How to Understand Your Drug Formulary


Prescriptions can be one of the most complicated things for people to figure out with their health insurance policy. There are ways to save money even when you don’t have insurance, or your insurance doesn’t cover prescriptions, such as sourcing Viagra coupons, or coupons for other big-name drugs like EpiPens, but regardless of any available discounts, understanding your prescription coverage if you have it is still important.

What’s covered and what isn’t regarding prescriptions is included under your drug formulary, and it’s one of the most misunderstood aspects of health insurance.

The following are some of the most important things you should know as you review your drug formulary.

What is a Drug Formulary?

First and foremost, a drug formulary is what outlines the approved drugs that a health insurance company will help cover. With medical costs, on the other hand, the insurer pays based on coded billing.

With a drug formulary, you may have to try to find similar drugs that are covered, rather than getting the actual drug you were initially prescribed. In some cases, you may also have to have your care provider prove to your insurance provider that you need a particular drug.

The objective of a formulary is to create a list of the drugs that the health insurance company sees as having the most value.


In many cases, a drug formulary is grouped into levels, and these tiers usually determine how much of the cost of the medicine the policyholder is required to pay.

For example, in many instances, Tier 1 is generic drugs, while Tier 2 might be preferred brand named drugs. Tier 3 can include non-preferred brand names, and Tier 4 may be specialty medicines. In some situations, Tier 3 and 4 can include drugs that haven’t been proven safe yet, or they may be a similar drug that would offer the same benefits at a lower cost.

With the lower tiers, the co-pay is usually pretty small, and it goes up depending on the level of the drug. With many health plans, Tier 4 drugs may have copays of $100 or more.

Some health plans may also require that policyholders pay full price for drugs until they meet their deductible and then they can move to paying copays. This is the most common scenario in policies with a high deductible.

There may be restrictions on certain drugs such as prior authorization, quantity limits, and step therapy where the patient is required to use a cheaper drug before they’re approved for the more expensive one.

Finding Your Formulary

Usually, you can look up your specific drug formulary online if you know your plan. Most insurance plans also have a brief, abridged formulary, and also a complete detailed version. You can check on your insurer’s website, and if it’s not available online, you can call your insurer and ask for a hard copy to be mailed to you.

As a final note, most doctors will also have formularies on-hand so you can use it when your care provider is writing your prescriptions to make sure you’re getting something that’s in your formulary.


Author: Susan Melony