Your health insurance plan includes a list called a formulary — a directory of the medications it covers. If you’ve ever been amazed at how much it cost you to fill out a prescription, chances are the drug wasn’t on your prescription.
The form directory is also referred to as the Preferred Drug List (PDL). At first glance you might think you need a decoder ring to figure it out. But understanding your PDL can help you pay the lowest possible price for the medication you need.
Your plan’s list is made by a panel of doctors and pharmacists. The group works together to ensure the formulary is based on safety, effectiveness and overall value, says Louise Norris, a licensed insurance broker and analyst for healthinsurance.org.
A PDL categorizes drugs into tiers, usually three to five, based on how much they cost you. Tier 1 drugs are the cheapest and often generic versions of brand-name drugs found in higher, more expensive tiers, Norris says.
Your insurance plan may not cover all possible medications. It depends on whether your PDL is open or closed.
With an open form, Your health plan covers all FDA-approved medications. “Every drug imaginable is at some stage. At worst, the most expensive drugs are at the highest levels,” says Dr. Michael Botta, co-founder of healthcare company Sesame, which caters directly to patients.
Many commercial plans are open or very close, he says.
With a closed formulary, “there are some drugs that aren’t on either level and therefore aren’t subject to your drug benefits,” says Botta.
A third of Americans take advantage of Medicaid, a federally funded health plan for people on low incomes, he says. Most of these plans have closed forms.
Go to your insurance plan’s website and search for it. It could be under a tab like Find Medication or Insured Medication. The form can list medications:
If you can’t find a drug you’re looking for, call the number on your health insurance card for information, says Botta.
“You may find that your health plan has an interactive prescription page that shows you covered alternatives if your medication isn’t on the prescription list,” says Norris. It can also give you lower-tier alternatives if your meds are in a higher tier, she adds.
The PDL will usually contain other important information about your coverage, including:
Most forms change at the beginning of each calendar year. Before you order your first refill of the year, check to make sure your medication is still on the list, whether it’s been replaced with generics, or whether any new ones you need have been added.
If you’re thinking of changing your health plan, make sure that all of your family’s medications are included in the prescription before making a decision.
Norris says it’s common to have low, fixed co-payments for Tier 1 drugs, but co-insurance (where you pay a percentage of the cost) for top-tier drugs. To lower your costs, ask your doctor about a lower tier medication if one is available.
You may be wondering if generic drugs are as good as brand name drugs. FDA-approved generic drugs have the same ingredients and are just as effective as their brand name counterparts. They are cheaper because they don’t have to repeat expensive efficacy and safety studies. There is also more competition in the market as there may be many different generic drugs available.
Make sure you share the most up-to-date list of formulas with your doctor, especially if cost is an issue. Let them know you want the most cost-effective option that fits your needs, suggests Botta.
In some cases, you and your doctor may need to get creative. For example, an extended-release drug may not be covered, while the standard-release version of the same drug is. Your doctor could write a prescription for the covered medications, which you then take at different times of the day. This can mimic the effects of a sustained-release drug.
If you need a medication that isn’t on your health plan’s list, your doctor can make an exception request for you. You may need to do this for a number of reasons, Norris says.
It usually takes time for insurance plans to add newly approved drugs to their prescriptions. If your doctor thinks that a brand new drug is the best or only choice for your medical needs, they can request a formula waiver if your health plan doesn’t already cover the new drug.
There is no guarantee that your insurance provider will grant a formula exemption. If not, there is an appeals process. It begins with an internal call. If that doesn’t work, you could face an external appeal — one that’s being reviewed by a third party instead of your health plan.
It’s sometimes a tough fight, says Botta. He advises checking the drug manufacturer’s website for discounts. Your pharmacist can also suggest savings options.