cards. She has written or edited for Reuters, the Washington Post,, MSNBC, Scripps Media Center, and more. She also was an Alicia Patterson Fellow, focusing on consumer finance and financial literacy, and a national correspondent for Newhouse Newspapers in Washington, DC. She covered the subprime mortgage crisis for the pathbreaking online site The Washington Independent, and later served as its editor. She is a two-time winner of the Excellence in Financial Journalism Awards sponsored by the New York State Society of Certified Public Accountants. She also is an adjunct professor at Johns Hopkins University, where she teaches a course on journalism and publishing in the digital age. She came to Kiplinger in March 2017.