Out-of-Pocket Maximums for Generic vs. Brand Name Prescription Drugs

Under the Affordable Care Act, a non-grandfathered group health plan must limit a participant’s out-of-pocket expenses to a specified amount (currently, $6,350 for employee-only coverage and $12,700 for other coverage options).  The purpose of the out-of-pocket maximum is to ensure that the cost of health care coverage does not fall disproportionately on the participant rather than on the insurer or plan sponsor.

Yet individuals differ in their ability and/or willingness to spend money on certain health care services.  For example, some participants prefer to use brand-name prescription drugs–and are sometimes urged to do so by their physicians–regardless of whether a generic equivalent is available.  Group health plans typically impose great cost-sharing requirements on participants who choose brand-name prescription drugs over a generic equivalent.   If a participant chooses a more expensive brand-name drug, must the full co-payment counted towards his out-of-pocket maximum for the plan year? Read More →