Making Sense of Medicare Prescription Drug Lists: What’s Covered?

All Medicare Part D plans offer prescription drug coverage through a formulary. Since there may be several medications in one category or class, each plan decides its own formulary, or list of covered drugs.

Some plans may offer more generic medications and will have lower premiums and copays. Other plans may offer more medication options in their formulary.

As the medication tier goes up, your copay for the medication goes up. Higher-premium plans may also have more options for each drug category on the formulary.

Both individual Medicare Part D plans and Medicare Advantage Part D (MAPD) plans have drug lists that are specific to their plan.

Medicare prescription plans use their drug lists, or formularies, to reduce drug costs. This helps Medicare enrollees choose plans that meet their individual needs and save money.

In general, formularies do this by increasing the use of generic medications. A 2014 study of Medicare Part D plans found that the following contributed to a higher use of generic drugs:

• preapproval by a Medicare prescription plan
• Medicare requirements
• higher costs for brand name medications

Medicare prescription drug lists also help keep costs down by:

• negotiating prices for specific medications on their formulary with individual drug manufacturers
• arranging formularies in tiers, or levels, with lower-cost generics on the lowest tier
• discouraging the use of medications outside the formulary by charging full price for nonformulary medications, unless there’s an exception due to medical necessity

Drug lists can sometimes limit which medications are available and affect your out-of-pocket costs.

Not every plan will have every medication from a class or category on its formulary. It could cost you more to get the medication if it’s nonpreferred.

Formularies can also change during the year if new information becomes available (e.g., a drug is considered unsafe) or new medications (brand name or generic) are approved.

Insulin savings: Part D Senior Savings Model

In March 2020 CMS announced a new program for participating Part D enhanced alternative plans to help lower out-of-pocket costs for insulin. The program caps copays to a maximum of $35 for a month’s supply of a broad range of insulins.

For example, if a generic medication of a covered brand becomes available, plans can automatically change their formulary to switch to the generic.

However, if the medication change will affect you, the plan must give you a written notice at least 30 days prior to the change in its formulary and also provide a 30-day supply of the original medication.

You can search plans for their entire drug list or search for specific medications by name. You can also search available plans in your ZIP code. Plans will show you costs like premiums, deductibles, drug tier, and copays based on quantity (e.g., 30 days versus 90 days).

Tips for searching Medicare prescription plans

• Visit the plan’s website and search for the Part D plan finder tool, or search by the medication name based on your state.
• Call the plan directly (you can also call 800-MEDICARE) or contact your State Health Insurance Assistance Program to help you find plans.
• Review the plan’s drug list, or formulary, based on where you live, the pharmacy you use, and the medications you take.
• Search for both stand-alone Part D plans and Medicare Advantage Part D plans.

Plan formulary information will include:

• the name of the medication (brand name or generic)
• the tier the medication falls under to help you with cost information
• notes on any special requirements

These special requirements might include:

• prior authorization requirements
• quantity limits
• step therapy requirements, which is when a plan requires you to try a lower-cost medication before it’ll cover a more expensive one

Check out this article for examples of one company’s Medicare Part D plans.

Each Part D plan’s formulary is grouped into tiers, or levels, of covered drugs and is based on medication cost.

The tiers are arranged from lower-priced generics to the most expensive medications. Copays are based on what tier the medication falls under.

Plans vary in their formulary and how they manage their tiers. The same medication could be on different tiers for different plans.

So, when you choose a plan, it’s important to see which tiers your medications fall under to estimate your costs for medications. Remember, you still have to pay:

• premiums
• deductibles
• coinsurance
• other out-of-pocket costs for Medicare parts

Most plans have four tiers, with medications arranged from lowest to highest for cost sharing. For example, the tiers might be:

• Tier 1: low-cost generic medications; no copay or low copay
• Tier 2: brand name medications (plan preferred); mid-level copay
• Tier 3: higher-cost brand name medications (plan nonpreferred); higher copay
• Specialty tier: highest-cost medications with a high copay and coinsurance

Although plans have individual drug lists, all plans must offer choices based on Medicare rules. Every plan must cover at least two medications from the most commonly prescribed medications.

Here are examples of some commonly prescribed generic medications:

• lisinopril for high blood pressure
• simvastatin for cholesterol
• metformin for diabetes
• azithromycin for infection

You can also choose between a stand-alone Part D plan with just medication coverage or opt for a Medicare Advantage plan that offers broader benefits, including drug coverage.

All Part D plans must offer basic coverage of these six categories of “protected class” prescription drugs:

• HIV
• cancer
• immunosuppressants
• antipsychotics
• antidepressants
• anticonvulsants

Medicare Part D plans don’t cover:

• over-the-counter medications
• fertility treatments
• erectile dysfunction
• hair loss medications
• weight-related medications
• dietary supplements, such as vitamins

Which parts of Medicare will use Medicare drug lists?

• Part A offers hospital insurance coverage, with medication coverage for hospital stays.
• Part B covers outpatient medical services including preventive care, some vaccines, and some injectable medications given by a health professional.
• Part C (Medicare Advantage) offers comprehensive insurance coverage. It must cover the same services as original Medicare (parts A and B) and has separate coverage for prescription drugs, dental, vision, and other extra benefits. All offered plans use formularies to list covered drugs.
• Part D is prescription drug coverage, with plans using formularies to set plan coverage and costs.
• Medicare supplement (Medigap) plans help pay for out-of-pocket costs associated with Part A and Part B. Medigap plans offered after 2006 don’t offer drug coverage

You are eligible for Medicare drug coverage under Part D or under a Medicare Advantage plan if you’re enrolled in either Medicare Part A or B.

You become eligible for Medicare starting 3 months before your 65th birthday and extending to 3 months after your birth month.

Even though enrollment in Part D is optional, you must have some form of prescription drug coverage. This will help you avoid paying a penalty for late enrollment when you become eligible.

You can also check to see if you’re eligible for Medicare’s Extra Help program to pay for premiums, deductibles, and copays.

Once you turn 65 years old and are eligible for Medicare, you can enroll in Part A and B. During the Part D enrollment period, you can then choose a Part D plan to help with prescription drug coverage.

Choose a plan based on:

• coverage of the medications you take
• out-of-pocket expenses
• premiums
• selection of pharmacies available

Remember, you have to enroll in a plan every year. So, if a plan didn’t meet your needs or expectations, you can switch to another plan. You’re not locked into a plan forever.

You can use Medicare’s plan finder tool to search for:

• Medicare Part D plans
• Medicare Advantage plans
• Part D plans with Medigap
• Medigap plans available where you live

You’ll need to provide proof that you’re enrolled in original Medicare, like your Medicare number, and the date your coverage started.

Medicare enrollment dates

• Initial enrollment period. This is a 7-month window around your 65th birthday when you can sign up for Medicare. It begins 3 months before your birth month, includes the month of your birthday, and extends 3 months after your birthday. During this time, you can enroll for all parts of Medicare without a penalty.
• Open enrollment period (October 15–December 7). During this time, you can switch from original Medicare (parts A and B) to Part C (Medicare Advantage), or from Part C back to original Medicare. You can also switch Part C plans or add, remove, or change a Part D plan.
• General enrollment period (January 1–March 31). You can enroll in Medicare during this time frame if you didn’t enroll during your initial enrollment period.
• Special enrollment period. If you delayed Medicare enrollment for an approved reason, you can later enroll during a special enrollment period. You have 8 months from the end of your coverage or the end of your employment to sign up without penalty.
• Medicare Advantage open enrollment (January 1–March 31). During this period, you can switch from one Medicare Advantage plan to another or go back to original Medicare. You can’t enroll in a Medicare Advantage plan if you currently have original Medicare.
• Part D enrollment/Medicare add-ons (April 1–June 30). If you don’t have Medicare Part A, but you enrolled in Part B during the general enrollment period, you can sign up for a Part D prescription drug plan.
• Medigap enrollment. This 6-month period starts after the first day of the month that you apply for original Medicare or from your 65th birthday. If you miss this enrollment period, you may not be able to get a Medigap plan. If you do get one later, you may pay higher premiums for it.

• Medicare has several parts to cover different health and medical needs to save you money. Each offers medication coverage based on Medicare requirements, but Medicare Advantage plans and Part D plans offer the most complete prescription drug coverage.
• All Medicare Part D plans have drug lists, called formularies, that indicate the medications the plan covers. It’s important to review your medications, out-of-pocket expenses, and plan limits or restrictions when selecting the best option for you.
• Medicare offers tips on choosing the best plan based on your medication coverage needs — for example, if you take expensive specialty medications or want to get comprehensive coverage with a Part C plan.
• Medicare also has a list of helpful resources, from state insurance departments to healthcare organizations, to help you navigate your healthcare needs and get answers to your insurance and health questions.