WARNING: Please see my recent post here regarding language being slipped into some insurance contracts in order to prevent your use of copay assistance cards from counting toward your deductible.
Open enrollment under Obamacare begins on November 1, 2017. Open enrollment for employer-sponsored health plans typically begins in November as well. Depending on your employer, open enrollment may have already started. I am reposting this entry because it is more timely today than it was when originally posted.
First some disclaimers about who these considerations do and do not apply to:
This post applies primarily to people who are not on Medicaid, Medicare, Tricare, or any other type of state or federal government-funded healthcare such as military veterans’ with VA benefits. Health plans purchased on the state or federal exchanges under the Affordable Care Act (Obamacare plans), are not government-funded healthcare for the purposes of this discussion. For those curious why, a copy of the statement from the department of Health and Human Services (“HHS”) can be located here. Neither are, believe it or not, health benefits offered to civilian employees of the Federal Government under the Federal Employee Health Benefits (“FEHB”) Act. The Office of Personnel Management (“OPM”) has issued a statement on its website confirming that FEHB plans are exempt from restrictions imposed on subscribers to Medicaid and Medicare plans regarding the use of pharmacy or pharmaceutical manufacturer incentive programs.
So, who does this post apply to?
The case for High Deductible Health Plans (“HDHP”) that I lay out here applies primarily to civilian workers who obtain their health insurance through their employer (and their dependents on those plans), including non-military employees of the federal government, or anyone else eligible to purchase an HDHP through one of the state or federal exchanges. Medicare, Medicaid, Tricare, and other recipients of public funds are not eligible. Neither are patients who lack health insurance at all.
What is a High Deductible Health Plan (HDHP)?
An HDHP is pretty much exactly what it sounds like. It is a health plan with a higher deductible than traditional health plans, but also a much lower premium. To qualify as an HDHP, a health plan must have a deductible of at least $1,300 for individuals or $2,600 for families. The average deductible for these plans is currently approximately $2,500 for an individual and $4,500 for families.
The IRS also requires these plans to have maximum out of pocket limits (meaning the member will never pay more than this amount) of $6,550 for individuals or $13,100 for families, for in network benefits. The average out of pocket maximum is $4,250 for an individual; I could not locate the average for families. HDHP’s are also a requirement if you wish to have a Health Savings Account (“HSA”). HSA’s are savings accounts usually funded by pretax dollars as a withholding from an employee’s paycheck. Employers often contribute to these accounts as an incentive for employees to choose HDHP’s during open enrollment. A simple and clear explanation of HDHP’s and HSA’s, along with links to the specific IRS rules governing these products, can be found here. An extremely detailed explanation by the Kaiser Family Foundation can also be found here.
About Integrated Deductibles
An plan with an integrated deductible applies your payments for medical treatments and prescriptions to satisfy the total deductible amount. Plans without integrated deductibles will typically have one deductible (usually lower) for prescriptions, and a separate deductible for medical treatment. I do not have statistics on how common integrated deductibles are for HDHP’s, but I have never seen an HDHP without an integrated deductible. Nevertheless, the strategy described here will work with either type of plan, but it will work especially well if the plan has an integrated deductible.
The Rapid Advances in HIV Treatment over the Last Decade
HIV is a very easy, but very expensive, infection to treat. It is hard to put an exact dollar amount on the annual cost of prescription medicines because the last 10 years have seen an unprecedented flood of new and increasingly better HIV drugs. For example, Gilead’s Atripla, the first single-tablet regimen, first hit the market in July of 2006. Atripla’s launch heralded the era of single-tablet regimens in which all three-to-four drugs needed to suppress the virus were combined in a single pill to be taken once per day. Atripla worked well, but the drug efavirenz contained within caused some unpleasant side effects.
Gilead continued releasing new and increasingly effective single tablet regimens at a rapid pace. Complera launched in 2011 and became one of the most widely prescribed single tablet regimens. The following year, Gilead launched Stribild, another single tablet regimen that for the first time incorporated an integrase inhibitor, a class of drugs that has proven to be superior in suppressing the virus and carry fewer side effects. Gilead finally faced some competition when ViiV Healthcare, a joint venture between GlaxoSmithKline, Pfizer, and Japan’s Shionogi, launched the integrase inhibitor Tivicay in 2013. Tivicay, when combined with Gilead’s Truvada, became a favored treatment regimen along with Stribild. ViiV expanded its presence in the HIV field when, in 2014, it received FDA approval for Triumeq, the first single-tablet regimen based on an integrase inhibitor not made by Gilead.
Most recently, Gilead has released Descovy, an improved version of its staple Truvada that can be administered in lower doses with less potential side effects. Stribild, which used Truvada as a backbone, was “upgraded” to Genvoya in late 2015.
None of these drugs is yet available in the United States in generic form, but as we will explain, this is actually good for you.
The Current Standard of Care in HIV Treatment
Every one to two years, the Department of Health and Human Services (“DHHS”) publishes its guidlines on the treatment of HIV. The most recent guidelines are located here., and in PDF format here. Under the guidelines, the ‘most favored’ regimens are listed as “Recommended”. The current guidelines list six recommended treatments (five of which are based on integrase inhibitors):
- Tivicay + Truvada/Descovy
- Genvoya (essentially “updated” Stribild containing Descovy instead of Truvada)
- Isentress (another integrase inhibitor) + Truvada/Descovy
- Prezista (a protease inhibitor) + Truvada/Descovy
As you can see, the most current guidelines heavily favor single tablet regimens or two-pill combinations that were first launched within the last five years. Even Atripla, which revolutionized the field as the first single tablet regimen, was demoted to an “alternative regimen.”
That’s nice, but how do all these expensive new drugs save me money?
Remember our discussion about HDHP’s and the average deductibles and maximum out of pocket amounts? Well, the manufacturers of these recommended treatments all offer very generous copay assistance programs that are so generous that, in most cases, they will cover your entire deductible for the calendar year, and possibly even your maximum out of pocket.
Recall that the average HDHP deductible for an individual is approximately $2,500 and for a family is $4,500. The average maximum out of pocket for an individual is approximately $4,250. While I don’t have a statistic for the average maximum out of pocket for families, my family’s maximum out of pocket for me and Ezra is $6,000.
Let’s compare these average deductibles and maximum out of pockets to the levels of copay assistance offered by the manufacturers of the six ‘Recommended’ treatments under the DHHS guidelines, which is actually quite easy given that nearly all of them share the same manufacturer, Gilead.
- If you take Genvoya or Stribild, Gilead’s copay assistance program will cover $6,000 in copays with no monthly limit.
- If you take Descovy or Truvada (as part of a regimen involving a third drug), Gilead will cover $3,600 in copays with no monthly limit.
- If you take Triumeq, or if you take Tivicay as part of a regimen involving another drug, ViiV Healthcare will cover $6,000 in copays with no monthly limit.
- If you take Prezista, its manufacturer Janssen will cover up to $7,500 in copays per year.
Conclusion: For most people with an HDHP plan, the drug manufacturer, rather than you, will pay your entire deductible and possibly your entire maximum out of pocket.
All of the copay assistance programs mentioned above offer assistance in amounts greater than the average deductible for an HDHP plan. Indeed, most of these programs offer assistance equal to or greater than the maximum out of pocket.
Average Wholesale Costs for HIV medications are notoriously difficult to come by due to confidential rebate programs between manufacturers, insurers, and pharmacies. So, I will use myself as an example. Yours truly takes Descovy + Tivicay. When I received my last EOB, the cost of 30 days of Descovy after in-network discounts was $1,563.92. The cost of Tivicay after in-network discounts was $1,532.07. All in, my 30-day supply of Descovy + Tivicay after in-network discounts totaled $3,095.99.
If this had been January when my deductibles reset, Gilead’s copay assistance program would have covered the entire cost of the Descovy, and ViiV’s program would have covered the entire cost of of the Tivicay. Assuming my deductible is the average for an HDHP (it is not), that would have covered my entire deductible for the year.
Your health insurance company does not care how you pay your deductible; they care only that it gets paid. When you submit your prescription to the pharmacy, your insurer will reply that your cost is several thousand dollars, which will then be credited toward your deductible. Then, the pharmacy will submit your prescription claim to the relevant copay assistance program which, as discussed, will likely cover the entire cost.
In fact, after only 2-3 months, you may find that the manufacturer(s) of your medication have paid not only your deductible, but your entire yearly out of pocket, leaving you with essentially free medical treatment for the remainder of the year.
Final (and important) notes. Read your health insurance policy!
These copay assistance programs are not insurance. They are available only to people with private commercial insurance, and you cannot be covered in whole or in part by any government-funded plan such as Medicare or Medicaid, VA benefits, or military retiree benefits (Tricare). Federal government employees are exempt from this rule as mentioned above.
Every health plan is different. Some plans require you to pay a coinsurance percentage after you meet your deductible ranging anywhere from 0-20% of the cost of treatment. Until you meet your out of pocket maximum, you will still be responsible for any coinsurance amounts for medical procedures, or for prescriptions not covered by the copay assistance programs.
You should carefully read your health insurance policy. Almost nobody does this, but everybody should. Use this Fall’s open enrollment as an opportunity to request a copy from your Human Resources department and closely read the sections regarding deductibles and maximum out of pocket expenses. Every policy is different, and your policy could contain language that blunts or entirely negates this strategy. You will not know if you do not review the policy.
If you have trouble understanding your policy, call the member services number on the back of your insurance card and just ask. In most cases, they will be happy to explain how your deductibles and out of pocket maximums are structured. If all else fails, consult an attorney or financial planner with experience assisting clients with significant medical expenses.