How to read a Part D formulary before you commit to a plan

Two people in the same town, on the same medication, on different Part D plans, can pay very different amounts across a year. That difference is never luck. It is the formulary, and the formulary is public, published in advance, and checkable in about an hour.

Here is how to do that hour properly.

Start with the actual list

Not the drugs you think you take. The bottles. Write down, for each one:

• The drug name, generic and brand
• The strength, in milligrams
• How often you take it
• The pharmacy you actually use

A photograph of every label is faster and less error-prone than transcribing.

Then check five things, in this order

1. Is the drug on the formulary at all?

If it is not, the plan pays nothing towards it. You can file a formulary exception, and sometimes it works, but it is a process with a doctor’s involvement and an appeal route — not a formality. A plan that does not cover a drug you take every day is not a cheap plan.

2. Which tier is it on?

Most plans use five tiers: preferred generic, generic, preferred brand, non-preferred brand, and speciality. The tier, not the drug, decides your share. The same generic can sit on tier 1 in one plan and tier 2 in another, and the difference over a year is real money.

3. Does it need prior authorisation?

Marked PA. Your doctor must get the plan’s approval before it will pay. Worth knowing in October rather than at the counter in January, because the first fill of the year is when everyone discovers this at once.

4. Is there step therapy?

Marked ST. The plan requires you to try a cheaper alternative first. If you have already tried and failed on that alternative, the documentation of that history is what gets the requirement waived — so find it before you need it.

5. Is there a quantity limit?

Marked QL. A cap on how much the plan covers in a period. This matters most for anything taken more than once a day, and for inhalers and injectables.

Then check the pharmacy, which people forget

Most plans have a preferred pharmacy network with lower cost sharing than the standard network. The same drug, on the same plan, in the same month, can cost noticeably more at the chemist two blocks away.

Check three things:

• Is your pharmacy in the network at all?
• Is it preferred, or merely standard?
• Is mail order cheaper for a 90-day supply of anything you take continuously?

Price the year, not the month

A plan with a $0 premium and a full deductible on tier 3 can easily cost more across twelve months than a plan with a modest premium and a $0 deductible. The only comparison that means anything is the annual total: premium, plus deductible, plus your actual fills at your actual pharmacy.

Medicare’s own Plan Finder at medicare.gov will do this arithmetic if you enter your drug list. So will any competent advisor. Neither should be charging you for it.

What changed, and what it means

The coverage gap — the donut hole — no longer exists as a separate phase. Part D now runs deductible, then initial coverage, then catastrophic coverage, with a single annual cap on what you pay out of pocket for covered drugs. Once you reach that cap, covered drugs cost you nothing for the rest of the calendar year. CMS resets the figure each year.

There is also the Medicare Prescription Payment Plan, which lets you spread your out-of-pocket drug costs in level monthly instalments across the year rather than paying them at the counter. No interest, no fee, and it does not reduce the total — it just moves it. If you face a large bill in January, it is worth opting in.

Do this every autumn

Formularies change on 1 January. A drug on tier 2 this year can be on tier 4 next year, or off the list entirely, and the plan is only obliged to tell you in the Annual Notice of Change that arrives in September — a document almost nobody reads.

One hour, once a year, between 15 October and 7 December. It is the highest-return hour in the whole of Medicare.