New Colorado Law Helps Lower Prescription Drug Costs

Coloradans may see savings on prescription drugs when a new law goes into effect.

Colorado’s 2026 legislation (Senate Bill 167: Prescription Drug Out-of-Pocket Expense Credit) aims to make prescription drugs more affordable and to ensure that consumers, including older adults on fixed incomes, receive financial credit for medication costs.

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Under current insurance practices, individuals sometimes pay out of pocket for prescription drugs—especially when they find a better price outside their insurance network. However, those payments may not count toward their annual out-of-pocket maximum. This law addresses that gap by requiring health insurers to credit certain direct payments for prescription drugs toward a consumer’s cost-sharing limits.

AARP Colorado Advocacy Volunteer, Leslie Kalechman, testified in support of this legislation.

Kalechman, a retired medical social worker, testified in support of the legislation.

“Permitting patients to receive credit towards annual deductibles for out-of-pocket prescription drug expenses is a just policy,” she said.

“People pay health insurance premiums regardless of whether they use the prescription drug plan. If I can find a cheaper option for obtaining medications, I should be able to do so, and the cost should be accepted towards my deductible.”

Beginning January 1, 2028, when a covered person purchases a prescription drug and pays for it directly, whether at a pharmacy or through a direct-to-consumer platform, those expenses must be counted toward their out-of-pocket maximum.

To receive this credit, consumers must submit proof of payment, such as an itemized pharmacy receipt or a payment record from a direct-to-consumer platform, within 90 days of purchase. Consumers should submit proof to the health insurer as directed, such as by mailing receipts or uploading documents online. This requirement helps ensure accuracy and accountability while still protecting consumers’ financial interests.

The law also includes important guardrails. Insurers are only required to credit up to the amount a consumer would have paid for the same drug within their plan’s network.

Additionally, the plan’s formulary must generally cover the drug, and consumers must follow the plan’s standard requirements, such as prior authorization.

This change offers older adults greater affordability and flexibility, allowing them to shop for lower-cost medications while still earning credit toward their out-of-pocket maximum. It helps Coloradans better manage health care costs.

To read the legislation in its entirety, please visit the Colorado General Assembly.