What Is a Three-Tier System in Insurance?

Three-tiered health insurance offers varied levels of coverage.

"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.

References

• Health Care Professionals for Health Care Reform: The HPfHR 3-Tier System
• Wisconsin Department of Employee Trust Funds: Explanation of Three-Tier Health Insurance Program
• CareFirst BlueCross BlueShield: What is the 3-Tier Prescription Drug Program?