You found a plan with a lower premium, switched, and then got a surprise at the pharmacy: the medication you take every month now costs several times what it used to, or the pharmacist says your plan needs approval before it will pay at all. The usual cause is the plan's formulary. So what is a formulary, and how do you check one before it costs you? This guide covers how drug lists work, what the restrictions mean, and the five-minute check to do before you pick a plan for next year.
What is a formulary?
A formulary is your health plan's list of covered prescription drugs. If a drug is on the list, the plan helps pay for it, subject to the plan's cost-sharing and any restrictions noted next to the drug. If a drug is not on the list, the plan generally does not cover it unless you get an exception (more on that below).
Every insurer builds its own formulary, and the same insurer often uses different drug lists for different plans. That is why two plans with similar premiums and deductibles can treat your prescriptions very differently.
Plans don't build these lists at random. Under federal rules, an ACA-compliant individual or small-group plan must cover at least one drug in every category and class of a national drug classification system, or as many drugs per category as the state's benchmark plan, whichever is greater. The list is maintained by a pharmacy and therapeutics committee of doctors, pharmacists and other clinicians, which must review the formulary regularly and base decisions on clinical evidence. The plan must also post its full, current drug list publicly, where you can view it without creating an account or entering a policy number.
How drug tiers affect what you pay
Most formularies sort drugs into tiers. The tier decides your share of the cost. Tier structures differ by plan, but a typical layout looks like this:
- Lowest tier: preferred generic drugs, usually the lowest copay.
- Middle tiers: non-preferred generics and preferred brand-name drugs, with a higher copay or coinsurance.
- Higher tiers: non-preferred brand-name drugs, with higher cost-sharing still.
- Specialty tier: high-cost drugs for complex conditions, often billed as coinsurance (a percentage of the drug's price) and sometimes required to come from a specialty pharmacy.
Pay attention to whether a tier uses a flat copay or a percentage. A percentage of an expensive drug's price can add up fast, and on many plans those costs apply before or after the deductible depending on the tier. Our guides to copays versus coinsurance and deductibles versus out-of-pocket maximums walk through how those pieces fit together.
Prior authorization, step therapy and quantity limits
A drug being on the formulary does not always mean you can simply fill it. Look for codes or notes next to the drug name. The three you'll see most often:
- Prior authorization (PA): your prescriber must get the plan's approval before it will cover the drug. Plans often use this for expensive drugs or ones with cheaper alternatives.
- Step therapy (ST): the plan wants you to try a lower-cost drug first and covers the prescribed drug only if the first one doesn't work or isn't appropriate for you.
- Quantity limits (QL): the plan covers only a set amount per fill or per month.
None of these are denials. They are extra steps, and your prescriber's office usually handles the paperwork. But they take time, so if you depend on a drug with one of these flags, start the process early, especially when you're changing plans.
What to do if your drug isn't covered
If your medication isn't on the formulary, you have options. ACA-compliant plans must offer an exception process that lets you, someone acting for you, or your prescriber ask the plan to cover a drug that isn't on its list. Under federal rules:
- On a standard request, the plan must decide and notify you within 72 hours of receiving it.
- If your health is in serious jeopardy, or you're in the middle of a course of treatment with the drug, you can ask for an expedited review, which must be decided within 24 hours.
- If the plan says no, you can ask for an independent outside review of that decision.
- If an exception is granted, what you pay for the drug counts toward your plan's annual out-of-pocket limit.
Your prescriber's supporting statement carries most of the weight, so ask them to explain why the covered alternatives won't work for you. Other practical options: ask whether a covered generic or therapeutic alternative would work, or compare the cash price at different pharmacies. Your plan documents explain its exact process, and some states add their own appeal rules on top of the federal ones.
Check the formulary before you switch plans
Formularies can change from one plan year to the next. A drug can move to a higher tier, pick up a prior authorization requirement, or drop off the list entirely. That makes Open Enrollment the most important time to check, whether you're switching plans or staying put. Our Open Enrollment 2027 guide covers the dates and deadlines. Before you choose, run this check for each plan you're considering:
- List every prescription in your household: drug name, strength and how often it's filled.
- Find each plan's formulary for the coming plan year, not the current one. Make sure the list you're reading matches the exact plan name, since one insurer may publish several.
- Note each drug's tier and any PA, ST or QL flags.
- Estimate your yearly drug cost using the tier's copay or coinsurance, and add it to the premium and deductible before comparing plans.
- Check that your usual pharmacy is in the plan's network, or whether the plan prefers mail-order or a specialty pharmacy for any of your drugs.
The cheapest premium isn't the cheapest plan if your medications land on a high tier. Drug coverage is one of the seven checks in our step-by-step plan comparison checklist, and for people on ongoing prescriptions it is often the one that decides the right answer. Some plans can also change their drug list during the year, so keep an eye on notices from your insurer.
If you're on Medicare, your Part D or Medicare Advantage drug plan has its own formulary that can also change each year. You can check it with the Plan Finder on Medicare.gov or by calling 1-800-MEDICARE.
Get help checking your prescriptions
Comparing formularies across plans is tedious, and it's easy to read last year's list or the wrong plan's list. A licensed agent can look up your prescriptions across the plans available to you and show where each one lands, with no cost to you for the help. Get a free quote and bring your medication list. We'll check it against each plan's drug list before you commit to anything.
Formulary rules, tiers and cost-sharing vary by plan and state and change each year. This article is general information, not medical or legal advice. Talk with your prescriber before changing medications, and confirm current coverage details with the plan or a licensed agent.