Editor’s note: If you or a loved one are struggling to afford reliable and consistent access to insulin, learn more about the options that exist here.
The US healthcare system is complex and can be incredibly difficult to navigate. The glossary below is meant to help clarify some of the many elements of navigating healthcare that most affect someone living with Type 1 diabetes. For further help choosing the best health insurance for you, consult the Health Insurance Guide.
Affordable Care Act (ACA) – The ACA, sometimes referred to as “Obamacare” was the comprehensive health care reform law enacted in 2010. While the reform extended to many facets of US healthcare, the most important provision for those living with Type 1 diabetes was its removal of pre-existing conditions clauses, where health insurance companies were previously allowed to turn down those with T1D from attaining individual health insurance plans. Also key in the law was the extension of coverage for those aged 25 and under, allowing continued coverage on their parents’ health insurance plans regardless of school enrollment.
Biosimilar insulin – Insulin that is highly similar to and has no clinically meaningful biological differences from an existing FDA-approved biologic insulin. In other words, the generic form of insulin. (Generics refer to the non-brand-name versions of synthetic drugs. Biosimilars refer to the non-brand-name versions of biologic medications, i.e. medicine that is created from living materials, like a vaccine.) A biosimilar insulin may be used to replace an existing insulin taken by a person with diabetes if it meets additional requirements, including producing the same clinical result as the product it is based off of in any given patient. In some cases, biosimilar insulins may be less expensive than other current insulins on the market but we do not yet know what impact they will have on the overall cost of insulin. Because of new FDA regulation pathways, the biosimilar market is changing rapidly. Ask your doctor what may be available to you.
CHIP – Insurance program that provides low-cost health coverage to children in families that earn too much money to qualify for Medicaid but not enough to buy private insurance. In some states, CHIP covers pregnant women. Each state offers CHIP coverage and works closely with its state Medicaid program. You can apply any time.
COBRA – If you leave a job for any reason, you are able to extend the employer’s health insurance coverage beyond your employment through a federal law, the Consolidated Omnibus Budget Reconciliation Act (COBRA). However, you will pay 100% of the health insurance premiums, including the portion your employer previously covered, plus an administrative fee.
Coinsurance – The percentage of a health care service you pay after you’ve met your deductible, but separate from a copay. For example, your health insurance plan may require a coinsurance payment on certain specialty healthcare costs, like an MRI. In this case, even if you have already hit your annual deductible, you may still be responsible for a 20% coinsurance payment, i.e. 20% of the total billed cost of the MRI, as opposed to a straight copayment fee.
Copay / Copayment – Your copay is the fixed amount you pay for a covered healthcare service or product after you’ve met your deductible. For example, you may have a $25-$50 copay to see your endocrinologist or another specialist, or you may have a $10-60 copay for your insulin every month. If you have not yet met your deductible, you may be responsible for part or all of the cost of a medication (like insulin) or supplies (like insulin pump infusion sets) until you do.
Copay cards – Offered by medication manufacturers, copay cards reduce the out-of-pocket cost you pay at the pharmacy. They exist for most types of insulin. When using a copay card, your health insurance pays for some of the cost, then the drug manufacturer will pay another portion. If you do not have health insurance or your insurance does not cover your prescription, the drug manufacturer may cover more of the cost. Unfortunately, copay cards are typically not available for those insured through Medicaid or Medicare. For a full list of copay card options, visit the Affordable Insulin Project.
Deductible – In a health insurance plan, the deductible is the amount paid out-of-pocket by the policyholder before insurance coverage kicks in. Plans with higher deductibles typically have lower premiums (your monthly payment for coverage), and vice versa. Most health insurance plans cover preventive services at no cost to the policyholder, bypassing the deductible. For some health insurance plans, costs associated with everything other than preventative services go towards your deductible. Other plans exempt some services from the deductible — usually services that require copayments such as doctor visits. For some health insurance plans, all out-of-pocket costs count toward the deductible, while other plans have a separate deductible just for prescriptions or specialty procedures, like an MRI.
DME (durable medical equipment) – DME is multi-use medical equipment such as walkers, wheelchairs, oxygen tanks, etc. Most health insurance also classifies insulin pump supplies and some continuous glucose monitor (CGM) supplies as DME, even though you’re only using an infusion set and similar items once. This changes what percentage of the cost of the equipment is covered by your health insurance. Some CGM companies have started negotiating with health insurance to get their supplies covered under pharmacy benefits instead, which increases the amount of cost covered by insurance. If you’re facing a high cost for non-medication supplies under your insurance, DME classifications may be the reason.
FDA (Federal Drug Administration) – The FDA, also referred to as the USFDA, is a US federal agency tasked with overseeing a multitude of regulations ranging from food safety to tobacco products to pharmaceutical drugs and more. Part of their responsibility is to ensure the safety of medicines and medical devices, including insulin pumps, insulin, health apps that make health recommendations, etc. When we say a device or medicine is going through FDA approval, it’s referring to this process.
FSA (flexible spending account) – A tax-free savings account arranged through your employer, where a chosen amount is deducted from your paycheck and placed into your FSA, to be used for qualified out-of-pocket medical expenses. You can choose how much you put toward your FSA, up to the limit determined by your employer. The benefit of an FSA is that it is a designated savings account that is not subject to tax, saving you a bit of money in the long term. However, it is important to be precise with your budget planning. Unused funds are restricted – depending on your employer, you can either only roll over $500 from your current year’s FSA to the following year, or you have 2.5 months into the new year to spend the money. You cannot withdraw money from your FSA for other uses, nor can you spend your FSA money on non-medical items. Please note, there are also childcare FSAs and health savings accounts (HSAs), which have different rules of use.
Formulary (i.e. prescription formulary) – A list of prescription drugs covered by your health insurance or prescription drug plan, also called a drug list. Health insurance companies tend to change their covered prescription drugs from year to year based on negotiations with Pharmacy Benefit Managers (PBMs) and drug manufacturers. This is why you may hear that the insulin you use is no longer “covered on the formulary.” Your doctor may be able to provide a Letter of Medical Necessity to override the formulary listing coverage.
Generic insulin – Generic insulins are called biosimilars. Refer to ‘biosimilar insulin’.
Healthcare exchange – Also known as the Health Insurance Marketplace, this is the service that helps people shop for and enroll in health insurance. The US federal government operates HealthCare.gov for most states, but some states run their own marketplaces. If your state has its own Marketplace, you will be directed to it when you enter your ZIP code on HealthCare.gov. You can apply for individual or family coverage by providing income and household information. You can also use HealthCare.gov to see if you qualify to apply for Medicaid or CHIP.
HSA (health savings account) – A tax-free savings account arranged through your employer or through a selected healthcare plan from HealthCare.gov, where a chosen amount is deducted from your paycheck and placed into your HSA, to be used for qualified out-of-pocket medical expenses. HSAs are only available to those who are enrolled in High Deductible Health Plans (HDHPs). You can choose how much you put toward your HSA, up to the federal limit, which is updated every year. The benefit of an HSA is that it is a designated savings account that is not subject to tax, saving you a bit of money in the long term. Different from an FSA, there is no time limit on when you use your funds. You cannot withdraw money from your HSA for other uses, nor can you spend your HSA money on non-medical items.
HDHP (high deductible health plan) – A plan with a higher deductible than a traditional insurance plan, with the minimum limit determined by the IRS. Currently, the IRS defines a HDHP as any health plan with a deductible of at least $1,400 for an individual or $2,800 for a family. The monthly premium is usually lower, but you pay more health care costs yourself before the insurance company starts to pay its share (your deductible). A high deductible plan (HDHP) can be combined with a health savings account (HSA), allowing you to pay for certain medical expenses with money free from federal taxes. There are pros and cons to HDHPs, but important to note is that they require significant financial planning for anyone with maintenance medication requirements, like those for diabetes, asthma, high blood pressure, etc. Because the high deductible must be hit before insurance kicks in on costs, your cost of care will be front-loaded each new year. Some HDHPs have separate prescription drug coverage for those with chronic health needs, helping to minimize the impact of the high deductible at the start of the year.
HMO (health maintenance organization) – A type of health insurance plan that usually limits coverage to care from doctors who work for or contract with the HMO. It generally won’t cover out-of-network care except in an emergency. An HMO may require you to live or work in its service area to be eligible for coverage. HMOs often provide integrated care and focus on prevention and wellness.
Insulin manufacturers – Refers to the companies who manufacture insulin. Currently there are three primary insulin manufacturers that market and distribute insulin in the US, sometimes referred to as “the Big 3”: Eli Lilly, Novo Nordisk, and Sanofi. These three companies create almost 90% of insulin worldwide. Other companies include MannKind, which makes Afrezza inhalable insulin, as well as multiple manufacturers who market insulin outside of the US.
Insulin rationing – Refers to the practice of taking less insulin than medically required in an effort to reduce the amount of insulin used, typically because of the high cost of insulin.
Letter of medical necessity – If you have been denied insurance coverage of a needed item or medication, your healthcare provider may be able to submit a Letter of Medical Necessity to your health insurance company. In the letter, they will outline why the item or medication they prescribed is medically necessary. This is a legal document based on your healthcare providers professional medical judgement.
Medicaid – A federal insurance program that provides free or low-cost health coverage to some low-income people, families and children, pregnant women, the elderly, and people with disabilities. Many states have expanded their Medicaid programs to cover all people below certain income levels. Whether you qualify for Medicaid coverage depends partly on whether your state has expanded its program. Medicaid benefits, and program names, vary somewhat between states. You can apply anytime on Healthcare.gov. If you qualify, your coverage can begin immediately, any time of year.
Medicare – A federal health insurance program for people 65 and older, certain younger people with disabilities, and people with End-Stage Renal Disease (permanent kidney failure requiring dialysis or a transplant, sometimes called ESRD).
Medicare Part C (Medicare Advantage) – A type of Medicare health plan offered by a private company that contracts with Medicare to provide you with all your Part A and Part B benefits. Medicare Advantage Plans include Health Maintenance Organizations, Preferred Provider Organizations, Private Fee-for-Service Plans, Special Needs Plans, and Medicare Medical Savings Account Plans. If you’re enrolled in a Medicare Advantage Plan, most Medicare services are covered through the plan and aren’t paid for under Original Medicare. Most Medicare Advantage Plans offer prescription drug coverage.
Medicare Part D – A program that helps pay for prescription drugs for people with Medicare who join a plan that includes Medicare prescription drug coverage. There are two ways to get Medicare prescription drug coverage: through a Medicare Prescription Drug Plan or a Medicare Advantage Plan that includes drug coverage. These plans are offered by insurance companies and other private companies approved by Medicare.
Medicare prescription drug donut hole – Most plans with Medicare prescription drug coverage (Part D) have a coverage gap (called a “donut hole”). This means that after you and your drug plan have spent a certain amount of money for covered drugs, you have to pay all costs out-of-pocket for your prescriptions up to a yearly limit. Once you have spent up to the yearly limit, your coverage gap ends and your drug plan helps pay for covered drugs again.
Non-medical switching – Refers to the process by which health insurance plans change what medications are covered under their formulary, leading to a switch of what medication you are covered for under your health insurance plan even though a different medication was prescribed by your healthcare provider. If your health insurance plan has tried to switch you to a different medication (for example, you use Humalog insulin but your health insurance switched you to Novolog), you may be able to get your insurance to cover Humalog by providing a Letter of Medical Necessity from your healthcare provider.
Open enrollment – The yearly period, typically in October and November, when you can enroll in a health insurance plan through your employer or through HealthCare.gov. You’re also eligible to enroll anytime you have a qualifying life event, like getting married, having a baby, or losing other health coverage. You can apply and enroll in Medicaid or the Children’s Health Insurance Program (CHIP) any time of year.
Out-of-pocket (i.e. out-of-pocket insurance costs) – Your expenses for medical care that aren’t reimbursed by insurance. Out-of-pocket costs include deductibles, coinsurance, and copayments for covered services plus all costs for services that aren’t covered.
Patient assistance program – If you are having issues affording the cost of your medication, you may qualify for patient assistance programs through drug manufacturers. A list of patient assistance programs for insulin can be found here.
Prescription plan–Also known as your pharmacy benefit, your prescription plan refers to what is covered by your health insurance through the pharmacy. Drugs and medications, as expected, are covered through your prescription plan. However, some continuous glucose monitor (CGM) supplies are as well. Some health insurance plans operate their own prescription plan, while some contract a separate company to operate your pharmacy benefit coverage.
PBM (pharmacy benefit manager) – PBMs are third-party intermediaries who negotiate prices between pharmaceutical companies and insurance companies. PBMs’ stated goal is to reduce costs from pharmaceuticals for the insurance companies while improving health outcomes for the members of the insurance plans. They participate in the rebate system and take a share of the profits from prescriptions that are sold to members of the insurance plans. This group is often invisible to consumers and can drive up the costs of prescriptions without consumer awareness. You can learn more here.
PPO (preferred provider organization) – A type of health plan that contracts with medical providers, such as hospitals and doctors, to create a network of participating providers. You pay less if you use providers that belong to the plan’s network. You can use doctors, hospitals, and providers outside of the network for an additional cost.
Preauthorization – A decision by your health insurer or plan that a health care service, treatment plan, prescription drug or durable medical equipment is medically necessary. Sometimes called prior authorization, prior approval or precertification. Your health insurance or plan may require preauthorization for certain services before you receive them, except in an emergency. Preauthorization isn’t a promise your health insurance or plan will cover the cost.
Pre-existing condition – A health condition, like asthma, diabetes, or cancer, you had before the date that new health coverage starts. Since the Affordable Care Act in 2010, insurance companies can’t refuse to cover treatment for your pre-existing condition or charge you more.
Premium (i.e. insurance premium) – The premium is the monthly cost paid to the health insurance provider, and does not count towards your deductible. Plans with higher deductibles typically have lower premiums, and vice versa.
Price cap laws – A recent string of proposed laws across the US, price cap laws refer to the concept of creating a price cap – a maximum amount a person can spend out of pocket – for a monthly supply of insulin. The intention is to create reliable, consistent pricing for insulin, usually aiming at around $100 a month maximum. However, price cap laws are restricted in that they’re being proposed state to state, and usually only apply to people who have health insurance. Some states are proposing price cap laws regardless of insurance coverage, capping out of pocket expenses for anyone needing insulin. You can learn more here.
Rebate – A price concession made by a drug manufacturer to a health insurance plan or a PBM (pharmacy benefit manager), in order to be listed on the health insurance plan formulary. Those in favor or the rebate system argue that it provides lower costs for those looking to get a medication through their health insurance plan. However, the rebate system seems to have significantly driven up out of pocket costs for patients, while restricting access to the medications prescribed by their doctors. Part of the insulin pricing debate in the US is heavily focused on how and why the rebate system exists, and the impact it has on cost. You can learn more here.