Prescription Insurance Coverage: Key Questions to Ask Your Plan

When you're on regular medication, your insurance plan isn't just about doctor visits - it's about whether you can actually afford your pills. Too many people assume their plan covers what they need, only to find out at the pharmacy counter that their $400 monthly drug isn't covered, or that they owe $1,200 out of pocket. That’s not a surprise - it’s a preventable mistake. The truth is, prescription insurance coverage varies wildly between plans, and if you don’t ask the right questions, you could be paying way more than you should.

Is your specific medication on the formulary?

Every insurance plan has a list called a formulary - that’s the official catalog of drugs they cover. It’s not just a suggestion. If your drug isn’t on it, you’ll pay full price. And no, the pharmacist won’t warn you. You have to check.

Formularies are split into tiers. Tier 1 is usually generics - think metformin or lisinopril - and costs around $10 per fill. Tier 2 is preferred brand-name drugs, like Humira or Eliquis, and might cost $40. Tier 3? That’s non-preferred brands. You’re looking at $100 or more. And Tier 4? That’s specialty drugs - things like biologics for MS or cancer treatments. These can cost over $1,000 per prescription, and you might pay 25-33% of the total cost yourself.

The catch? A drug you’ve been on for years might suddenly get moved to a higher tier. Or it might be removed entirely. Plans update their formularies every year. So even if you were covered last year, you’re not guaranteed coverage this year.

What to do: Go to your plan’s website. Look for the formulary. Type in your exact medication name - not the brand, not the generic, but the full name on your prescription. If you’re on Medicare, use the Medicare Plan Finder tool. Enter your drugs, your pharmacy, and your zip code. It’ll show you exactly which plans cover what, and how much you’ll pay.

How much will you pay before coverage kicks in?

Some plans have a deductible - that’s the amount you pay out of pocket before the insurance starts helping with drug costs. In 2023, the average deductible for a Bronze Marketplace plan was $6,000. That means if you need a $500 drug, you pay the full $500. And if you need three of them? You’re at $1,500 before your plan even starts sharing the cost.

Silver and Gold plans usually have lower deductibles - sometimes as low as $150. But they come with higher monthly premiums. So if you’re on multiple medications, paying more each month might save you thousands by the end of the year.

A 2023 CMS analysis found that someone filling 12 maintenance medications annually saved $1,842 by choosing a Gold plan over a Bronze one. Even though the Gold plan cost $150 more per month, the out-of-pocket savings were massive.

What to do: Look at your plan’s summary of benefits. Find the section labeled “Prescription Drugs” or “Drug Coverage.” Note the deductible amount. Then add up your monthly drug costs. Multiply that by 12. If your total annual cost is higher than the deductible, you’re better off with a higher-premium plan.

Are there prior authorization or step therapy rules?

Insurance companies don’t always let you take the drug your doctor prescribed. They might require prior authorization - meaning your doctor has to jump through hoops to prove you need it. Or they might require step therapy - forcing you to try cheaper drugs first, even if they didn’t work for you in the past.

In 2023, 28% of Medicare Part D prescriptions needed prior authorization. For specialty drugs, that number jumps to over 60%. And 37% of Marketplace plans use step therapy for chronic condition drugs like those for diabetes or rheumatoid arthritis.

One user on Reddit shared that their insurer denied coverage for their insulin because they hadn’t tried three cheaper (and ineffective) alternatives first. They ended up paying $800 out of pocket for a month’s supply while waiting for approval.

What to do: Ask your plan: “Does this drug require prior authorization?” and “Do I have to try other drugs before you’ll cover this one?” If your doctor says no, but the insurer says yes - get it in writing. You can appeal.

Which pharmacies can you use?

Not all pharmacies are created equal. Most plans limit coverage to a network of pharmacies. If you go outside that network, you might pay 37% more. That’s not a small difference - it’s the difference between paying $120 for a drug and $165.

For Medicare Part D, 68% of Advantage plans use tiered pharmacy networks. That means you pay less at a CVS or Walgreens than at a local pharmacy. Standalone Part D plans are more flexible, but still have preferred networks.

What to do: Check your plan’s pharmacy directory. Find out if your go-to pharmacy is in-network. If you use mail-order, confirm they’re covered. And if you travel often, check if you’re covered at pharmacies outside your state.

What happens if you hit the coverage gap?

If you’re on Medicare Part D, you might run into the “donut hole.” That’s the gap between what you and your plan pay, and what kicks in for catastrophic coverage. In 2024, this gap starts when your total drug costs hit $5,030 and ends at $8,000. During that time, you pay 25% of the drug cost - no help from your plan.

But here’s the good news: Starting in 2025, the donut hole is gone. The Inflation Reduction Act eliminated it and capped insulin costs at $35 per month. That’s huge. But until then, if you’re on expensive meds, you need to plan for it.

What to do: If you’re on Medicare, calculate your annual drug spending. Add up your copays and coinsurance. If you’re close to $5,000, talk to your pharmacist about cost-saving options - like switching to generics, using mail-order, or applying for manufacturer assistance programs.

How do you compare plans during open enrollment?

You don’t have to stick with your plan forever. Open enrollment for Marketplace plans runs from November 1 to January 15. For Medicare, it’s October 15 to December 7. This is your only chance to switch without a penalty.

Use the tools. HealthCare.gov lets you enter up to 15 medications and three pharmacies. Medicare Plan Finder does the same. You can compare plans side-by-side. Look at the total annual cost - premiums + copays + estimated out-of-pocket. Don’t just look at the monthly premium. A $300/month plan with $50 copays might cost you $1,800 less than a $200/month plan with $150 copays.

A 2023 Urban Institute study found that people who spent 20+ minutes comparing plans saved $1,147 on average each year. That’s more than a month’s premium.

What to do: Mark your calendar. Set a reminder. Gather your prescriptions. List your pharmacies. Run the numbers. Don’t wait until you’re stuck with a bill you can’t afford.

What’s changing in 2025?

The rules are shifting. By 2025, Medicare Part D beneficiaries will have a $2,000 annual out-of-pocket cap on drug costs. That means no matter how expensive your meds are, you won’t pay more than that. Insulin will cost $35 a month. And Medicare will start negotiating prices for 20 high-cost drugs - which could lower premiums by 10-15% by 2030.

Some private insurers are already testing value-based designs - lowering copays for drugs that truly improve outcomes, like those for diabetes or heart disease. By 2026, 70% of new plans are expected to offer this.

But until then, you still need to be proactive. The system isn’t perfect. The savings are real - but they’re not automatic.