Credit: Allison Bell/ALM
Rae McMahan has a modest proposal for small employers that simply cannot afford great, comprehensive health coverage: Have employees pay for the prescription benefits separately, if they want prescription benefits.
Most U.S. employers with health coverage offer prescription drug coverage, but employers with fewer than 50 full-time employees or full-time equivalents need not offer any coverage, let alone prescription drug coverage.
Owners of small businesses who run the numbers might prefer to keep pharmacy benefits in the plan and save money some other way.
But McMahan, senior vice president for payer solutions at Prescryptive Health, a pharmacy technology services firm, said some owners carve out pharmacy benefits and have the employees pay most or all of the enrollment costs.
An employer can offer two types of employee-paid prescription programs: a voluntary group plan or a program that gives workers help with buying individual plans sold at the worksite.
"Voluntary group plans are employer-sponsored and underwritten at the group level, which can result in lower premiums and broader access," McMahan said. "Individual worksite plans are personally owned, underwritten based on individual risk factors, and portable. Group voluntary plans might be more common among midsized employers. Individual worksite plans could be more typical at smaller companies or in industries with high turnover."
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Although worksite plans cost more, they also are easier that traditional or voluntary group plans for workers to customize, McMahan said.
An employee-paid plan could offer the same kind of "formulary," or covered drug list, as a traditional employer-paid plan, but many employers with employee-paid prescription plans choose formularies that focus mainly on generic drugs and low-cost brand-name drugs.
The full enrollment cost for an employee-paid prescription plan could be 20% or 40% more than the the full cost of comparable employer-paid prescription benefits, but using a limited formulary can narrow the cost gap, McMahan said.
"Transparency and education remain critical to helping employees make cost-effective choices," she said.
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