There are two basic and very different types of drug plans: prescription discount plans and prescription drug insurance.

In a discount plan, you typically pay a monthly or annual fee and get a card. You present your card when you fill a prescription, and the pharmacy gives you a certain percentage off the cost of the drug. The discount may vary drug by drug or by brands versus generics. Discount plans are NOT insurance plans. Discount plans are sold by drug manufacturers, drug stores and membership organizations like AARP.

Prescription drug insurance is similar to medical insurance. You (or your employer) pay a premium, and then you pay a copay when you fill a prescription. If you are insured through an employer or other group plan, prescription drug coverage may be a stand-alone plan or integrated with your medical insurance. In the individual, non-Medicare market, you’re most likely to find prescription insurance bundled with health insurance.