Prescription drug formulary: What you need to know

Understanding how your prescription drug coverage works will help save you money. I’ll break down drug tiers, formularies and more.

Medicare Part D (coverage for prescription drugs) is confusing – words like drug tiers, formularies, covered medicines and not covered medicines. What do these words even mean? And what do you really need to know about drug tiers and formularies and how they affect how much you’ll pay for medicine?

The formulary for success

Every insurance company has a formulary, which is a list of approved medicines they will help pay for. (Remember, if your Medicare plan has a deductible, you’ll have to meet that before your plan starts helping.)

While a plan that covers only certain medicines sounds restrictive, it may actually help lower how much you pay for medicines.

There are thousands of medicines available and a lot of them treat the same conditions in slightly different ways for slightly different costs. Your insurance company works with expert doctors and pharmacists to come up with the best, safest and most effective list of medicines to put on their formulary. By law, a Medicare drug formulary is required to include a certain number of options to treat specific conditions.

Know your tiers

The formulary is divided into levels, called “tiers.” The tiers are based on the cost of the medicine. The amount you pay each time you fill a prescription depends on the tier the medicine is in.

Most insurance companies have five tiers and some have four, and it may be structured similar to this:

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My medicine is non-preferred – that doesn’t sound good

If your doctor prescribes a non-preferred medicine, ask your pharmacist to work with your insurance company and doctor to find a less expensive generic or preferred alternative you can take. It will be as safe and effective at treating you, but could cost you less.

Related content: Why does my medicine cost more this month?

Even if your medicine isn’t covered, you are

Your insurance plan’s formulary will change throughout the year as medicines that offer new benefits or lower costs enter the market. Sometimes a drug may be taken off the list. While this sounds scary, it’s important to know that in most cases, a better or lower cost alternative will be added to the list in its place. If your doctor decides that you need a medication that isn’t on the list, he or she can always request authorization from your insurance company to see if you can get help from your insurance company to pay for it.

Since the formulary can change throughout the year, you’ll need to find out if your medicines are covered. Most plans offer an online formulary search tool. Just type in the name of the medicine and you’ll see if your plan covers it, and what tier it falls into. If you have more questions about your plan’s drug coverage, contact your member services line for help.