You may have prescription coverage, but your out-of-pocket expenses for a particular drug depends on its position in your insurance company’s pricing system. This system is known as a formulary. A drug’s tier and formulary status is something you should consider when choosing health insurance coverage. According to VeryWell.com, you can save money on prescription drugs by becoming familiar with your insurance company’s formulary.
What is a Formulary and What is a Tier?
Your insurance company will pay for certain drugs on the list it maintains. That list is called a formulary and contains prescription and generic drugs and may contain over-the-counter drugs as well.
Tiers reflect the drug’s pricing. Tier one drugs are normally generic and lowest in cost. Brand name drugs may fall into this tier if their co-pay is from $10 to $25, while the copay for Tier two drugs is normally $15 to $50. As the Tier rises, so does the co-pay for the drugs in that tier. A tier four drug may cost a patient as much as $600.
So then, a formulary is the list of drugs your insurance company will approve, and a tier is where that drug falls in the pricing schedule.
Is a Drug’s Tier and Formulary Status Consistent?
The short answer is no. A drugs cost and therefore its tier level depends on cost negotiations between drug companies and your insurance company. A tier one drug in company A’s formulary may be a tier two drug on company B’s list.
How Can I save Money?
Ask your insurance provider for its formulary. They will make it available to you and may be on their website. Ask to be notified if a drug you take regularly is shifted to another tier on their formulary. Using the formulary when open enrollment comes around and compare plans by comparing formularies. Be informed and make wise decisions.
