How do drug tiers work in Medicare Part D?

Question

Jeremy Harkins · Accepted Answer

Medicare Part D plans usually place covered prescriptions into different drug tiers. The tier helps determine what you pay for the medication.

A typical plan may look something like this:

Tier 1: Preferred generic drugs
Tier 2: Other generic drugs
Tier 3: Preferred brand-name drugs
Tier 4: Non-preferred drugs
Tier 5: Specialty medications

In general, the lower the tier, the lower your cost. But every Part D plan creates its own formulary and tier structure, so the same medication can be placed on a different tier from one plan to another.

That is why it is important to check more than whether a drug is simply "covered." You also want to know which tier it is on, what the copay or coinsurance is, whether the deductible applies, and whether the plan has any prior authorization, step therapy, or quantity limits.

If you are comparing plans, a licensed Medicare agent can review your exact medications, dosages, and pharmacy and show how the plans differ. You can also check this yourself using the Medicare Plan Finder at Medicare.gov.

The drug name alone is not enough. The exact dosage, quantity, and pharmacy can all affect what you pay.

Casey Ahlbum · Answer

All Part D plans divide drugs into different tiers, typically one through four. Tier one is typically your preferred generics, tier 2 is non-preferred, tier 3 is preferred brand name drugs, and tier 4 is non-preferred brand name. Some plans will also have an additional tier for specialty drugs.

Medicines that fall in tier one usually have the lowest out-of-pocket cost, while higher tier medicines require the beneficiary to pay a larger share of the costs. Each Part D plan will have a different formulary, or list of drugs, and two different plans could have the same drug in different tiers. That's why your choice of a Part D plan should always be prescription-driven, based on the actual medicines that you take.

You can change your Part D plan, if necessary, during the Annual Election Period (AEP) each year, between 10/15 and 12/7.

Steven Litzsinger · Answer

Drug Tiers is another way to easily identify categories of drugs (generic, preferred generic, Brand, Preferred Brand, Specialty/Non-Formulary Medications) and the associated cost shares by tier. Tier 1 is the lowest cost and Tier 5/6 is the highest cost share or coinsurance amount.

Example:
Tier 1-Preferred Generic/Generic (typically no cost or low cost share)
Tier 2-Preferred Brand
Tier 3- Brand (Mid-range on cost- will see copays/coinsurance of $20+)
Tier 4- Specialty (higher cost and often involves % of coinsurance depending on the cost of the medication)
Tier 5/6- Non-Formulary (highest cost share/may not be covered)

Please keep in mind, you can't assume a medication will be the same tier across all carriers and all plans. It is extremely important to verify your medications through all plans that you are considering to identify the best coverage and the least amount of out-of-pocket costs.

Out-of-Pocket Costs include: Deductibles, Copays, and Coinsurance

John Becker · Answer

Drug tiers in Medicare Part D are levels within a plan's drug list (formulary) that determine how much you pay for a prescription; drugs in lower tiers generally have the lowest copayments or coinsurance, while those in higher tiers cost more.

HOW DRUG TIERS WORK
Each Medicare Part D plan assigns its covered drugs to different tiers. While plans typically use a 5-tier structure, the specific placement of a drug can vary from one plan to another.

Tier 1 (Lowest Cost): Usually includes preferred generic drugs.
Tier 2 (Low Cost): Often includes generic drugs that cost slightly more than Tier 1.
Tier 3 (Medium Cost): Generally includes preferred brand-name drugs.
Tier 4 (High Cost): Typically includes non-preferred brand-name or generic drugs.
Tier 5 (Highest Cost / Specialty Tier): Reserved for very high-cost specialty drugs used to treat complex conditions.

Mary Turner · Answer

Prescription drug plans (PDPs) and Medicare Advantage Prescription Drug plans (MAPDs) structure the drug portion of the plans based on tiers, prior authorizations and step therapy protocols. The tiers are typically for the following:

Tier 1 - preferred generics - you will see medications that are frequently prescribed in this tier. Most blood pressure and cholesterol medicines fall in this category, but not all.

Tier 2 - generic

Tier 3 - preferred brand

Tier 4 - non-preferred brand - typically these are medications that you will see advertised on TV because they are new.

Tier 5 - specialty medication - medicines used for transplants, etc.

This is just a sample; they can change according to company. The tiers can have copays of $0 or more and can also be percentages based on the cost of the medication, which can change as the medicine prices change.

Keep in mind that for 2026, the max out-of-pocket that you may pay is $2,100 for eligible medications.

LaTosha Turknett · Answer

Each insurance company creates its formulary, which includes the medications that are covered, if a deductible applies, and what tier (usually 1-5) they fall in. Each tier has a maximum pre-assigned rate. Typically, the higher the tier, the higher the costs. 

The exception... some plans have Tier 6, and these medications are usually low-cost, maintenance medications.

Tiers 1 and 2 are usually generic medications, while tiers 3 and 4 are typically brand drugs. Tier 5 is generally reserved for specialty drugs, but keep in mind that any prescription drug can be in any tier.

Frances Eleanor Mitchell · Answer

It's all based on the type of medication.

Tier One is preferred generics-they are the least expensive and your copay could be as low as $0

Tier Two are generics-they are usually new to the generic market and can cost $0 to $6 (on some plans maybe a little more)

Tier Three Brand preferred usually a percentage of the total amount of the drug up to a max amount of (which is based on the type of plan you have) (could be $35, could be $100)

Tier Four is Non-Preferred, which is about 38% of the cost of the drug

Tier Five Specialty Drugs, which is about 25% of the cost of the drug

Usually, with all plans, insulin is a $35 copay.

Kendra Siemiesz · Answer

Drug tiers are the way that Part D plans will price covered drugs. Each plan has its own formulary (covered-drug list), meaning the same drug could be priced higher on one plan and cheaper on the other. The common and cheaper medications are usually Tier 1/Tier 2 type medications, while some more expensive ones may be a Tier 3/4/5 medication, but again it depends on how that Part D or MAPD (Medicare Advantage) plan lists those types of medications. Some plans may even have no drug deductible for certain tiers, which is always good to know.

Answered by Kendra Siemiesz on October 12, 2026

Broker Licensed in FL, AL, AR & 19 other states

Answered by Kendra Siemiesz Medicare Insurance Agent

Steven Kirsch · Answer

Part D plans vary from company to company. However, typically, you have 5 tiers of coverage:

Tier 1 Preferred generic
Tier 2 Generic
Tier 3 Preferred Brand
Tier 4 Brand
Tier 5 Specialty

Depending on the medication you are currently taking, the cost would be based on the tier the medication falls into. That is why it is important to shop around with various companies to see if you can get a lower copay for your prescription.

Julia Alves · Answer

In Medicare Part D, drug tiers are the cost groups within a plan’s formulary (the list of covered medications) that determine how much you pay at the pharmacy.
The lower the tier number, the lower your part of the payment.
The lowest tiers will be generics, mid-tier brand-name medications, and the highest tier will be specialty medications.

Jeffrey Adams · Answer

Typically, Part D plans have 5 drug tiers. Tier 1 and 2 are typically generic, low-cost medications. Tier 3 are preferred brand name and some generic drugs. Tier 4 are non-preferred drugs, and Tier 5 are Specialty drugs - very expensive.

Most plans that have a deductible will have you pay full price on Tier 3-5 drugs. Most deductibles do not impact Tier 1 and 2 drugs.

Most plans that have a deductible will have you pay full price on Tier 3-5 drugs. Most deductibles do not impact Tier 1 and 2 drugs.

Daniel Fraser, CLTC, RSSA · Answer

Medicare Part D has three phases. The deductible phase, the initial coverage phase, and the catastrophic phase. During the deductible phase, a Medicare beneficiary is responsible for meeting a deductible for brand-name drugs (normally Tier 3-5). Generic drugs (Tiers 1, 2) normally do not have to meet the deductible. During the Initial phase, you will pay either a copay or coinsurance based on the tier your prescription falls into. The drug tiers, which are typically Tiers 1-5, with the lower tiers being the least expensive.

This is why it is important to work with an agent/broker. Prescription drugs can change tiers each year, so your plan must be "shopped."

This is why it is important to work with an agent/broker. Prescription drugs can change tiers each year, so your plan must be "shopped."

Dean Chiapetto · Answer

The basics are 5 tiers: Tier 1 preferred generic, Tier 2 Non-Preferred Generic, Tier 3 Preferred Name Brand, Tier 4 Non-Preferred Name Brand, Tier 5 Specialty. The company decides what drugs are on their formulary and what tier they fall in.

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Joseph Peck · Answer

Tiers 1 and 2 are the basic generic drugs. Little to no copays on most plans. Tier 3 are the higher generic or newly generic drugs, tier 4 are the name brand and controlled substance, i.e., opioids. Tier 5 are the specialty drugs, namely cancer drugs.

Answered by Joseph Peck on June 8, 2026

Agent Licensed in MI, AL, CO, KS & TN

Answered by Joseph Peck Medicare Insurance Agent

Jemeel Adams · Answer

They are priced at different levels that each plan decides how much you, the consumer, pay for each medication. Tier 1, for example, will be lower. Tier 5, for example, could be higher. This process was started in 2006, authorized by Congress.

Answered by Jemeel Adams on June 29, 2026

Agent Licensed in KS, CA, FL, ME, NC & TX

Answered by Jemeel Adams Medicare Insurance Agent

How do drug tiers work in Medicare Part D?

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