Rising Drug Costs Spur Minnesota Small Businesses into Tiered Copay System

Date: July 19, 2016

A new report details the means to which businesses go to provide health care to their employees

Rising Drug Costs Spur Minnesota Small Businesses into Tiered Copay System

Employers are getting creative to avoid some of the burdensome costs of employer-sponsored health insurance.

Many small businesses are instituting a tiered copay system to dole out the prescription drug benefits they provide to their employees. This move is part of an effort to pass along some of the prescription drug costs to them, according to Twin Cities Business magazine’s analysis of a new report from United Benefit Advisors.

A tiered system works by categorizing prescription drugs into groups, each with a different copay amount. More than 44 percent of employers use a four-tiered distribution for their employees’ health care, according to the report.

The report analyzed the U.S. in five different geographical regions. In the “Central” region where Minnesota is classified, the vast majority of companies use three- or four-tiered plans to provide prescription drug benefits, according to the report. More tiers in a system allow employers to shift more of the cost to their employees.

In Minnesota, the cost of healthcare continues to be one of the top concerns of small business owners. Prescription drug costs are one of the main contributors to the overall rising cost of health insurance in the state, according to a study from Minnesota Health Action Group.

The study surveyed 39 companies across the state, and the results represent more than 228,000 Minnesota employees.

Forty-five percent of employers in Minnesota Health Action Group said they planned to change health-care vendors in the next year in an effort to lower healthcare costs.

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