What will I pay for my medication if my Medicare plan agrees to cover a non-formulary drug?

The cost of covering a non-formulary drug will depend on your Medicare drug plan.  Your Medicare Part D plan has some flexibility with regard to what you will pay for the coverage of a non-formulary drug when your formulary exception request is granted and may even provide a lower cost-sharing structure for non-formulary generic drugs as compared to brand drugs.  Even so, many Medicare Part D plans cover non-formulary drugs (generic or brand) as Tier 4 or Tier 5 Non-Preferred drugs with 25% to 50% cost-sharing.

As noted in the Medicare manual:

"Unlike under the tiering exceptions process, the regulations do not specify what level of cost sharing applies when an exception is approved under the formulary exceptions process. Instead, a plan sponsor has the flexibility to determine what level of cost sharing will apply for non-formulary drugs approved under the exceptions process. However, a plan sponsor is limited to choosing a single cost-sharing level that applies to one of its existing formulary tiers [for example, Tier 4 non-preferred brands]. Plans may also elect to apply a second less expensive level of cost sharing for approved formulary exceptions for generic drugs, so long as the second level of cost sharing is associated with an existing formulary tier and is uniformly applied to all approved formulary exceptions for generic drugs [for example, Tier 2 non-preferred generic or Tier 4 non-preferred brand]." [emphasis added]

Accordingly, the government's Model Evidence of Coverage document provides Medicare drug plans with a very broad template when explaining cost-sharing for the coverage of non-formulary drugs.

"Section 6.2    What is an exception?
...
1.  Covering a Part D drug for you that is not on our List of Covered Drugs (Formulary). (We call it the “Drug List” for short.)
...
If we agree to make an exception and cover a drug that is not on the Drug List, you will need to pay the cost-sharing amount that applies to [insert as appropriate: all of our drugs OR drugs in [insert exceptions tier] OR drugs in [insert exceptions tier] for brand name drugs or [insert exceptions tier] for generic drugs]. You cannot ask for an exception to the copayment or coinsurance amount we require you to pay for the drug." [emphasis added]

However, as noted above, although provided with broad and flexible guidance, you may find that many Medicare Part D drug plans follow the same convention and cover a non-formulary drug (using the Formulary Exception request process) as a Non-Preferred drug at a higher-costing formulary tier (just below the Specialty Drug Tier) and you probably will pay around 25% to 33% of the drug's retail cost.

Question:  Where can I learn more about what I will pay if my Medicare drug plan agrees to cover a non-formulary Part D drug?

We have the cost-sharing information online showing what your Medicare drug plan will charge if your formulary exception request is granted and your plan agrees to cover your non-formulary drug.

For stand-alone Medicare Part D prescription drug plans (PDPs), you can begin with our Medicare Part D Plan Finder at PDP-Finder.com, select your state, scroll down to the different Medicare drug plans, and click on the plan name.  In the plan details, you will see for example:


In the example above, the Tier 4 cost-sharing for coverage of a non-formulary drug is 40% of the retail drug cost.

For Medicare Advantage plans that include prescription drug coverage (MAPDs), you can begin with our Medicare Advantage Plan Finder at MA-Finder.com, enter your ZIP Code (or select your state and then county), scroll down to the different Medicare Advantage plans in your area, and click on the Medicare plan name.  In the plan details you will see something such as:


In the example above, cost-sharing for a Tier 5 drug is 28% of the retail drug price.

You can also learn more about how your non-formulary drugs might be covered if you are granted a Formulary Exception in your plan’s documentation about Formulary Exceptions or telephone your Medicare plan’s Member Services department using the toll-free found on your Member ID card or within our Medicare Plan Finders (see graphics above).

For example, you can review your Medicare plan’s “Evidence of Coverage” (EOC) document and you will find an explanation in the section under "Formulary Exceptions" that states something such as:

“If we agree to make an exception and cover a drug that is not on the Drug List, you will need to pay the cost-sharing amount that applies to drugs in Tier 4 [assuming a 5-tier formulary]. You cannot ask for an exception to the copayment or coinsurance amount we require you to pay for the [coverage of a non-formulary] drug.” [emphasis added]

... or you may read in your plan's Evidence of Coverage document something such as:

"If we agree to make an exception and cover a drug that is not in the Drug Guide, you will need to pay the cost-sharing amount that applies to drugs in Cost-Sharing Tier 4 - Non-Preferred Drug. You cannot ask for an exception to the copayment or coinsurance amount we require you to pay for the drug."

... or a slight variation...

"If we agree to make an exception and cover a drug that is not on the Drug List, you will need to pay the cost-sharing amount that applies to drugs in Cost-Sharing Tier 3: Non-Preferred Drug. You cannot ask for an exception to the copayment or coinsurance amount we require you to pay for the drug."

You can then look on your Medicare drug plan's formulary (drug list) and see the cost-sharing for Tier 3 or 4 Non-Preferred drugs (for example, 25% or 33% or $50).  We also have all formulary cost-sharing information online in our Medicare Part D Plan Finder (PDP-Finder.com) and in our Medicare Advantage Plan Finder (MA-Finder.com).


Question: So, will I always pay more for coverage of a non-formulary drug as compared to similar formulary drugs?

Not necessarily.  When a non-formulary drug is covered by your drug plan (even as a Tier 4 drug), you will not necessarily pay more for the drug than similar drugs on the plan’s formulary.  The cost difference will depend on the non-formulary drug's retail price, the placement of the similar drugs on the plan's formulary, and your Medicare Part D plan's cost-sharing structure (for example, Tier 1 drugs cost $1 and Tier 2 drugs cost $10).

Example:  If your Medicare drug plan covers “Drug ABC” as a Tier 3 drug with a $47 co-pay and you use a similar non-formulary Part D drug “Drug XYZ” that has a retail cost of $100 and the plan agrees to cover this non-formulary drug on Tier 4, you may pay 33% co-insurance for the drug or $33 (depending on your plan) -- and this is less than the $47 you would have paid for the similar Tier 3 drug.


Sources include:

Parts C & D Enrollee Grievances, Organization/Coverage Determinations, and Appeals Guidance
(Effective January 1, 2020) and (Effective August 3, 2022)