Understanding Three-Tier Insurance Systems: Levels of Coverage Explained

"Three-tier system" is an insurance term that may refer to levels of care or pharmacy co-payment benefit levels. Each level covers different types of health care coverage or different categories of prescription drugs.

Health Care

• The Health Professionals for Health Care Reform (HPfHR) is one example of an organization with a three-tier plan of coverage. HPfHR is a group of health care professionals, patients, politicians and business leaders. Tier one of the system provides basic lifetime care. It includes outpatient, life-saving, preventative and life-sustaining care. Tier two includes general health services that would improve the patient's quality of life, such as a knee replacement. Tier three includes cosmetic and luxury procedures such as laser vision correction eye surgery and injections of Botox.

Pharmacy

• Three-tiered pharmacy coverage plans provide different co-payment levels. An example is CareFirst BlueCross BlueShield, for which the co-payment for generic drugs is usually the lowest. The second level would include preferred medications on the formulary list. Brand-name drugs typically have the highest co-payment at tier three.

Premiums

• Three-tiered health coverage has an impact on premium costs. The Wisconsin Department of Employee Trust Funds provides an example. In 2007, tier one was $13.50 per month for an individual and $34 for a family. Tier two was $30 and $75. Tier three cost $71.50 for one and $179 for family coverage.