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Formulary

3 min read

Definition

A list of prescription drugs covered by a health insurance plan, organized by tiers with different cost-sharing levels.

In This Article

What Is a Formulary

A formulary is the official list of prescription medications that your health insurance plan will pay for. If you receive Medicaid, SNAP benefits that include health coverage, or TANF assistance with medical components, your state's Medicaid program maintains a formulary. The medications on this list are organized into tiers, with each tier determining how much you pay out of pocket through copays or coinsurance.

How Formulary Tiers Work

Most state Medicaid programs use a three-tier or four-tier system. Tier 1 typically includes generic medications with the lowest cost-sharing, sometimes as low as $0 to $3 per prescription. Tier 2 covers preferred brand-name drugs, usually costing $5 to $25 depending on your state. Tier 3 includes non-preferred drugs, often costing $25 to $50 or more. Some states add a Tier 4 for specialty drugs, which can cost significantly more.

Your state's Medicaid formulary may exclude certain medications entirely. If a drug you need isn't covered, you can request a prior authorization from your state's Medicaid agency, which is a formal approval process that can take 3 to 5 business days. Some states also allow therapeutic substitution requests if your doctor believes a covered alternative won't work for your condition.

Formularies Across Government Benefits Programs

  • Medicaid: Each state maintains its own formulary. You can view your state's formulary through your state Medicaid website or your insurance card. As of 2024, most state Medicaid programs cover over 10,000 medications.
  • SNAP and WIC: These nutrition assistance programs do not directly cover prescriptions. However, if you qualify for SNAP, you typically also qualify for state Medicaid, which does use a formulary.
  • TANF: Temporary Assistance for Needy Families programs often bundle Medicaid eligibility. Families receiving TANF cash assistance usually have automatic Medicaid coverage under their state's formulary.

What Happens If Your Medication Isn't Covered

If your doctor prescribes a medication not on your state's formulary, you have several options. First, ask your doctor if a covered generic alternative exists. Many branded medications have generic versions on Tier 1 at minimal or no cost. Second, submit a prior authorization request through your insurance or state Medicaid office. Your doctor must document medical necessity, explaining why the non-covered drug is needed instead of formulary options. Third, you can appeal the denial if your prior authorization request is rejected. This appeal process typically takes 10 to 15 business days in most states.

You also have the option to pay out of pocket for non-covered medications, though this can be expensive. A single specialty pharmaceutical can cost $200 to $500 monthly without insurance coverage.

Common Questions

  • Can my state change its formulary? Yes. States update formularies annually, typically in January or during open enrollment periods. Changes are published on state Medicaid websites 30 to 60 days before they take effect. If your medication is removed, your doctor can request a prior authorization for continued coverage under transition rules.
  • Is there a copay for formulary drugs? This depends on your state and specific Medicaid plan. Some state Medicaid programs with emergency aid provisions charge no copay. Others charge $1 to $5 per generic prescription and $5 to $25 per brand-name prescription. Check your insurance plan documents or call your Medicaid managed care plan directly to confirm your exact copay amounts.
  • Do I need prior authorization before filling every prescription? No. Prior authorization is only required for certain medications, usually high-cost drugs, medications with abuse potential, or drugs when the quantity prescribed exceeds typical dosing. Your pharmacist will notify you if a prescription requires prior authorization before it can be filled.
  • Prior Authorization - the approval process required for certain off-formulary medications
  • Copay - the fixed amount you pay for each prescription based on the drug's formulary tier
  • Prescription - the written order from your doctor for a medication covered under the formulary

Disclaimer: BenefitStack provides benefits navigation information, not financial or legal advice.

Related Terms

Insurance

Prior Authorization

A requirement that the health plan approve certain services, procedures, or medications before they are provided. Ensures the treatment is medically necessary.

Insurance

Copay

A fixed dollar amount the insured pays at the time of receiving a medical service, such as $25 for a doctor visit or $10 for a prescription.

Insurance

HMO

Health maintenance organization. A type of health plan that requires members to use a network of providers and get referrals from a primary care physician for specialist visits.

Insurance

PPO

Preferred provider organization. A type of health plan that offers a network of providers at lower cost but allows out-of-network visits at higher cost without referrals.

Insurance

EPO

Exclusive provider organization. A type of health plan that covers only in-network providers except in emergencies, but does not require referrals.

Insurance

POS

Point of service. A type of health plan that combines features of HMO and PPO plans, requiring referrals for specialists but offering some out-of-network coverage.

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