Making the most of your medications budget

Refilling a prescription often feels like a guessing game. Sometimes the medication costs twice what you expect, other times it’s next to nothing.

Many people worry about the price of medications even when using Medicare’s pharmacy benefits. Of the Americans taking prescription medicine, about 76% of seniors consider the price of prescription drugs to be unreasonable. But whether you have original Medicare, a Medicare Advantage plan that includes prescription drug coverage or a Medicare Supplement plan with a Medicare Part D plan, it can be helpful to better understand what goes into the pricing.

An older woman wearing a mask chats with her pharmacist


Here’s what you need to know to help better understand your medication costs.

What is a prescription drug list?

A drug list is a catalog of the medications your health plan covers and how you share in the cost. Some plans call it a drug formulary. Covered medications usually cost less than ones that aren’t covered.

Health plans typically revise this list twice a year, although changes that benefit consumers (such as new medications or price cuts) may occur at any time.

Medication lists break drugs into groups called tiers, and each tier has a certain payment level. You may have a set copay or coinsurance for each level. For some plans, tier pricing might not apply until you hit your deductible. Tiers vary by health plan, but generally look something like this:

  • Tier 1: Mainly generics and some brand names; lowest cost.
  • Tier 2: A mix of generic and brand-name medications that provide good overall value; mid-range cost.
  • Tier 3: Mostly brand-name drugs; highest cost.

What should I ask?

As with all aspects of your health care, you have a say in decisions about medications and their cost. And a plan like a Medicare Supplement Plan, which can work in conjunction with Medicare Part D, allows you to find the best doctor for you and your needs with a great degree of freedom. Consider asking your doctor or your pharmacist the following questions:

  • What drug are you prescribing for me?
  • How long will I need to take it?
  • Is this medication generic or brand name? Does my health plan cover it?
  • Does my plan require prior authorization (pre-approval) or step therapy (trying lower-cost medications first to see if they work)?
  • What tier is this medication in on my plan’s drug list, and what will it cost me?
  • Is there a lower-tier option that would work for me?
  • What are its benefits and side effects?

Where can I learn more?

Your insurer’s website will include its drug list, and each plan has its own formulary. If your health plan offers an app, you may be able to manage medications on the go and use drug-pricing tools from that platform. There’s no need for sticker shock, if you do your homework.