Cash pay vs insurance for prescriptions: a complete guide

Two prices for the same prescription

When you use insurance, the price is set by your plan’s contract with the pharmacy, which a pharmacy benefit manager may negotiate on the plan’s behalf, and what you pay depends on your plan design: a flat copay, a coinsurance percentage of the negotiated price, or the full negotiated price while you are in your deductible. When you pay cash, the price is whatever that pharmacy charges customers who are not using insurance, and the pharmacy sets it itself. The two are calculated independently, which is why a copay can be higher than the cash price for the same bottle.

Which one is lower depends on the drug, the pharmacy and your plan design, and it can change during the year as you move through your deductible. The only way to know for a given fill is to ask the pharmacy for both prices before it fills the prescription.

When the cash price is worth checking

In some situations the cash price is especially worth checking, because your insurance price is not fixed or your plan does not help. Comparing takes a few minutes, and for a medicine you refill all year, it is worth repeating whenever your plan or the price changes.

• Generics with a flat copay, since a flat copay comes from your plan design rather than the drug’s price and can be higher or lower than a cash quote.
• The deductible stage of a high-deductible plan, when you are paying the plan’s full negotiated price.
• Drugs your plan excludes, puts on a high tier, or limits by quantity; your plan’s formulary shows which drugs these are.
• Short-term prescriptions, such as a course of antibiotics, when you do not expect to reach your deductible this year.
• Pet prescriptions, which human health plans do not cover.

When insurance is worth checking first

For brand-only drugs, specialty medicines and biologics, and other medicines you take long term, insurance has advantages that a cash price does not. Every insured fill moves you toward your deductible and out-of-pocket maximum, and once you reach the maximum, your plan pays in full for covered in-network care for the rest of the plan year. Commercially insured patients may also be able to use a manufacturer copay card for a brand drug, subject to the card’s terms. Using insurance also keeps every fill in your plan’s records, which supports prior authorizations and safety checks.

What paying cash does to your deductible

A cash purchase is outside your insurance, so it does not count toward your deductible or your out-of-pocket maximum unless your plan accepts it when you submit the receipt, and plans set their own rules on whether they do. For a single short course this may not matter to you, but for a drug you take all year that would help you reach your deductible, paying cash early can mean paying more later in the year. Ask your plan how it treats outside purchases before you rely on it.

A health savings account or flexible spending account can pay either price, so pre-tax money works whichever route you choose.

You are allowed to know the lower price

Some contracts between pharmacies and pharmacy benefit managers once contained gag clauses, which stopped pharmacists telling insured customers that the cash price was lower. Two federal laws signed in October 2018, the Patient Right to Know Drug Prices Act for commercial plans and a companion law for Medicare drug plans that applies from 2020, banned those clauses. Pharmacists may now tell you, and you can always ask directly: what is my insurance price, and what is your cash price for this prescription?

If you have Medicare or Medicaid

Medicare Part D enrollees can pay cash for a prescription, but manufacturer copay cards cannot be used with Medicare. Under CMS’s Part D rules, buying a covered drug at a pharmacy’s lower cash price while you are in the deductible stage can count toward your deductible and out-of-pocket cap once you send your plan the receipt, while Medicare.gov notes that purchases made with discount cards instead of your plan do not count. For drugs you take all year, weigh the plan price and the annual cap against any cash quote. If you have Medicaid, ask your pharmacy and your state Medicaid program what you would pay through Medicaid before paying cash for a drug it covers.

Common situations, worked through

A short course of a generic antibiotic in January, on a high-deductible plan: you are in your deductible, so you would pay the plan’s full negotiated price. Ask for that price and compare it with cash quotes, and if you choose cash, keep the receipt in case your plan will count it toward your deductible.

A generic statin or blood pressure tablet you take every day: compare a ninety-day cash quote with your plan’s ninety-day price. If your plan covers it as preventive care before the deductible, your plan price applies from the first fill; either way, compare the two and remember how each counts toward your deductible.

A brand inhaler or injectable you need all year: check your insurance price, with any manufacturer copay card you qualify for, alongside cash quotes. Every insured fill counts toward your deductible and out-of-pocket maximum, which a cash purchase may not.

A drug your plan denies or limits: pay cash while your prescriber asks for an exception, then switch back to insurance if it is approved.

How to decide, fill by fill

The quickest method is to ask for both prices every time a prescription is new or a price changes, and to keep a note of what you pay for each long-term medicine. Compare at more than one pharmacy, since each pharmacy sets its own cash price, while your copay is set by your plan. For long-term medicines, also compare a ninety-day supply with a thirty-day supply, per day, both through your plan and for cash.

• Ask the pharmacy for your insurance price and its cash price.
• Consider where you are in your deductible and how close you are to your out-of-pocket maximum.
• Compare cash quotes from more than one pharmacy.
• For brand drugs, check manufacturer programs and your plan’s formulary alternatives.
• Use HSA or FSA money for whichever price you choose.