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Are All Benefits Created Equal?

Did you switch to a new Insurance Company and receive a rate reduction?  Only to find out that some benefits that you wanted to continue for your employees is no longer covered?

One area to look at is the a growing trend for Insurance Companies to put groups onto their Formulary plans.

What is a Formulary plan?

“A formulary is a list of generic and brand name prescription drugs covered by your health plan. Your health plan may only help you pay for the drugs listed on its formulary. It’s their way of providing a wide range of effective medications at the lowest possible cost.”

Some Insurance Companies don’t provide any coverage for prescriptions that aren’t on their formulary.  While others cover them at a reduced rate, normally 50%.

The prescriptions that aren’t normally on a formulary are the new and more expensive prescriptions.  An Insurance Company with a Formulary will offer prescription options in every category of illness.  It just might not be the latest ones.

Not all new prescriptions are the balm, however, sometimes these new prescriptions are the last chance for a patient.

Mandatory Generic

Most of the Employers that we work with have Mandatory Generic.  This is a couple paragraphs out of Empire Life’s brochure on Mandatory Generic:

“Mandatory Generic Substitution (MGS) is a drug plan feature that encourages employees to take lower cost, generic drugs wherever possible. If you add this feature to your benefit plan, employees will be reimbursed for the cost of the generic drug, even if the doctor writes ‘no substitution’ on the prescription.  This is different from a generic substitution plan, where ‘no substitution’ means employees will be reimbursed for the drug prescribed.

In a very small number of cases, an employee may have an adverse reaction to a generic drug. If this happens, the employee should go back to the doctor and get a prescription for a different generic. If there is an adverse reaction to the second generic, the doctor can prescribe a brand name drug; however, in order for the cost of the brand name drug to be covered, the doctor must complete a “Request for Drug Substitution” form for the employee to send to us for review. While this is being sorted out, the employee will continue to be covered for the cost of the generic drug.”


There isn’t anything wrong with either of these choices, as long as you the consumer know that this is what you have chosen.  With some of the costs of the new prescriptions on the market, it might not be a viable option to provide these high cost drugs.

It is important to understand which option you have purchased.

If you want to deal with a Broker who understands the Insurance Contracts, contact Glendinning Insurance Services 250-764-0142.

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