What is a Prescription Drug Formulary?
Written by: Aaron Garcia
A drug formulary is a list of generic and name-brand drugs covered by your health insurance policy.
A drug formulary is divided into three or four different categories called “tiers.” Each tier is made up of certain drugs based on type: generic, brand name, preferred brand name, and specialty drugs.
Sometimes health plans choose not to cover a prescription drug. Health plans update their formularies every year, but they also make changes throughout the year.
What Are Drug Formularies?
A drug formulary is a list of the medications covered by a health insurance plan. Insurance companies can’t afford to cover each drug on the market equally. To make medicines more affordable to consumers, they separate drugs into “tiers.” Drug tiers allow insurance companies to charge you less money for a low-tier drug plan versus a high-tier drug plan.
If you take medication for your health, it’s essential to review your plan’s formulary. Make sure your drug is covered and determine if a similar option is available in a lower tier.
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How Many Formularies Exist?
Each insurance company and the pharmacies in their network have a formulary. Formularies can change continually. However, that doesn’t mean the availability of your medication will vary. It’s common to have a prescription drug covered one plan year, and then not be covered the following. When this happens, you should be able to find a comparable alternative to the drug. The same is true if you don’t see your medication on a formulary list. Call your health insurance carrier directly and let them know what you need and to check for similar alternatives.
All of the drugs make up the formulary, which then gets sorted into tiers.
- Tier One: Generic Drugs (lowest copays)
- Tier Two: Preferred Brand Name Drugs (medium copays)
- Tier Three: Non-Preferred Brand Name Drugs (higher copays)
- Tier Four: Specialty Drugs (highest copays)
To determine which tiers your health insurance provider uses, give them a call or review your Summary of Benefits and Coverage . Each insurance company is allowed to use their criteria for how they classify drugs and medications. If you are a GoHealth member, a licensed insurance agent on our TeleCare team will be able to help you.
What If My Medication Isn’t Covered?
If your medication isn’t covered, ask your doctor for a generic drug equivalent. If a generic doesn’t work, you may be able to file an exception. Common reasons for exceptions include:
- The drug is excluded but is the best treatment for your condition.
- The drug needs pre-authorization or has limits.
- The drug is covered but at a tier that isn’t affordable for the policyholder.
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