How do Part D formularies and drug tiers work?
The short answer
A formulary is a plan's list of covered drugs. Each drug on the list is placed in a tier, and higher tiers generally mean higher out-of-pocket costs for you.
The full explanation
Every Medicare Part D plan, and every Medicare Advantage plan with drug coverage, has a formulary. Think of it as the plan's approved drug list. If your medication is on the formulary, the plan helps pay for it. If it isn't, you're generally paying full price unless you get an exception approved.Drugs on the formulary are sorted into tiers, typically numbered one through five or six depending on the plan. Tier one is usually generic drugs with the lowest copay. Tier two is often preferred brand-name drugs. Tier three is non-preferred brands. Higher tiers typically include specialty drugs, which are high-cost medications often used for complex conditions, and they can come with significant cost-sharing.The tier a drug sits on directly affects what you pay at the pharmacy. Two plans might both cover the same medication but place it on different tiers, meaning your cost could vary quite a bit between them.Formularies can change during the year, and plans are required to notify you of significant changes. They also vary from plan to plan and year to year, so what was covered last year may be on a different tier or off the formulary entirely this year. Before enrolling or staying in a plan, it's worth checking where your specific medications land using the plan's drug lookup tool or by calling the plan directly.
Related Medicare Resources
