Switching Health Plans? How to Check Generic Drug Coverage and Save Money

When you switch health plans, your prescription costs can jump overnight-even if you’re taking the same pills. Many people assume all generic drugs are covered the same way, but that’s not true. One plan might charge you $3 for your blood pressure med. Another might make you pay $40. And some won’t cover it at all until you’ve spent $2,000 out of pocket. The difference isn’t the drug. It’s the formulary.

What Is a Formulary, and Why Does It Matter?

A formulary is a list of drugs your health plan covers. It’s not just a catalog. It’s a pricing map. Drugs are grouped into tiers, and each tier has a different cost to you. Tier 1 is almost always generic drugs. That’s where you save the most. But not all Tier 1 drugs are treated equally.

In 2023, 92% of private health plans used a 3- to 5-tier system. Medicare Part D plans follow similar rules. The key is knowing which tier your meds are on-and whether the plan waives your deductible for generics.

For example, Silver Standardized Plans on the Health Insurance Marketplace are required to waive the deductible for Tier 1 generics. That means if your plan has a $3,000 deductible, you still pay just $20 for your metformin. Other plans? You pay the full deductible first. That could cost you $1,500 extra a year if you take three or more maintenance meds.

How Generic Drug Tiers Work

Most plans use one of these structures:

• 3-tier: Generic ($5-$10), Preferred Brand ($30-$50), Non-Preferred Brand ($60+)
• 4-tier: Generic ($3-$20), Preferred Brand ($40), Non-Preferred Brand ($70), Specialty ($100+)
• 5-tier: Preferred Generic ($0-$10), Non-Preferred Generic ($20-$40), Preferred Brand ($50), Non-Preferred Brand ($80), Specialty ($150+)

The biggest trap? Non-preferred generics. These are still generics-same active ingredient, same FDA approval-but the plan puts them in a higher tier because they’re made by a less preferred manufacturer. Your levothyroxine might cost $0 under Plan A, but $35 under Plan B-even though both are "generic thyroid meds."

Where Costs Really Add Up

You might think, "I only take one generic pill." But if you’re on multiple meds-say, metformin, lisinopril, and atorvastatin-that’s three prescriptions. At $20 each, that’s $240 a year. But if your plan doesn’t waive the deductible, and you hit a $1,500 deductible, you pay $1,500 before the $20 copay even kicks in.

Medicare Part D plans have a $505 deductible in 2023. Most people pay $0-$10 for generics after that. But if you’re on a high-deductible health plan (HDHP) that combines medical and drug deductibles, you’re paying out of pocket for everything until you hit that combined amount. That’s a bad deal if you take regular meds.

States make it even more complicated. California has an $85 separate deductible for prescriptions. New York waives deductibles for generics entirely. DC has a $350 outpatient drug deductible. If you move or switch plans across state lines, your costs can change by hundreds of dollars.

What You Must Check Before Switching

Don’t rely on the plan’s summary. Don’t trust the sales rep. Do this:

1. Get the full formulary. Not just the tier list. Download the complete drug list from the insurer’s website.
2. Look up your exact meds. Use the brand name AND the generic name. Check the strength too-500mg metformin might be Tier 1, but 1000mg might be Tier 2.
3. Check the manufacturer. If your current generic is made by Teva, but the new plan only covers Mylan, you could get hit with a surprise cost.
4. Verify your pharmacy. If your local pharmacy isn’t in-network, your $3 copay becomes $75. Use the plan’s pharmacy locator.
5. Calculate annual cost. Multiply your monthly copay by 12. Then add any deductible you’d have to meet first. Compare that to your current plan.

People who do all five steps cut unexpected drug costs by 73%, according to CMS data. Most people skip at least one-and pay for it.

Tools That Actually Help

Use these free tools:

• Medicare Plan Finder (medicare.gov/plan-compare): Enter your meds, zip code, and pharmacy. It shows exact costs across all Part D plans.
• Healthcare.gov Plan Selector: Filter plans by "prescription drug coverage" and enter your meds. It highlights Silver SPD plans that waive deductibles for generics.
• Insurer-specific formulary tools: Blue Cross, UnitedHealthcare, and others have their own search tools. They’re 96% accurate-much better than third-party sites.

In 2022, 4.2 million Medicare users used the Plan Finder. Those who did saved an average of $320 a year on generics alone.

Red Flags to Watch For

Watch out for these warning signs:

• Your current generic is "not covered" or "requires prior authorization" in the new plan.
• The copay jumps from $5 to $20 without explanation.
• The plan says "generics are covered" but doesn’t list your specific drug.
• You’re told, "It’s the same generic," but the cost is higher.

A 2022 American Pharmacists Association study found 68% of people switching plans didn’t check if their exact generic formulation was covered. That’s how you end up paying $100 for a pill you used to get for $5.

What’s Changing in 2025

New rules are coming. The Inflation Reduction Act caps insulin at $35/month starting in 2023-and by 2025, Medicare Part D will have a $2,000 annual out-of-pocket cap for all drugs. That’s huge for people on multiple meds.

Also, Medicare is splitting generics into two tiers: "Preferred" and "Non-Preferred." That means even if you’re on a generic, you might pay more if it’s not on the preferred list.

And by 2027, most marketplace plans are expected to drop the combined medical/drug deductible. That’s because people kept getting hit with surprise bills. Plans are learning: if you don’t make generics affordable, people skip doses-and end up in the ER.

Real Stories, Real Savings

One person in Massachusetts switched from a plan with $15 generic copays to one with $3. She took three meds. Her annual cost dropped from $540 to $108. That’s $432 saved.

Another in California thought her new Medicare plan was cheaper. But her levothyroxine went from $0 to $35 because it was now a non-preferred generic. She switched back.

These aren’t rare cases. Reddit’s r/healthinsurance had 147 posts in 2023 from people who got burned by a formulary change. Over half were for generic drugs.

Bottom Line: Don’t Guess. Check.

Switching health plans is about more than premiums. It’s about what you pay when you need your meds. A $100-a-month plan with $40 generic copays can cost more than a $200-a-month plan with $5 copays and no deductible for generics.

Take 30 minutes. List your meds. Use the Plan Finder. Download the formulary. Compare the real numbers. You don’t need a degree in insurance to do it. You just need to be careful.

People who skip this step end up paying more, skipping doses, or getting hit with bills they never saw coming. Those who check? They save hundreds, sometimes thousands. And they keep taking their meds-because they can afford to.