Medicare Part D Formularies: How Generic Coverage Works

When you're on Medicare and need prescription drugs, understanding how generic drugs are covered under Part D can save you hundreds - even thousands - of dollars each year. Most people assume all prescriptions work the same way, but the truth is, Medicare Part D formularies are built to steer you toward generics, and knowing how that system works makes all the difference.

What Is a Medicare Part D Formulary?

A formulary is simply a list of drugs that your Medicare Part D plan covers. Every plan has one, and it’s not random. The Centers for Medicare & Medicaid Services (CMS) sets strict rules: every plan must include at least two different generic versions of each common medication type - like blood pressure pills, diabetes meds, or cholesterol drugs. This ensures you have choices, even if you’re only taking generics.

These lists are split into five tiers. Generics almost always land in Tier 1 or Tier 2. Tier 1 is for the cheapest, preferred generics - often with a $0 to $15 copay for a 30-day supply. Tier 2 is for non-preferred generics, which might cost more - maybe $20 to $40, or 25-35% of the drug’s price. Brand-name drugs? They’re stuck in Tiers 3 to 5, where costs jump up dramatically.

How Much Do Generics Actually Cost in 2025?

The cost structure changed big time in January 2025 thanks to the Inflation Reduction Act. Before, you hit a "donut hole" - a gap where you paid full price after spending a certain amount. That’s gone. Now, once you’ve paid $2,000 out of pocket in 2025 (rising to $2,100 in 2026), you pay nothing for any drug - generic or brand - for the rest of the year.

Here’s how it breaks down:

• Deductible: $615 in 2025. You pay this first, unless your plan has a $0 deductible (52% of plans do).
• Initial coverage: After the deductible, you pay 25% coinsurance on generics. The plan pays the other 75%. This continues until you hit the $2,000 out-of-pocket cap.
• Catastrophic coverage: After $2,000, you pay $0. Medicare covers nearly everything.

This is a huge win for people taking multiple generics. Someone on three daily medications might have been paying $80-$120 a month before. Now, after hitting the cap, they pay nothing. And even before that, their monthly costs are much lower than they were for brand-name drugs.

Why Generics Are So Much Cheaper

Generic drugs aren’t "weaker" or "inferior." They’re chemically identical to the brand-name versions. The only difference? No marketing, no patent, no R&D costs. That’s why they cost 80-85% less.

In 2023, 92% of all prescriptions filled under Medicare Part D were generics. But here’s the kicker: those 92% of prescriptions made up only 18% of total drug spending. That’s because generics are so cheap. A generic statin might cost $5. A brand-name version? $150. That’s why plans push generics so hard - it saves Medicare and you money.

What If Your Generic Isn’t Covered?

This is where things get messy. Even though a drug is generic, your plan might only cover one version - say, the generic version made by Company A - and not another, even if it’s the same active ingredient. That’s called "therapeutic interchange."

A lot of people get hit with surprise bills because their pharmacist tries to swap one generic for another. If the new one isn’t on your plan’s formulary, you pay full price. One Reddit user reported being charged $120 for a blood pressure generic because his plan only covered a different brand of the same drug. He had to call his plan and file a coverage request - which was approved, but not before he paid out of pocket.

You can avoid this by:

• Checking your plan’s formulary before enrolling - don’t just pick the cheapest plan.
• Using the Medicare Plan Finder tool and typing in every medication you take, including the exact generic name.
• Asking your pharmacist: "Is this the version my plan covers?" before they fill it.

Protected Classes and What You Can’t Be Denied

Some drug categories are protected by law. These include antidepressants, antipsychotics, anticonvulsants, immunosuppressants, antiretrovirals, and antineoplastics (cancer drugs). For these, your plan must cover every available generic version. No exceptions.

That means if you’re on an antidepressant like sertraline, your plan can’t pick just one generic and deny others. You have the right to any FDA-approved version. If your plan denies coverage, you can appeal - and you’re very likely to win.

How to Save More on Generics

You don’t have to just accept whatever your plan gives you. Here’s how to optimize:

• Choose a $0 deductible plan. About half of Part D plans offer this. If you take even one generic a month, you skip the $615 deductible entirely.
• Use mail-order pharmacies. Many plans offer 90-day supplies at the same price as 30-day. That’s two refills for the cost of one.
• Check for manufacturer discounts. Some generic makers offer coupons - yes, even for generics. Sites like GoodRx sometimes list discounts for generic drugs too.
• Request a coverage determination. If your needed generic isn’t on your plan’s list, file a formal request. CMS data shows 83% of these requests get approved.
• Switch plans during Open Enrollment. Every fall, plans change their formularies. 37% of plans alter at least one generic’s tier. Use the Medicare Plan Finder to compare. People who switch save an average of $427 a year.

What’s Changing in 2026 and Beyond

The changes aren’t over. Starting in 2026, Medicare plans must add a "generic price comparison tool" to their member portals. That means you’ll be able to see, right on your phone, which generic version of your drug costs the least - even if it’s not the one your doctor prescribed.

In 2029, Medicare will start negotiating prices for certain generic drugs. Insulin glargine (the generic version of Lantus) is already on the list. That could bring prices down even further.

And there’s growing pressure to standardize formularies. Right now, one plan might cover five different generic versions of a blood pressure drug. Another might cover only one. That’s confusing and costly. The Medicare Payment Advisory Commission has recommended a national standard - and lawmakers are listening.

Real Stories, Real Savings

One beneficiary in Ohio, 72, takes three daily generics: a blood pressure pill, a cholesterol med, and a thyroid drug. Before 2025, she paid $110 a month out of pocket. After hitting the $2,000 cap in July, her monthly cost dropped to $0. "I didn’t realize I was paying so much until I hit the cap," she said. "Now I don’t even think about it. I just pick up my pills." Another, a veteran in Florida, switched plans after learning his current one didn’t cover his preferred generic of metformin. He found a new plan with the same drug on Tier 1 - $0 copay. He now saves $320 a month. "I didn’t know I had a choice," he told his local senior center. "I thought I was stuck."

What to Do Next

If you’re on Medicare Part D and take any generics:

1. Log into your plan’s website and check your formulary - specifically for every drug you take.
2. Use the Medicare Plan Finder (medicare.gov/plan-compare) and enter your medications. Compare at least three plans.
3. If you’re taking multiple generics, look for a plan with a $0 deductible and low Tier 1 copays.
4. Call your pharmacist and ask: "Is this the version my plan covers?" before you pay.
5. Mark your calendar for October - Open Enrollment starts then. Don’t wait until December.

The system isn’t perfect. There are still gaps, surprises, and confusing rules. But if you know how generics are structured, tiered, and capped - you’re not just saving money. You’re taking control of your health care costs.