If you are concerned about being able to afford prescription drugs, or you simply want to keep your drug costs down, here are some tips:
1. Understand the details of your plan’s coverage
Review and make sure you understand the basics of your plan, such as the amount of your deductible and what your copays or out-of-pocket expenses are for different benefits. Do you have to meet a deductible before your non-preventive drug coverage kicks in?
Next, ask about your plan’s formulary, or its list of covered drugs.
Many plans group the medications they cover into price categories called tiers. Tier 1 drugs are typically your plan’s preferred generics, and they require the lowest copayment or coinsurance. If your medication is in a higher tier, you’ll pay a much larger share. “Pharmacy benefit managers have moved a lot of drugs to more expensive tiers,” says Lisa Gill, deputy content editor for Consumer Reports Best Buy Drugs. “So out-of-pocket spending has gone up, even if the drug price hasn’t.”
Plans often have preferred network, standard network, and out-of-network pharmacies, which can impact the amount you pay for your prescription drugs. Review your plan documents for information regarding preferred and standard pharmacy relationships.
Make sure, too, that you're taking advantage of a program that helps cover the the premiums, deductibles, and copays related to your Medicare Part D prescription drug coverage. For example, if you meet certain income and resource limits, you may qualify for Medicare Extra Help: a program that helps pay for your Medicare drug coverage plan premiums, deductibles, and costs when you fill your prescriptions.
Tip: Find out if your health plan offers an app to help you estimate the cost of filling a prescription. If it does, use your smartphone to access information quickly about your covered meds and their costs.
2. Speak frankly with your doctors about cost
“When doctors prescribe a drug, they may choose from several options, but they don’t necessarily know which ones are covered in your plan or how much each option will cost,” explains Dr. Michael Rea, a pharmacist and CEO of Rx Savings Solutions, which helps employees of member companies reduce their drug costs. “Sometimes one drug is clearly best for you. Other times, there may be less expensive alternatives that work equally well.” Bring up cost with your doctor and check your plan’s formulary together to determine the lowest-cost solution for you.
Generic drugs typically cost much less than brand-name drugs. Even among generics, drugs designed to treat the same condition may vary greatly in price. “The fastest-growing component of savings is from generic to generic,” says Rea. You may save money by moving from one generic to another, just as you would by moving from a brand-name drug to a generic. Be sure to talk to your doctor about what might work best for your particular situation.
Sometimes taking a low-cost drug before using a higher-cost one isn’t a matter of choice. Your insurer may require "step therapy" for certain classes of drugs, which means that you and your doctor would try lower-cost medications first, then move on to more expensive alternatives only if necessary. This strategy may apply to medications that treat common conditions such as diabetes or high cholesterol.
3. Make your pharmacist a member of your team
"Pharmacists can be some of your best advocates for making sure you get the best price,” says Gill. Instead of simply handing over your insurance card so the pharmacist can fill your prescription, take a few minutes to ask if there is a way you can save money.
For instance, pharmacists can suggest such cost-reducing options as changing from a liquid to a capsule, taking 2 different prescriptions rather than 1 combination drug, or getting a higher-dose pill and splitting it (provided this approach is suitable for your situation and comfort level). “In many cases, doctors don’t know if a medicine is scored and can be easily split,” says Dr. Heather Free, a pharmacist and spokesperson for the American Pharmacists Association.
Pharmacists also can help you determine if it would be better to use your insurance plan or pay cash. For a brand-name drug, your insurer’s negotiated price usually will be lower than you’d spend in cash, says Rea. Many pharmacies offer discount cards too. However, you should be aware that when you use a discount card, your payment doesn’t count toward your deductible. If your family goes to the doctor a lot and tends to meet your annual deductible, a pharmacy discount card may not be a good option.
Apps such as SingleCare or GoodRx work with your insurance to help you determine how to get the best price and show estimated copayments based on your plan.
Of course, getting the best price isn’t the only consideration when purchasing medications. “Once you find a pharmacy that gives you a good deal on your most expensive medication, move all of your medications to that pharmacy,” says Gill. The reason: If you take several medications, one pharmacy should oversee them to help prevent the possibility of harmful drug interactions.
While drug costs may continue to climb, you can save a bundle if you take the time to be a more careful consumer of health care, says Gill. Before filling a prescription, ask your doctor and your pharmacy if there are ways to keep your costs down. Keep tabs on your health plan benefits too, particularly during open enrollment. “People often assume that their plan will remain the same,” says Gill, “but covered benefits often change. If you don’t know the new details of your prescription drug coverage, you could end up spending a lot more in out-of-pocket expenses than you need to.” That’s money you could put in your pocket—or, better yet—in your retirement plan, where it could help you live a happier, healthier future.
4. Use tax-advantaged accounts to help pay for your prescriptions
If your employer offers a health care flexible spending account (FSA), you can put aside up to $3,300 in 2025 in pretax dollars to pay for prescriptions, copayments, and other qualified medical expenses.
The money you put in an FSA is deducted from your pay before Social Security and federal taxes are applied. Most states follow federal tax rules but not all so be sure to consult with your tax professional before enrolling in the plan. (Note that income tax laws differ significantly by state, so be sure to consult your tax professional before making any changes to your benefits.) That means if you set aside $1,000 and your marginal income tax rate (federal and state income taxes, as well as payroll taxes) is 33%, you’d save $330. FSAs generally don’t allow you to carry money from one year to the next, so take care not to elect more than you will need. That said, some plans offer either a carryover provision, allowing you to carry over up to $660 from 2025 into 2026 of unused funds, or a grace period, giving you up to an additional two-and-a-half months to use up your FSA funds. Lastly, your employer may also offer a limited purpose health care FSA, which lets you set aside money before it is taxed to pay for your qualified vision and dental care expenses. This can be used in combination with a health savings account (HSA), as you can't contribute to an HSA if you are covered by a health care FSA.
For 2024, the IRS contribution limits for HSAs are $4,150 for individual coverage and $8,300 for family coverage. The 2025 limits are $4,300 for individual coverage and $8,550 for family coverage. Any employer contributions will count toward these limits.
If you're 55 or older during the tax year, you may be able to make a catch-up contribution, up to $1,000 per year. Your spouse, if age 55 or older, could also make a catch-up contribution, but will need to open their own HSA. See IRS Publication 969 for more on annual HSA contribution limits.
Similar to an FSA, your contributions are made pre-tax. HSA earnings grow on a tax-deferred basis.1 Unlike an FSA, however, contributions made to a HSA remain in the account until used (that is, they are not "use it or lose it") and they are portable and potentially investible, meaning the funds stay with you even if you change employers or leave the workforce. Withdrawals from your HSA that you make for qualified medical expenses are tax-free,1 but if you withdraw money for a non-medical expense prior to age 65, you'll owe income taxes, plus a 20% penalty tax. Withdrawals for purposes other than qualified medical expenses at age 65 or later are subject to tax but exempt from the 20% penalty.
Tip: Read Viewpoints: Three healthy habits for health savings accounts.
