Formularies and Drug Tiers: What Your Prescriptions Will Cost

Every health plan has a formulary — its list of covered prescription drugs, organized into tiers that set what you pay. The drug you take every day might cost a small copay on one plan and not be covered at all on another. That's why you check your medications against each plan's formulary before you enroll — not after, when you're already locked in.

What a formulary is

The formulary is the plan's official list of covered drugs. If your drug is on the list, the plan pays its share according to the drug's tier. If it isn't, the plan generally won't pay — you'd owe the full price unless you get an exception (more on that below).

Formularies change from year to year. A drug covered in 2026 may sit on a different tier — or drop off the list — in 2027. Check the current formulary during every open enrollment, even if you're renewing the same plan.

Typical tier structure (plans vary)

Most plans organize drugs into tiers something like this:

• Tier 1 — generics. Lowest cost to you, often a small copay. These are the FDA-approved equivalents of brand-name drugs.
• Tier 2 — preferred brand-name drugs. Mid-range cost. The plan has negotiated better pricing on these brands.
• Tier 3 — non-preferred brand-name drugs. Higher cost. Covered, but you'll pay noticeably more.
• Tier 4 / specialty — specialty drugs. Highest cost, often charged as coinsurance (a percentage) rather than a flat copay, and frequently dispensed through a specialty pharmacy.

This is the typical pattern — your plan may use more or fewer tiers, or different names. Higher tier always means higher cost to you; the exact dollars are in your plan's documents.

Prior authorization and step therapy for drugs

Two more hurdles can apply to prescriptions:

• Prior authorization: your insurer must approve the drug before the plan covers it — common for expensive or specialty medications. Your doctor's office usually files the request.
• Step therapy: the plan requires you to try a lower-cost drug first. If it doesn't work for you, you "step up" to the more expensive one. If your doctor believes the first-step drug isn't appropriate for you, they can request an exception — ask them about it.

Both can delay a fill, so find out before enrollment whether your medications need them.

Quantity limits

Some plans limit how much of a drug you can get per fill — for example, a 30-day supply at a time. If you take a maintenance medication, check whether the plan allows 90-day fills, which are often cheaper per dose.

Check your own medications before enrolling

Use each plan's formulary search tool during open enrollment. Match the exact drug, dose, and quantity — a different dose of the same drug can sit on a different tier with a different price. While you're at it, check whether your pharmacy is in the plan's network, and whether the plan has preferred pharmacies with lower cost-sharing.

This single check — your drugs, your doses, each plan's formulary — is one of the highest-value things you can do when comparing plans. (The other is checking your doctors: PPO vs. HMO vs. EPO.)

Ways to pay less

• Mail order for maintenance drugs. Many plans offer 90-day supplies by mail at a lower per-dose cost than monthly retail fills.
• Preferred pharmacies. Plans often have a preferred tier of pharmacies with lower copays. The pharmacy across the street and the one across town can charge you different amounts under the same plan.
• Ask about alternatives. Ask your doctor or pharmacist whether a generic or a lower-tier drug would work for you. Don't switch on your own — but do ask the question.
• TennCare members: pharmacy benefits for all TennCare plans run through OptumRx statewide — one pharmacy program regardless of which TennCare health plan you're in.

Frequently asked questions

What is a formulary? Your plan's list of covered prescription drugs, organized into tiers. If a drug isn't on the formulary, the plan generally won't pay for it.

What are drug tiers? Price bands within the formulary. Lower tiers (usually generics) cost you less; higher tiers (usually brands and specialty drugs) cost you more. The typical structure is generic / preferred brand / non-preferred brand / specialty, but plans vary.

What happens if my medication isn't on my plan's formulary? Talk to your doctor about a covered alternative, and ask about the plan's exception process — plans have a formal way to request coverage of a non-formulary drug when it's medically necessary. If the exception is denied, you have appeal rights: Denied Claims.

What is step therapy? Your plan requires trying a lower-cost drug before it covers the more expensive one your doctor prescribed. If the first drug doesn't work or isn't appropriate, your doctor can request an exception to move to the next step.

Can my plan change its formulary during the year? Yes, formularies can change mid-year, though plans typically must give you advance notice. Another reason to re-check every open enrollment.

Is mail order really cheaper? Often, yes — especially 90-day supplies of maintenance medications. Compare the mail-order price against your retail pharmacy cost-sharing before assuming.

How do I check my prescriptions before I pick a plan? Use each plan's formulary search tool during open enrollment, matching your exact drug, dose, and quantity. Then confirm your pharmacy is in-network.

Where do TennCare members get their prescriptions? Through OptumRx, which handles pharmacy benefits for all TennCare health plans statewide.

Are GLP-1 drugs like Ozempic or Wegovy covered? It depends on the plan and the reason. Coverage for type 2 diabetes is common, usually with prior authorization; coverage for weight loss alone is often excluded or restricted. Check the formulary for the exact drug. What plans cover.

Do I need prior authorization for my prescription? Often for expensive, specialty, or easily misused drugs. The formulary marks them, usually with "PA," and your doctor requests approval before you fill. Prior authorization.

Keep reading

• Provider networks: HMO, PPO, EPO
• What you'll pay: costs explained
• Prior authorization and referrals
• Denied claims: how to appeal
• How we verify our information
• Glossary

Sources

• HealthCare.gov — formulary, drug tiers, and prescription coverage explanations
• Centers for Medicare & Medicaid Services (CMS) — prescription drug coverage rules

Every figure and claim on this site is checked against primary sources. See how we verify.