The formulary is the single most important factor in choosing a Medicare Part D plan, and the one most people pay the least attention to. Most people compare plans by monthly premium and call it a day. But a plan with a $15 monthly premium that puts your blood pressure medication on Tier 4 can cost you far more than a $45 plan that covers it on Tier 2. Understanding how formularies work before you enroll is one of the highest-value things you can do at Medicare age.
I check formularies for clients every enrollment season and the differences between plans on the exact same drug can be dramatic. I have seen a blood pressure medication on Tier 1 with one plan and Tier 3 with another in the same zip code, a $540 difference per year on a single drug. Enter your actual medications before you pick a plan. Every single time.
What a formulary is
A formulary is a list of prescription drugs that your Part D plan covers. Not every drug that exists is on every plan formulary. The formulary determines whether your medication is covered at all, and if so, at what cost-sharing tier. Plans file their formularies with CMS each year and must follow rules about minimum drug coverage, but within those rules they have significant latitude to decide which drugs to include and where to place them.
How tiers work
Part D plans organize covered drugs into tiers, typically five levels. Tier 1 covers preferred generic drugs at the lowest copays, often $0 to $5 per fill. Tier 2 covers non-preferred generics, usually $5 to $15. Tier 3 is for preferred brand-name drugs, typically $30 to $50. Tier 4 covers non-preferred brands, often $65 to $100 or more. Tier 5 is for specialty drugs, which are high-cost medications often used for serious conditions, and may be priced as a percentage of the drug cost rather than a flat copay.
Why the same drug costs differently across plans
Drug manufacturers negotiate with Part D plans for favorable formulary placement, similar to how grocery stores negotiate shelf placement with food companies. A brand-name medication might be on Tier 3 with one plan (preferred brand, moderate copay) and Tier 4 with another (non-preferred, high copay) because of different negotiated agreements. The same chemical compound, the same pharmacy, the same prescription, dramatically different prices depending on your plan.
How to check your specific drugs before enrolling
The Medicare Plan Finder at medicare.gov allows you to enter your specific medications, dosages, and preferred pharmacy and see exactly what each drug costs under each plan in your area. This tool is invaluable and free. Use it before every Annual Enrollment Period, not just once. Formularies change each year, and a plan that was optimal in 2024 may have moved your medication to a higher tier for 2025.
Need help comparing Part D plans against your actual medications?
Running your specific prescriptions through every available plan in your area is exactly what I do. The right Part D plan is different for every person, and it changes every year.
Book a Free CallWhat to do if your drug is not covered
If a medication you need is not on a plan formulary, you have options. You can request a formulary exception, which requires your doctor to submit documentation explaining why the non-formulary drug is medically necessary. The plan must respond within 72 hours for standard requests. If approved, the plan covers the drug at the applicable tier. Alternatively, your doctor may know of a therapeutically equivalent drug that is on the formulary. If all else fails, choosing a different plan during AEP is the cleanest solution.
Formulary changes mid-year
Plans can make limited changes to formularies during the plan year. If your drug is removed from the formulary or moved to a higher tier mid-year, you are typically protected for the rest of the calendar year if you were already taking it. You also gain a Special Enrollment Period to switch plans in some circumstances. Read notices from your plan carefully, especially letters that arrive in the fall.
Frequently asked questions