Prescription Drugs and the Drug Formulary

Under the Affordable Care Act, health insurance plans must offer Prescription Drug coverage as an Essential Health Benefit.

Prescription Drug Tiers

Prescription Drugs are broken out into tiers. Most insurance plans cover Tiers 1-4.

  • Tier 1: Generic prescription drugs
  • Tier 2: Preferred brand name drugs
  • Tier 3: Non-preferred brand name drugs
  • Tier 4: Specialty drugs

Depending on the tier that the prescription drug falls under, coverage will vary. Usually Tier 1 generic drugs will have the highest coverage, meaning less out-of-pocket for enrollees, and Tier 4 will have the lowest level of coverage and will be generally more expensive.

The Prescription Drug Formulary

Each carrier has a Formulary that denotes which prescription drugs fall under which tier. These formularies can be found on the insurance carrier's website, and are usually a PDF with a very detailed list of prescription drug names broken out by tier. If a prescription drug is not on the formulary, it is likely not covered.

Confirming Coverage for a Certain Prescription Drug

We recommend reaching out to the insurance carrier to confirm coverage for a certain Prescription Drug, especially if it isn't common or isn't listed on the carrier's posted Prescription Drug Formulary. The Member Services number on the back of member ID cards is a great place to start.

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