For people who take regular medications, prescription drug coverage is one of the most important factors in choosing a health insurance plan during 2027 Open Enrollment. Getting this wrong can cost you thousands of dollars. Here’s how to evaluate drug coverage the right way.
What Is a Formulary?
A formulary is an insurance plan’s list of covered prescription drugs. Every marketplace plan has its own formulary — and they vary significantly. A drug that’s a cheap generic on one plan may be a high-cost Tier 3 brand drug on another.
Formularies are organized into cost tiers:
- Tier 1 (Generic): Lowest copay, often $0–$10 per fill
- Tier 2 (Preferred Brand): Moderate copay, typically $30–$60
- Tier 3 (Non-Preferred Brand): Higher copay, often $60–$100+
- Tier 4 (Specialty): Highest cost, often 20–40% coinsurance after deductible
How to Check a Plan’s Formulary
Every marketplace plan is required to make its formulary publicly available. When comparing plans:
- Make a list of every prescription taken by anyone who will be on the plan (name, dosage, frequency)
- For each plan you’re considering, search the formulary online (usually at the insurer’s website)
- Note the tier each drug is on and the associated cost
- Check whether any drugs require prior authorization or step therapy
- Confirm the plan uses pharmacies convenient to you
Prior Authorization and Step Therapy
Some plans require prior authorization for certain drugs — meaning you need pre-approval from the insurer before the drug is covered. Others require step therapy — you must try a cheaper drug first before the preferred drug is approved. If you’re on a specific medication for a chronic condition, confirm whether these requirements apply and factor in the administrative burden.
Specialty Medications
For specialty drugs (biologics, cancer treatments, rare disease therapies), formulary placement and cost-sharing can be dramatic. Plans often apply high coinsurance rates rather than flat copays for specialty drugs — 30% coinsurance on a $15,000/month medication means $4,500/month out of pocket until you hit your OOPM. For high-cost specialty meds, look for plans with:
- Low out-of-pocket maximums
- Favorable specialty drug tier placement
- Manufacturer copay assistance compatibility (some plans specifically block this)
Mail-Order Pharmacies
Many plans offer significant discounts for 90-day mail-order fills of maintenance medications vs. retail pharmacy 30-day fills. If you take daily chronic medications, confirm whether the plan has a preferred mail-order pharmacy and what the savings are.
Taking regular medications and want to verify they’re covered before choosing a 2027 plan? Contact Paul at Garden State Benefits for a no-cost, no-obligation review of your 2027 options — he’s a licensed independent broker serving individuals and families across 26 states.