Prescription Drug Coverage: Formularies, Tiers and How to Check Your Meds

Start with the formulary

Every plan that covers prescriptions has a drug list, called a formulary. If a drug isn't on it, the plan generally won't pay for it unless you get an exception.

Marketplace plans have to cover prescription drugs as an essential health benefit, and each plan must include at least a minimum number of drugs in each category. That doesn't mean every plan covers every drug. Two plans from the same insurer can have different lists.

Formularies also change. Most changes happen at the start of a plan year, but a plan can add or remove drugs mid-year. Check the new list every renewal, even if you keep the same plan. My premium vs. deductible guide explains why a single drug can flip which plan wins.

How drug tiers work

Most formularies sort drugs into tiers. The lower the tier, the less you usually pay. A common setup looks like this:

• Tier 1, generics. The lowest copays. Many common generics fall here.
• Tier 2, preferred brands. Brand-name drugs the plan has negotiated a better price for.
• Tier 3, non-preferred brands. Brands with a preferred alternative. You pay more.
• Tier 4 or 5, specialty drugs. High-cost drugs for complex conditions, often with coinsurance instead of a flat copay.

Plans don't all use the same number of tiers, and the cost at each tier varies a lot. On some plans, generics have a copay from day one. On others, every drug counts toward the deductible first, so you pay the full negotiated price until the deductible is met. That one detail can change your year.

The rules that come with the list

Being on the formulary is step one. Many drugs also come with conditions.

• Prior authorization. Your doctor has to get approval before the plan pays. Without it, the pharmacy may turn you away or charge full price.
• Step therapy. The plan wants you to try a lower-cost drug first. If it doesn't work or causes problems, the plan then covers the one your doctor wanted.
• Quantity limits. The plan caps how much it covers in a period, like a set number of pills a month.
• Pharmacy rules. Some plans have preferred pharmacies with lower copays. Specialty drugs often have to come from a specific specialty pharmacy, sometimes by mail.

None of these mean you can't get the drug. They mean paperwork and time. If you start a new plan in January, ask your doctor to file any prior authorization early so your refill isn't delayed.

Specialty drugs deserve extra attention

Specialty drugs treat conditions like rheumatoid arthritis, multiple sclerosis, hepatitis C, some cancers and HIV. They can cost thousands a month. On many plans they carry coinsurance, so you pay a percentage of a large number until you hit your out-of-pocket maximum.

If you take one, check four things for every plan:

1. Is the drug on the formulary, and at what tier?
2. Is it a copay or coinsurance, and does it apply before or after the deductible?
3. Which pharmacy has to fill it?
4. Does a manufacturer copay card count toward your deductible on this plan? Some plans don't count it.

On a Marketplace plan, the out-of-pocket maximum caps your in-network costs for covered drugs. That cap matters most for specialty users.

Ways to pay less for the drugs you already take

Even on a good plan, a few habits can lower what you pay at the counter.

• Ask for the generic. When a generic exists, it is almost always on a lower tier. Your pharmacist can tell you if one is available.
• Ask about a 90-day supply. Many plans charge less per month for a three-month fill, especially through mail order or a preferred pharmacy.
• Compare pharmacies. Two in-network pharmacies can charge different copays on the same plan. The plan's pharmacy finder shows which ones are preferred.
• Ask your doctor about a covered alternative before the prescription is written, not after the pharmacy says no.
• Use the right pharmacy for specialty drugs. Filling at the wrong one can mean the plan pays nothing.

Switching plans while you are on a medication

People worry about this, and they should plan for it. A new plan doesn't know your history. A drug your old plan approved may need a new prior authorization on the new plan, even if nothing about your health changed.

Before your new plan starts, ask your doctor to check the new formulary and file any paperwork in advance. Fill your last prescription on the old plan close to its end date, if your plan allows it, so you have some buffer while the new approval comes through. If the new plan doesn't cover the drug at all, start the exception process right away rather than waiting until you run out.

Drugs that are often excluded

Some kinds of drugs are left off many plans entirely. Common examples include drugs used mainly for weight loss, fertility drugs, and some cosmetic treatments. Coverage varies by plan and state, so if you take or plan to start one of these, check before you enroll. Don't assume.

What to do if your drug isn't covered

You have options. On Marketplace plans, you have a right to ask for an exception.

1. Ask your doctor about alternatives. A covered drug in the same class may work just as well and cost less.
2. Request an exception. Your doctor explains why you need the specific drug. For a standard request, the plan generally has to decide within 72 hours. If your health is at serious risk, you can ask for an expedited review, generally decided within 24 hours.
3. Ask for an outside review. If the plan says no, you can request an external review by an independent reviewer.
4. Appeal other denials. Prior authorization and step therapy denials can be appealed too. HealthCare.gov explains the process on its appeals page.

Keep copies of the denial letter and anything your doctor sends. Deadlines apply, so don't let the letter sit.

Exceptions get approved more often than people think, especially when your doctor documents that the covered options didn't work or aren't safe for you. The request is only as strong as the medical reasons behind it, so give your doctor's office the details they need, like which drugs you already tried and what happened.

How I check your meds before you buy

This is the most useful thing I do for people on regular prescriptions. Before I recommend any plan, I need:

• Every drug you take, with the exact name, strength and how often you fill it.
• Your pharmacy, since network pharmacies vary by plan.
• Any drug you expect to start in the next year.

Then for each plan I look up the drug list, the tier, the cost before and after the deductible, and any prior authorization or step therapy flags. On the Marketplace, you can also enter your drugs on HealthCare.gov while you browse plans to see which ones cover them. It is a good start, but call the plan or check the formulary document to confirm.

Private plans and prescriptions

Private, medically underwritten plans handle drugs in different ways. Some have a full drug benefit with tiers and copays. Others have more limited prescription coverage, a discount program, or benefits that only start after the deductible. Some may not cover drugs for conditions you had before enrolling. Benefits vary by plan and state, so I check your specific drugs against each option.

For a healthy person with a couple of generics, a private plan can work well. For someone on a specialty drug, the Marketplace's drug rules and out-of-pocket cap may be the safer home. I'll tell you which side wins for your list, even when it isn't the private plan. If approved, private coverage can start on the first of an upcoming month.

Get your drug list checked

I'm licensed in Florida, Texas and 29 other states, and I work by phone or video. Send me your medication list and your pharmacy, and I'll compare how each Marketplace and private plan treats them, drug by drug. Request a quote to get started. There is no fee for my help.