Medicines are divided into levels organized into tiers, classifying medication from lowest to highest cost. There are three payment phases: deductible, initial coverage, and catastrophic coverage, that dictate costs based on tiers.

 

• Tier 1: Preferred Generic. The lowest-cost tier, typically including commonly used generic drugs.

• Tier 2: Generic. Includes higher-cost or less common generic drugs.

• Tier 3: Preferred Brand. Often features brand-name drugs that don't have a generic equivalent and some high-cost generics.

• Tier 4: Non-Preferred Drug. Includes higher-priced brand-name and non-preferred generic drugs.

• Tier 5: Specialty Tier. The highest-cost tier for very expensive drugs used to treat complex conditions like cancer or multiple sclerosis.

• Tier 6: Select Care. Some plans include a sixth tier specifically for $0 or low-cost drugs treating chronic conditions like diabetes or high blood pressure

 

Formularies can change annually, or as new drugs become available, often featuring restrictions like prior authorization or step therapy. Drugs not listed on the formulary may not be covered, requiring more out-of-pocket cost or request a formal exception.

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Prescription Drug Plans (Part D) are offered as a standalone policy if in Original Medicare and Combined in a Medicare Advantage Plan (Part C). It's optional and offered to everyone with Medicare.

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Eligibility & Enrollment: Anyone with Medicare Part A or Part B is eligible, with initial enrollment.

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Costs: In addition to monthly premiums, a "late enrollment penalty" may apply if you go 63 days or more without creditable drug coverage.

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Coverage Phases: Coverage typically moves through three phases: deductible, initial coverage, and catastrophic coverage, where costs are reduced.

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Extra Help: Individuals with limited income and resources may qualify for "Extra Help" to pay for premiums, deductibles, and copayments.

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Exceptions: If doctor prescribes a drug not on the formulary, or a drug on a high tier, a formulary exception or tiering exception can be requested.

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Resources for Coverage: Medicare.gov and searching under “Find Plans” to check if your specific medication is covered and which tier it falls under.