Formulary
A formulary is a list of prescription drugs covered by a Medicare drug plan. Drugs are organized into tiers, with different cost-sharing for each tier.
Understanding Formulary
A formulary is a list of prescription drugs covered by a Medicare drug plan. Each Part D plan and Medicare Advantage plan with drug coverage has its own formulary.
Formularies organize drugs into tiers, typically: Tier 1 (preferred generics, lowest cost), Tier 2 (generics), Tier 3 (preferred brand drugs), Tier 4 (non-preferred brand drugs), and Tier 5 (specialty drugs, highest cost).
Plans can change their formularies during the year with notice to beneficiaries. They can add drugs, remove drugs, or move drugs to different tiers. Removed drugs may require prior authorization or step therapy.
Before enrolling in a plan, check that your medications are on the formulary and note what tier they're in. You can use Medicare's Plan Finder tool or work with an advisor to compare formularies.
Related Terms
Part D
Medicare Part D is prescription drug coverage. You can get it through a standalone Prescription Drug Plan (PDP) or through a Medicare Advantage plan that includes drug coverage.
Prior Authorization
Prior authorization is approval you must get from your plan before certain services or drugs will be covered. Without it, the plan may not pay for the service.
Donut Hole
The donut hole (coverage gap) is a temporary limit on what the drug plan will cover. Once you reach this limit, you pay a higher percentage of drug costs until you reach catastrophic coverage.
Premium
A premium is the monthly payment you make for your Medicare coverage. You pay premiums for Part B, Part D, Medicare Advantage, and Medigap plans.
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