Drug tiers are used by Medicare Part D plans to organize medications into logical cost-sharing groups. As background, both stand-alone Medicare Part D plans and Medicare Advantage plans with prescription drug coverage (MAPDs) organize their covered medications into tiers (or categories). Each formulary tier has a different cost-sharing amount -- for instance, during your plan’s Initial Coverage phase, your Tier 1 generic medications may cost $4 and your Tier 3 brand-name drugs may cost $40.
During the annual Open Enrollment Period you may have compared different Medicare prescription drug plans and probably found that there is was no one universal formulary drug tier structure. However, most Medicare prescriptions drug plans (91% of stand-alone Medicare Part D plans and 73% of MAPDs), use the following formulary drug tier definitions:
Tier 1: Preferred Generic
Tier 2: Generic
Tier 3: Preferred Brand
Tier 4: Non-Preferred Brand
Tier 5: Specialty Tier
However, even though many Medicare drug plans use the same 5-Tier structure, each plan individually determines which medications will be organized into each drug tier. See the next question below for more details.
Below is an example of the drug tier structures and cost-sharing for two different Florida stand-alone Medicare Part D prescription drug plans.
AARP MedicareRx Preferred (PDP) |
EnvisionRx Plus Silver (PDP) |
3,341,899 members nationwide |
333,108 members nationwide |
5 Drug
Tiers
Tier 1: Preferred Generic: $2.00 Tier 2: Generic: $15.00 Tier 3: Preferred Brand: $36.00 Tier 4: Non-Preferred Brand: 40% Tier 5: Specialty Tier: 33% |
4 Drug
Tiers
Tier 1: Generic: $2.00 Tier 2: Preferred Brand: 12% Tier 3: Non-Preferred Brand: 40% Tier 4: Specialty Tier: 25% |
If you are looking to see how a specific Medicare Part D plan (PDP) or Medicare Advantage plan (MAPD) defines their drug tiers, you can use our 2016 PDP-Finder or 2016 MA-Finder for tier definitions and cost-sharing. Also, keep in mind that cost-sharing for the same tier can be different at preferred network pharmacies as compared to non-preferred (standard) network pharmacies.
You can click here for a chart showing the number of 2016 Medicare prescription drug plans using different drug tier structures and definitions.