Do Co-Pay Accumulators Cost You More?

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30 Aug Do Co-Pay Accumulators Cost You More?

Posted at 08:00h in Finances, Health Insurance by Triage Cancer

To understand co-pay accumulators, you first have to understand a few key health insurance terms related to costs that you have to pay when you get medical care or a prescription drug, called “out-of-pocket” costs. The specific amount of those costs will depend on your plan.

What are Out-of-Pocket Costs?

Annual deductible: the amount you have to pay out-of-pocket each year, before your health insurance policy kicks in. This fixed dollar amount could be $500 or $5,000. Some plans have a $0 deductible.
Co-payment: a fixed dollar amount you pay when you get medical care. For example, when you visit the doctor’s office you might have a $20 co-payment; if you pick up a prescription you might have a $40 co-payment.
Out-of-pocket maximum: a fixed dollar amount that is the most that you will have to pay for your medical expenses out-of-pocket during the year. Your out-of-pocket maximum will depend on your plan. It is a very important thing to find out! Once you reach your out-of-pocket maximum, your insurance pays 100% of your medical expenses for the rest of the year.

What are Co-Payment Assistance Programs?

If you are having a hard time paying for your medications, some pharmaceutical companies can help you pay for the medications you need. This can include co-payment assistance coupons. These coupons lower the cost that you have to pay out-of-pocket to get your medications. The amount of financial help that you get, usually counts towards your deductible or out-of-pocket maximum.

For example, your health insurance plan has a $4,000 out-of-pocket maximum, and you get a $1,000 co-payment assistance coupon.

The $1,000 coupon will count towards your out-of-pocket payment. $4,000 – $1,000 = $3,000 that you will still be responsible for, before reaching your out-of-pocket maximum for the year.

What is a Co-Payment Accumulator Program?

A co-payment accumulator program is used by insurance companies to exclude the amount of financial help that you get from a pharmaceutical company from counting towards your deductible and out-of-pocket maximum.

For example, your health insurance plan has a $4,000 out-of-pocket maximum, and you get a $1,000 co-payment assistance coupon.

If your insurance plan does have a co-payment accumulator program, then the $1,000 does not count towards your out-of-pocket maximum. You will still be responsible for paying the full $4,000 in out-of-pocket costs, before reaching your out-of-pocket maximum for the year.

Here is another example: If your co-payment for a prescription is $200, and your co-payment coupon covers $180 so you pay $20, only that $20 will count towards your deductible and out-of-pocket maximum.

Unfortunately, co-payment accumulator programs increase out-of-pocket costs for patients.

Which States Have Laws on Co-Payment Accumulator Programs?

As of spring 2022, the following states have laws to limit the use of co-payment accumulator programs, by requiring financial assistance received by a patient to count towards their out-of-pocket costs:

Arizona
Arkansas
Connecticut
Georgia
Illinois
Kentucky
Louisiana
Maine
North Carolina
Oklahoma
Puerto Rico
Tennessee
Virginia
Washington
West Virginia

It is important to note that these state laws do not apply to self-funded plans that are subject to the Employee Retirement Income Security Act (ERISA). Self-funded plans, also known as self-insured plans, are ones in which the employer pays directly for the employee’s health care costs. So, it is important to understand if your employer-sponsored health insurance plan is insured or self-insured, because the rules will apply differently.

How Do I Learn More About My Plan?

You may have to dig deeper into your specific health insurance plan to see if it has a co-payment accumulator program. Read the plan carefully to check if it allows or doesn’t allow financial assistance, like co-payment assistance coupons, to count towards your deductible or out-of-pocket costs.

You can also ask how co-payment assistance funds from a pharmaceutical company will be applied.

The program might also apply to all medications or just specific ones. The easiest way to figure out the specifics of your health plan and the possible co-payment accumulator program is to call your insurance plan’s customer service directly.

For more information about health insurance, see our Health Insurance Materials & Resources.

About Triage Cancer

Triage Cancer is a national, nonprofit providing free education to people diagnosed with cancer, caregivers, and health care professionals on cancer-related legal and practical issues. Through events, materials, and resources, Triage Cancer is dedicated to helping people move beyond diagnosis.

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