Each insurance carrier has a list of prescription medications that they cover called a drug formulary or Prescription Drug List (PDL).
A drug formulary is a list of prescription drugs, both generic and brand name, that is preferred by your health plan. Your health plan may only pay for medications that are on this preferred list. A health plan's formulary is generally updated annually, although it is subject to change throughout the year.
How does a formulary work?
- Insurance generally does not cover prescription drugs that are not on the formulary list.
- Exceptions are only made when deemed medically necessary. Your doctor will need to get approval from the insurance carrier (prior authorization).
- Within the formulary, drugs are typically grouped in three to six tiers.
- The tier that your medication is in determines your portion of the cost (copayment/coinsurance).
- Certain preventive drugs (such as birth control) may be covered 100%, with no out-of-pocket cost to you.
Some drugs on your plan’s formulary may be covered automatically with a doctor’s prescription. Others may be covered only for the treatment of specific conditions or after you’ve tried a different, preferred drug first.
Drug Tiers
Within the formulary, drugs are typically grouped in three to six tiers. The tier that your medication is in determines your portion of the cost. Generally, the lower the tier, the lower your cost.
Your plan’s Summary of Benefits will have information on your carrier's specific prescription drug tiers. It will break down your copay/coinsurance for each drug tier.
Example Tiers
| Tier 1 | Generic drugs |
| Tier 2 | Preferred drugs; typically less expensive brand names |
| Tier 3 | Non-preferred brand name drugs |
| Tier 4 | Specialty drugs for chronic and complex illnesses |
A medication may be placed in a higher tier if it is new and not yet proven to be safe or effective; or, there is a similar drug on a lower tier that may provide you with the same benefit at a lower cost.
What drugs are covered by my plan?
For the most recent copy of your health plan’s formulary, call your insurance carrier or visit their website:
Related reading:
Prior Authorization for Prescription Drugs
What is a Summary of Benefits and Coverage (SBC)?
