Video: What Are Prescription Drug Tiers? - YouTube
Every Medicare Part D prescription drug plan or Medicare Advantage plan that includes Part D coverage can have up to 6 tiers to classify medications on the plan’s formulary list of drugs. But what do these tiers represent? And how does the tier correlate with the drug’s cost?
Once you know what the tiers mean, then you can get a general idea of the cost, as it compares to the other tiers. Let’s take a look:
The tiers mentioned below are specific to Medicare plans. If you’re in a group health plan through your employer or a Marketplace plan, these Medicare drug tiers might not match up to your coverage.
:: A copay is a specified dollar amount owed
:: A coinsurance is a percentage owed based on a drug’s total cost
Tier 1 - Preferred Generic
Cost: These are your least expensive drugs
Pricing Structure: A copay
Tier 2 - Generic
Cost: These are more expensive generics, or sometimes lower-cost brand name drugs that the insurance carrier decides to classify in this lower-priced tier
Pricing Structure: A copay | This is only sometimes a coinsurance
Tier 3 - Preferred Brand
Cost: These are lower-cost brand name drugs, or sometimes generic drugs classified in this higher-priced tier
Pricing Structure: A copay or coinsurance
Tier 4 - Brand
Cost: These are more expensive brand name drugs
Pricing Structure: Usually a coinsurance, but sometimes a copay
Tier 5 - Specialty
Cost: These are your most expensive drugs. The price can vary widely.
Pricing Structure: A coinsurance
Tier 6 - Select Drugs
Cost: The types of medications could be very inexpensive generics, insulin, or other medications…all are usually priced very low.
Pricing Structure: Usually a copay
A Part D drug plan’s formulary list of drugs can change each year, as well as the tiers each medication is classified in. Be sure to watch this each Annual Election Period (AEP) [Open Enrollment] before your plan renews for the following year.
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Neither Medicare Mindset LLC nor its agents are connected with the Federal Medicare program.
