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SB 167

Prescription Drug Out-of-Pocket Expense Credit

2026 Regular Session

Starting in 2028, insurers must credit a portion of direct-purchase prescription expenses toward a enrolled member’s out-of-pocket maximum or cost-sharing.

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Bill Summary · SB 167

Summary of Bill SB 26-167 (Colorado) – Prescription Drug Out-of-Pocket Expense Credit

Purpose and intent

SB 26-167 proposes to modify how an individual or group health benefit plan’s “covered person” contribution to out-of-pocket maximums or cost-sharing requirements is calculated. Beginning January 1, 2028, the bill requires health insurance carriers to credit a portion of a covered person’s out-of-pocket expenses that result from directly purchasing prescription drugs (i.e., direct purchases outside the standard in-network pharmacy path) toward the covered person’s overall contribution to the plan’s out-of-pocket maximum or cost-sharing requirements. The ultimate aim is to incentivize or recognize direct-purchase expenses as part of the financial responsibility borne by enrollees.

Key provisions and changes

  • Creditable expenses (2.5(a)): Starting in 2028, carriers must account for and credit to the covered person’s overall contribution an out-of-pocket expense incurred by directly purchasing a prescription drug from a pharmacy, healthcare provider, or direct-to-consumer platform.

  • Proof of payment (2.5(b)): To receive the credit, the covered person must provide proof of payment to the carrier.

  • Application of credit (2.5(c)): The credit must be applied to the covered person’s contribution for the plan year in which the out-of-pocket expense was incurred.

  • Limitations on credit (2.5(d)): A credit shall not exceed certain thresholds:

    • (I) The credit cannot exceed the amount the covered person would have incurred if they had obtained the same drug in-network and under the plan’s terms. In this case, the carrier applies credit only up to the in-network “would-have-been” amount, based on drug cost data (per 10-16-122.9(1)(c)).
    • (II) If the covered person did not provide proof of payment, or incurred an expense for a drug not covered by the formulary (without an exception), the credit is not granted or is limited, subject to exceptions granted under related processes (e.g., Section 10-16-113.5(2)(a)(IV)).

Who and what is affected

  • Affected parties: Carriers of individual or group health benefit plans domiciled in Colorado.
  • Affected activities: Calculation of the covered person’s annual out-of-pocket contribution to the plan’s maximum and cost-sharing obligations, specifically incorporating direct-purchase prescription drug expenses.
  • Data and processes: Carriers must verify proof of payment for direct-purchase drugs and compare direct-purchase costs to in-network costs using drug-cost data.

Procedural and timeline aspects

  • Effective date: The new credit mechanism takes effect January 1, 2028.
  • Certification and compliance: Carriers must implement appropriate accounting, verification (proof of payment), and utilization-management considerations to ensure proper application of credits.
  • Governor’s referendum note: If a referendum petition is filed, the act could be delayed until after voter approval in November 2026.

Potential impact and considerations

  • Potentially lowers out-of-pocket contributions for enrollees who frequently purchase prescriptions directly (non-network or direct-to-consumer channels).
  • Encourages transparency in drug costs and utilization, as carriers must base credits on verifiable payments and in-network cost comparisons.
  • May affect premium calculations or plan design if widespread crediting alters overall cost-sharing dynamics for carriers.

Compiled from official sources — confirm details with the bill’s official record.

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