Prescription drugs costs have escalated widely over the past two decades.

There are a number of factors that contribute to this. One main reason is that there are more people living for longer periods of time, taking necessary prescription medications. Additionally, it is no secret that big pharmaceutical companies exist to make a profit.

As a result price increases, you will probably receive less in the way of coverage for prescription medications than you may have in the past. Employers and health plans are passing greater amounts of prescription drug costs on to the consumer.

Health Insurance and Prescription Drugs

Every health plan has a different approach to providing coverage for prescription drugs. This depends on the size of their group and the deals that can be arranged with pharmaceutical benefit providers (PBM), drug manufacturers and pharmacy networks.

Most health plans cover the most popular 100 drugs on the market. No plan provides coverage for every medication. If you are taking a particular drug, and expect to for a long time, this could be a major consideration in your choice of drug plan. If you are forced to pay $100 per month out-of-pocket for a prescription, then it may be worth paying a higher premium to get a drug plan that covers your medication.

Prescription drug plans typically have an out-of-pocket maximum. This varies, but usually it is in the neighborhood of $1,000 for an individual or $2,000 for families, per year. After meeting these amounts, the plan will pay for all of your drug costs.

Typically, health plans offer a four part structure to encourage cost-saving:

• Generic Drugs. After a company's patent on a drug reaches its expiration, other companies can reproduce it under a generic name. Generic drugs are exactly the same as their name brand counterparts, but some people avoid generic drugs because they mistakenly believe them to be inferior. Generic drugs are often completely covered, or they may require a small co-payment.
  

• Preferred Brand Name Drugs. This refers to drugs which have been reviewed by a committee of doctors and pharmacists and have determined it to be an excellent value in terms of effectiveness, cost and safety. Each plan will have a different list of Preferred Brand Name Drugs. Your share of costs for these drugs will be greater than that for generic drugs. In most cases, you'll be responsible for paying around 30% of the prescription cost.
  

• Brand Name Drugs. These are drugs that are haven't made the Preferred Brand Name Drug list, but still are covered by your insurance. Typically, you'll pay about half the costs of these prescriptions.
  

• Non-covered Drugs. These are drugs that aren't covered by the plan. You'll have to pay the entire cost yourself.
  

Additionally, most prescription drug plans will offer a mail order program. This lets you order a 90 day supply of your prescription, by mail or internet. Since retail pharmacies aren't involved, you receive further discounted rates for using the mail order service.

Medicare Prescription Drug Coverage

Those eligible for Medicare can take advantage of Medicare Prescription Drug Coverage. This helps seniors defray the costs of high prescription expenses. The coverage you receive will depend on the health insurance you have. You may be responsible for paying a deductible. In 2007, these deductibles range between $0 and $265 per person.