What is formulary? How do they affect me? What happens if they change?

Read all about Medicare Part D Formulary 2020 in this article.

What are the formularies?

In the context of Medicare drug plans (e.g. Prescription Drug plans, Medicare Advantage plans with drug coverage) the term Formulary refers to the list of drugs covered by a particular plan. Each plan has its own formulary.  Plans include both branded and generic prescription drugs.

Who determines the Medicare Part D Formularies?

‘Each plan that offers prescription drug coverage through Medicare Part D must give at least a standard level of coverage set by Medicare.

Plans can vary the list of prescription drugs they cover (called a formulary) and how they place drugs into different “tiers” on their formularies’ [drawn from Medicare].

The medications (prescription drugs) on your plan’s formulary are chosen by a panel of experts, the pharmacy and therapeutics committee (P&T) who are independent of the insurance companies.

How do formularies affect me?

It is tempting to think that your Medicare prescription drugs plan or Medicare Advantage prescription drugs plan will cover all your prescription drugs. It won’t!

Many health insurance companies freely publish their formulary. The Silverscript Formulary 2020 and the Humana Formulary 2020 are representative examples.  So too are the Cigna formulary 2020 and Aetna formulary 2020, but these insurance companies may not cover your State or county, or may not have a network of pharmacies that fits your circumstances.

You also need to be aware that tax benefits, i.e. the premium tax relief and state-aided benefits, are only available if you purchase your plan through a health insurance exchange, whether Federal, State or Private.

To take the fullest advantage of your plan coverage, you must select a plan (and formulary) that matches your expected usage of prescription drugs and make sure that you can fill your prescriptions at a network pharmacy.

If your prescription drug is not on your plan’s formulary you may have to pay the full price. [If your doctor or other authorized prescriber believes that none of the drugs on your plan’s formulary will be effective you may ask your insurer for an EXCEPTION.]

We referred earlier to ‘tiers’.

What are formulary ‘Tiers’ and how do they affect me?

Let’s be clear: all the drugs covered by your plan must meet the requirements of the MMC and FDA.

In particular, Generic or Multi-Source drugs must demonstrate that they are clinically as effective as the branded equivalent.  There may, of course, be a significant price difference.  Both you and your insurers have an interest in keeping the expenditure on drugs as manageable as possible without affecting your course of treatment.  Hence the need for formularies or lists of approved medications (prescription drugs) which your plan will (help to) cover.  When you have met your deductible you will not have to pay full price for further prescriptions during the plan period.

Now about the formulary tiers!

Your physician (or another qualified prescriber) will recommend a particular drug(s) according to your clinical needs.

Generally, these drugs are included in most insurers’ formularies and usually in more than one version.  There may be one or more branded versions and one or more generic versions. All of these must meet the standards of the MMC and FDA.

There can be up to five tiers but typically insurers divide their formulary drugs into four tiers: –

There may be some minor differences in the formulation of these medications BUT the major discernable difference will be the COST.

  • Tier 1 of Formulary: Low cost generic drugs-Co-pay $20
  • Tier 2 of Formulary: Higher cost generic drugs low cost branded drugs – Co-pay $4o
  • Tier 3 of Formulary : Brand name drug with no generic alternative – Co-pay $60
  • Tier 4 of Formulary: High cost/specialty drugs – Co-pay $100+

With some exceptions prescriptions are filled for a one month supply.  You can see that your choice of drug tier will make a huge difference to your monthly outgoings.

When choosing your insurer, make sure there are in-network ‘providers’, authorized prescribers and pharmacies, who are easily accessible, or alternatively that you can receive your medications by direct mail at the ‘in-network’ cost.

There are two further considerations.

  1. Prior Authorization – Certain drugs require you or your doctor to obtain prior authorization from the insurer in order to be covered
  2. Step Therapy – Before being covered for a new or expensive drug you must first try a lower-priced (lower tier) drug for the same indication.

What happens if the formulary changes?

If a ‘covered’ drug which you have been taking is removed from your insurer’s formulary you will be given written notice. As a Medicare beneficiary, you can expect a further 60 days supply, giving you time to find an alternative.

You can be sure that drugs will not be withdrawn unless there is a more effective replacement Silverscript formulary 2020 or the same outcome can be obtained more affordably.

Talk to our insurance agent to know more about Medicare Part D Formulary 2020

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