How do drug tiers work in Medicare Part D?

Question

John Becker · Accepted 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.

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 co pays/ 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, Co Pays, and Coinsurance

Mary Turner · Answer

Prescription drug plans (PDP's) and Medicare Advantage Prescription Drug plans (MAPD's) structure the drug portion of the plans based on tiers, prior authorizations and step thereapy 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 $2100 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.

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 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 Speciality

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.

Daniel Fraser · 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 an agent/broker.  Prescription Drugs can change tiers each year so your plan must be "Shopped"

Jeffrey Adams · Answer

Typipcally, 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.

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.
Brokers Make a Difference!

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, ie opiods. Tier 5bare 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

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 a 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 $35 copay

How do drug tiers work in Medicare Part D?

Agents: Share Your Expertise

Seniors: Ask a Question of Your Own

Related Questions

Agent Locator

Medicare Agents Hub
A non-government resource website

How do drug tiers work in Medicare Part D?

Agents: Share Your Expertise

Seniors: Ask a Question of Your Own

Related Questions

Agent Locator

Medicare Agents HubA non-government resource website

Medicare Agents Hub
A non-government resource website