If you’re on Medicare and take regular medications, a little know-how pays off at the pharmacy. Those surprise costs and extra approval steps aren’t random — they follow a logic you can learn and use to your advantage. Here’s how it works.
Every plan has its own drug list
Each Part D plan keeps its own formulary, or list of covered drugs. Plans must cover at least two drugs in every common category and can’t skimp on protected classes like antidepressants or anticonvulsants, but beyond that, it’s up to them. That’s why the same prescription can be cheap on one plan and barely covered on another — worth checking before you enroll if you take anything long-term.
The tier system
Plans sort drugs into five tiers that determine your cost. Tier 1 is preferred generics, the cheapest option. Tier 2 is other generics. Tier 3 is preferred brand names, the best price for a brand. Tier 4 is non-preferred drugs the plan wants to steer you away from. Tier 5 is the specialty tier, for drugs like biologics, with the steepest coinsurance.
Plans don’t have to use this setup, but almost all do.
Why your doctor sometimes has to get approval
Some drugs come with extra requirements on top of the tier. Prior authorization means your doctor must demonstrate medical necessity before the plan pays. Step therapy means you have to try the cheaper option first and show it didn’t work. Quantity limits cap how much you can get at once.
These rules control costs and push people toward cheaper options — and they’re why a prescription sometimes doesn’t go through until the paperwork catches up.
If a drug isn’t covered, or costs too much
You’re not stuck. You or your doctor can file for an exception. A formulary exception asks the plan to cover something off its list, or to waive a step-therapy or prior-auth requirement. A tiering exception asks the plan to charge you a cheaper tier’s rate for a drug on a pricier tier — though this doesn’t apply to specialty-tier drugs.
Your doctor writes a letter explaining why the standard options won’t work for you. Plans must respond within 72 hours, or 24 hours if waiting could hurt your health. If they say no, you can appeal — first to the plan, then to an independent reviewer, and eventually to a federal hearings office if the drug is worth at least $200.
What changed for 2026
A few numbers moved this year. The out-of-pocket cap — the point where your plan covers 100% of drug costs — rose from $2,000 to $2,100. The maximum deductible rose from $590 to $615.
The first Medicare-negotiated drug prices started January 1, covering 10 drugs for diabetes, heart failure, blood clots, and kidney disease. The negotiated prices are 38–79% below list price, and more drugs are lined up for future rounds.
Formularies and tiers can change every plan year, even for a drug you’ve taken for a decade. Check during open enrollment, and remember that “denied” isn’t final — there’s an appeals process with fast-track options when your situation doesn’t fit the plan’s default rules.
