Creditable Prescription Drug Coverage Explained
Creditable prescription drug coverage is drug coverage that’s expected to pay, on average, at least as much as Medicare’s standard Part D prescription drug coverage.
Medicare Part D Formulary Explained: Is Your Prescription Covered?
Last Modified: 10/02/2026 | Reviewed by Keith Armbrecht (NPN 634015)
Quick Summary
A Medicare Part D formulary is the drug plan’s list of covered prescription medications.
Every Medicare drug plan has a formulary, and formularies can vary from one plan to another.
A medication covered by one plan may:
- Not be covered by another
- Be placed on a different tier
- Have a different copay
- Require prior authorization
- Require step therapy
That’s why checking your actual medications is essential when choosing Part D.
Key Facts
- Every Medicare drug plan has a formulary.
- Formularies contain generic and brand-name drugs.
- Drugs are usually organized into tiers.
- Lower tiers often cost less.
- Plans can use prior authorization.
- Plans can use step therapy.
- Plans can use quantity limits.
- Formulary exceptions can sometimes be requested.
- Formularies can change.
- Plans must provide required notice for changes affecting drugs you’re taking.
What Is a Drug Tier?
Part D plans group drugs into levels.
A typical structure might include:
Tier 1 — lower-cost generics
Tier 2 — preferred drugs
Tier 3 — higher-cost preferred or brand drugs
Tier 4 — non-preferred drugs
Specialty Tier — very expensive medications
Your plan’s exact tier structure can differ.
What If Your Drug Isn’t Covered?
You may be able to:
- Ask about an alternative covered drug
- Ask your prescriber about another medication
- Request a formulary exception
- Appeal an adverse coverage determination when appropriate
What Is a Tier Exception?
In some circumstances, you or your prescriber may request that the plan cover a higher-tier medication at lower cost sharing.
Exceptions aren’t guaranteed.
Can the Formulary Change?
Yes.
Plans may change their formularies during the year under Medicare rules.
Plans must provide appropriate notice when a change affects medication you’re taking.
Why Annual Review Matters
Suppose your medication costs:
$10 per month this year.
Next year the plan moves it to another tier.
Your cost could increase dramatically even if your monthly plan premium barely changes.
Always recheck your drug list during Annual Enrollment.
Video Explanation from Keith
Medicare Drug Formularies Explained
Keith's Take
The formulary is the heart of a Part D plan.
If your prescriptions aren’t covered well, I don’t care how low the plan premium is.
Before enrolling, check every medication.
And don’t just ask:
“Is it covered?”
Ask:
What tier?
What cost?
Which pharmacy?
Any restrictions?
That’s how you really compare drug coverage.
Keith Armbrecht
Medicare on Video
Frequently Asked Questions
Q. What is a formulary?
A. The plan's list of covered prescription drugs.
Q. Are formularies identical?
A. No.
Q. What are tiers?
A. Cost-sharing categories within the formulary.
Q. Can a plan require prior authorization?
A. Yes.
Q. Can a formulary change?
A. Yes, subject to Medicare rules.
Q. What if my drug isn't covered?
A. You can explore alternatives or request an exception where appropriate.
Q. Should I review my drugs annually?
A. Yes.
Official Government Sources
Explore Related Guides
Medicare Part D Tiers, Copays and Coinsurance Explained
Medicare drug plans commonly divide covered medications into tiers, with lower-tier drugs generally costing less and higher-tier drugs generally costing more.
