Formulary (Health Insurance)

What it means

The list of prescription drugs that a specific health insurance plan covers. Most plans organize the formulary into tiers. Generic drugs are usually the lowest copay. Preferred brand-name drugs are middle. Non-preferred brand-name drugs and specialty drugs are highest. Drugs not on the formulary at all may not be covered without a formal exception or coverage determination. The plan can change the formulary during the year, but is generally required to give notice and provide a transition supply for current users. Medicaid managed care plans in New York follow a state preferred drug list overlaid on the plan's formulary. Patients can ask the prescriber to switch to a covered alternative or file a formulary exception request when a non-covered drug is medically necessary. Federal Medicare Part D plans have their own formularies and exception process under 42 CFR § 423.578.

When you might hear this

A formulary is the list of prescription drugs that a health insurance plan covers. Drugs are usually grouped into tiers — generic, preferred brand, non-preferred brand, and specialty — with different copays. Drugs not on the formulary may not be covered at all without an exception.

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