Breaking Down Some of the Basics of Health Coverage Formularies and Tiers

Did you know insurance plans have a list of medicines they cover? It’s called a formularyThe list of prescription medicines covered by a health insurance plan. A non-covered medicine is not included in the list of prescription drugs covered by an insurer. For non-covered medicines, patients must pay for the cost of the medicine or go through an exceptions process to get it covered. Also see Drug List or Tiers.. If your medicine isn’t on that list, you’ll likely have to pay much more out of pocket. Even if the covered drug is on the list, if it is on a higher formulary tier, there still may be higher out-of-pocket costs or other barriers to access. TiersThe list of medicines covered by a health insurance plan is often broken down into tiers – usually three or four. Lower tiers (Tier 1 or Tier 2) typically require co-payments, which are fixed dollar amounts, typically ranging from $10 to $50. Higher tiers (Tier 3 or Tier 4) are more likely to require coinsurance, which is a percentage of the cost of a medicine. This amount varies based on the cost of the medicine and, as a result, is harder to predict. Which tier a medicine falls under is included on a plan formulary. Also see Formulary or Drug List. are the groupings of drugs on a formulary that have different levels of patient out-of-pocket costs.

Before choosing or switching plans, knowing how a plan covers your medicines is important to ensure that you have access to the treatments you need.
Take the time to learn the basics and evaluate your options to make sure you’re choosing the best coverage options for you and your family. There is a lot of information to learn and digest, but we’re here to help.