Formulary

Your plan's drug list

Every health plan that covers prescriptions has a formulary: the list of medications it pays for. If a drug is not on the list, the plan generally will not cover it unless you get an exception. Formularies change each year, and the same drug can sit on different tiers in different plans.

How drug tiers work

Most formularies sort drugs into tiers:

• Tier 1: preferred generics, usually the lowest copay.
• Tier 2: non-preferred generics or preferred brands.
• Tier 3: non-preferred brand-name drugs, with higher copays or coinsurance.
• Tier 4 or specialty: high-cost drugs for conditions like rheumatoid arthritis, multiple sclerosis or cancer, often with coinsurance after the deductible.

The tier determines your cost, so a drug that is cheap on one plan can be expensive on another.

Other rules to know

• Prior authorization: the plan must approve some drugs before covering them.
• Step therapy: you may need to try a lower-cost drug first before the plan covers a more expensive one.
• Quantity limits: the plan may cap how much you can get per fill.

Example

Daniel, a self-employed consultant in his fifties, takes a brand-name medication for diabetes and a generic for blood pressure. He is comparing two silver plans.

• On Plan A, his diabetes medication is on tier 2 with a modest copay.
• On Plan B, the same drug is tier 3 with coinsurance after the deductible, and it requires step therapy.

Plan B has a lower premium, but once Daniel adds up a year of prescriptions, Plan A costs less overall. Without checking the formulary, he would have chosen the wrong plan.

Requesting an exception

If your drug is not covered or is on a high tier, your doctor can request a formulary exception. ACA-compliant plans must have an exceptions process, including expedited reviews for urgent needs. A strong letter from your doctor explaining why alternatives will not work helps.

Marketplace vs private plans

ACA-compliant plans must cover at least one drug in every category and class, or the number of drugs set by the state benchmark, whichever is greater. Private plans that are not ACA-compliant may have limited drug coverage, a separate drug card with discounts only, or annual caps on drug benefits. If you rely on a specialty or brand-name drug, check this before switching to a private plan.

Before you enroll

• Look up each medication by exact name and dosage in the plan formulary.
• Note the tier, any prior authorization or step therapy, and preferred pharmacies.
• Recheck every renewal, since formularies change on January 1.

Early retirees often manage several medications, which our early retiree health insurance guide covers, and an annual plan review catches formulary changes. To compare plans against your medication list, request a quote.