Before filling a prescription, type the drug name into your plan’s formulary search tool. What you find determines exactly what you pay — and whether you need a workaround. Here’s how to read what you find.
| Tier | Drug type | Typical cost | Example |
|---|---|---|---|
| Tier 1 | Preferred generic | $0–$15 copay | Metformin, lisinopril, atorvastatin |
| Tier 2 | Non-preferred generic | $10–$30 copay | Amlodipine besylate (certain manufacturers) |
| Tier 3 | Preferred brand | $40–$75 copay | Eliquis, Jardiance (negotiated brands) |
| Tier 4 | Non-preferred brand | $75–$150+ copay | Brand-name drugs without preferred contracts |
| Tier 5 | Specialty | 20–33% coinsurance | Biologics, MS drugs, oncology agents |
Tier names and copay amounts vary by carrier. The tier structure above reflects the most common five-tier design. Your plan may use three or four tiers.
What Is a Drug Formulary?
A formulary is a list of prescription drugs that your health insurance plan covers. Every ACA-compliant plan maintains a formulary, also called a drug list. If a medication is on the formulary, the plan covers it (at varying cost-sharing levels). If a drug is not on the formulary, you typically pay the full retail price out of pocket unless you get an exception approved.
Drug Formulary Tiers
Most formularies organize drugs into tiers, with lower tiers costing you less. The exact number of tiers and what each includes varies by carrier and plan, but a common five-tier structure looks like this:
- Tier 1 — Preferred Generic: The lowest-cost option. Generic versions of common medications. Copays often $0–$15.
- Tier 2 — Non-Preferred Generic: Generic drugs that are less preferred by the plan. Slightly higher copay, often $10–$30.
- Tier 3 — Preferred Brand: Brand-name drugs the plan has negotiated favorable rates for. Copays often $40–$75.
- Tier 4 — Non-Preferred Brand: Brand-name drugs without preferred pricing. Copays often $75–$150, or coinsurance.
- Tier 5 — Specialty: High-cost biologics, specialty medications, and drugs for complex conditions. Often 20%–33% coinsurance with no copay cap before the OOP maximum.
How to Check If Your Medications Are Covered
Before enrolling in any plan, verify your prescriptions are on that plan's formulary. Here is how:
- Visit the plan's website and find the drug formulary or drug list tool.
- Search for each medication by generic name (not just brand name).
- Note the tier — this determines your copay or coinsurance.
- Check whether the drug requires prior authorization, step therapy, or quantity limits.
- Compare the same drug's tier and cost across multiple plans before choosing.
On healthcare.gov, the Plan Compare tool lets you enter your medications and shows estimated annual drug costs for each plan. This tool is valuable but does not account for all plan-specific restrictions, so also verify directly with the carrier.
Prior Authorization, Step Therapy, and Quantity Limits
Even if a drug is on the formulary, the plan may require additional steps before covering it:
- Prior authorization (PA): The plan requires your doctor to submit documentation proving the medication is medically necessary before they will cover it.
- Step therapy: The plan requires you to try a lower-cost alternative (often a generic) before covering the preferred medication. For example, you must try Metformin before a newer diabetes drug is covered.
- Quantity limits: The plan limits how many pills or units will be covered per fill or per month, regardless of your prescription.
These restrictions can delay access to medications and create administrative burden for your doctor's office. When comparing plans, check your medications not just for formulary inclusion but for PA requirements and step therapy.
Formulary Changes Mid-Year
Carriers can change their formulary during the plan year, which may affect what you pay for a drug you are already taking. However, under ACA rules, plans generally must give 60 days' notice before removing a drug from the formulary for non-safety reasons, and must maintain coverage for certain drug classes throughout the plan year. If your drug is removed mid-year, you may be able to request a formulary exception or switch plans at the next open enrollment.
Formulary Exceptions and Non-Formulary Drugs
If your medication is not on the formulary or is at a tier that makes it unaffordable, you can request a formulary exception. Your doctor submits a request explaining why the formulary alternative is medically inappropriate for you. The plan must respond within 72 hours (or 24 hours for urgent situations). If approved, the plan covers the drug, often at a lower tier cost.
Why Formulary Comparison Matters When Choosing a Plan
The same medication can be Tier 1 on one plan (nearly free) and Tier 4 on another (expensive). If you take one or more brand-name or specialty medications, the formulary can easily be worth hundreds or thousands of dollars per year in cost differences between plans. A licensed broker can help you compare formularies across all plans available in your area and find the one with the lowest total cost for your specific prescriptions. Call (713) 575-9904 for a free review.