When you’re switching health plans, the biggest mistake most people make is focusing only on monthly premiums. You think you’re saving money - until you get your first prescription bill. That’s when you realize your new plan charges $45 for a generic medication you used to pay $5 for. It’s not a glitch. It’s the formulary.
What Is a Formulary, and Why Does It Matter?
A formulary is just a list of drugs your insurance covers. But it’s not a simple list. It’s broken into tiers, and each tier has a different price. Tier 1? That’s where you’ll find the cheapest generic drugs. Tier 2? Slightly more expensive. Tier 3 and 4? Often brand names or specialty generics. And if your drug isn’t on the list at all? You pay full price.Here’s the reality: 84% of all prescriptions filled in the U.S. are generics, but they only make up 14% of total drug spending. Why? Because they’re cheap - if your plan covers them right. The problem isn’t the drug. It’s how your plan treats it.
Tiered Coverage Isn’t the Same Everywhere
Not all plans are built the same. A Silver Standardized Plan (SPD) on Healthcare.gov, for example, waives your deductible for Tier 1 generics. That means if you take a monthly medication like metformin or lisinopril, you pay a flat $3 to $20 - no matter how much you’ve spent on other medical bills. But a non-standardized plan? You might have to hit a $2,000 deductible before that same $3 generic kicks in.Medicare Part D plans vary too. Some charge $0 for preferred generics. Others charge $10. And if you’re on a Medicare Advantage plan with drug coverage, you’re often better off than if you’re on a standalone Part D plan - but only if your specific drug is in the preferred tier.
State rules add another layer. In New York, many plans cover generics with $0 copay before you even meet your deductible. In California? You pay $85 out-of-pocket first, then 20% coinsurance. That’s $150 for a $750 prescription. In Washington? You might pay $10 flat. It’s a lottery - and you’re the one playing.
Your Medication Might Not Be What You Think
Here’s where most people get burned. You take “metformin.” But there are dozens of versions. Metformin ER made by Manufacturer A? Covered. Metformin ER made by Manufacturer B? Not covered - or bumped to Tier 2 with a $40 copay.That’s not a mistake. That’s standard practice. Insurers negotiate with manufacturers. If Manufacturer A gives a better discount, the plan favors them. If you switch plans, your drug might suddenly be “non-preferred” - even though it’s chemically identical.
One user on Reddit reported switching plans and suddenly paying $58 instead of $5 for her levothyroxine. Same active ingredient. Same dosage. Different manufacturer. Her new plan didn’t cover the new version. She had no idea until the pharmacy told her at the counter.
Pharmacy Networks Can Double Your Cost
Even if your drug is on the formulary, where you fill it matters. Your plan might cover your generic at $5 - but only if you use a preferred pharmacy. If you go to a non-preferred pharmacy? That $5 becomes $20. Or $30. Or $50.OptumRx data shows some consumers pay 300%-400% more at out-of-network pharmacies for the same generic. That’s not a typo. That’s how pharmacy networks work. And most people don’t check.
How to Check Your Coverage Before You Switch
Don’t guess. Don’t assume. Do this:- Get your current prescription list. Include exact names, strengths, and how often you take them.
- Find the new plan’s full formulary. Not the summary. The full list. Look for each drug by name and manufacturer.
- Check if your pharmacy is in-network. Use the insurer’s tool - don’t trust the pharmacy’s website.
- Use a cost calculator. Medicare.gov’s Plan Finder or Healthcare.gov’s tool lets you plug in your drugs and see real estimates.
CMS data shows people who do all four steps reduce unexpected drug costs by 73%. That’s not a small number. That’s hundreds - sometimes thousands - saved per year.
What’s Changing in 2025 and Beyond
The rules are shifting. The Inflation Reduction Act capped insulin at $35/month starting in 2023. By 2025, Medicare Part D will cap total out-of-pocket drug spending at $2,000. That’s huge. But it doesn’t help if your generic isn’t on the formulary.Also, new plan designs are coming. In 2024, 32 states now offer Silver SPD plans with $10 generic copays before the deductible. More states are expected to follow. Meanwhile, Medicare is splitting generics into two tiers: “preferred” and “non-preferred.” That means even if your drug is generic, it might cost more.
And here’s the kicker: AI tools like the CMS-endorsed “Medicare Plan Scout” are now helping people compare formularies with 44% fewer errors. These tools are free. Use them.
The Bottom Line
Switching health plans isn’t about the premium. It’s about the copay. If you take even one generic medication every month, you’re paying hundreds - maybe thousands - more if you don’t check the formulary. The cheapest plan isn’t always the best. The plan that covers your drugs at the lowest cost? That’s the one that saves you money.Don’t wait until the pharmacy tells you your drug costs $60. Check before you switch. Know your tier. Know your pharmacy. Know your manufacturer. That’s how you win.
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1 Comments
I’ve been on the same plan for 8 years. Never checked the formulary. Last month, my metformin went from $3 to $42. Turns out they switched manufacturers and my version got bumped to Tier 3. I didn’t even know that was a thing. Now I’m paranoid every time I refill.