Approximately 131 million people in the United States, about 66 percent of all adults, use prescription drugs. If you are like most people and have health insurance coverage with an annual deductible of more than a few hundred dollars, you have a big incentive to be smart about the way you buy prescription drugs. This is especially true if you have HSA-qualified high-deductible health insurance. All the money you save on prescription drugs stays in your pocket or keeps growing in your Health Savings Account (HSA). If you begin at age 35, each $50 a month in healthcare expenses you save means an additional $20,000 a year in your HSA when you retire.

Here are the top five ways to save money on prescription drugs:

• Get a drug discount card.
• Choose the right drug plan from your health insurer.
• Shop overseas pharmacies.
• Substitute generic drugs.
• Use a different drug that has similar effects.

Get a Drug Discount Card and Save 10 to 25 Percent
If you have either employer-sponsored health insurance or a good individual/family plan, you probably already have a decent drug discount card. However, if you don't get a good card through your health insurance or are on Medicare, you should get a drug discount card.

There are about 70 drug discount cards on the market now, and while they typically required an annual fee when they were first introduced, today most are free.

$$$ Tip: Watch the fine print when signing up for any drug discount card, particularly one that is free. Some charge high rates for shipping and handling, some charge extra fees to add family members, and some appear to be “free,” but when you try to use them you're charged an “activation fee” of $15 or more.

You are probably asking yourself, how can anything be good if it's free? Sponsors of drug discount cards are typically paid a $1 to $3 fee by the pharmacy each time you use the card, and they also receive rebates and other kickbacks from the pharmaceutical companies when you buy specific prescriptions. The pharmacies hate drug discount cards but are forced to accept them because they know you will take your pharmacy business, and your regular grocery shopping, elsewhere if the pharmacy in their store doesn't accept your drug discount card.

Most people think that when they use the drug discount card that comes with their health insurance, their insurance carrier or employer pays part of the cost of their prescription. Actually, the opposite is true. In most cases, the provider of the drug discount card is actually paid a $1 to $3 “prescription fee” from the pharmacy that accepted the card.

$$$ Tip: You should obtain every card you can that is free, and use the one that gives you the higher discount for each individual prescription—different cards have different discounts for each drug, so no one card is universally the best. Always ask your pharmacist whether any rebates are associated with your prescription and whether you can get these rebates yourself instead of having the pharmacy or the drug discount card company keep them.

How to Choose a Drug Discount Card
Expiring Medicare Drug Discount Cards for Senior Citizens
Your Insurance Company's Drug Plan Could Save You Thousands
Shop Overseas Pharmacies
Ask for Generic Drugs
Use a Different Drug That Has Similar Effects

If no generic version of your prescribed drug is available, you can still save money by asking your doctor to prescribe a cheaper drug that has the same or similar effect. This is known as therapeutic substitution or category shifting.

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