Prescription Drug Tiers
All health insurance plans under the Affordable Care Act are legally required to cover a series of essential health benefits, including prescription drugs. This means that your insurance will pay for some prescriptions, but how much (and which drugs) depends on your plan’s formulary.
A formulary is a list of medications that your insurance company is willing to cover. Formularies can vary, but most include five tiers, which categorize drugs by how unique and expensive they are. If you know a drug’s tier, it’s much easier to predict how much you’ll pay for it.
• TIER 1: Includes preferred generic drugs, which are commonly used generic prescriptions (like amoxicillin). These cost you the least when you go to the pharmacy.
• TIER 2: Includes generic drugs that are a bit more expensive than your Tier 1 drugs.
• TIER 3: Includes preferred brand drugs, which are lower-priced brand name prescriptions that don’t have a generic version. These are your cheapest brand name drugs, but will cost more than generics.
• TIER 4: Includes non-preferred brand drugs. These are higher-priced brand name drugs that have a generic equivalent. Because less-expensive, generic versions of these drugs are available, you will be expected to pay more for this tier.
• TIER 5: Includes specialty brand drugs. These prescriptions cost you the most and are used to treat complex conditions like cancer.
Choosing the Right Pharmacy
Because insurance companies contract with certain pharmacies to establish drug costs, where you buy your prescription matters:
• In-network pharmacies are covered by your insurance, so you can fill your prescription here for the standard price set by your health plan.
• Preferred pharmacies are contracted with your insurance company to offer a discount on your prescriptions.
• Out-of-network pharmacies are not covered by your insurance, so you will be responsible for the full cost of your prescriptions if you fill them here.
Making Sure Your Prescription Is Covered
There are a few simple ways to ensure your insurance will cover your prescription:
Paying at the Pharmacy
Ready to finally pick up your prescription? What you will pay at the pharmacy depends on your plan and your drug’s tier, but these are the three most common scenarios:
*If you find that you will have to pay full price for your drug, you can check for manufacturer coupon and price compare drugs on websites like: www.GoodRx.com. If you find you are unable to afford the cost of the drug, you may qualify for assistance from the manufacturer. You can apply for this at: www.MedicineAssistanceTool.org.