I'm confused about the different tiers in Medicare Part D plans. How do they affect what I pay for my medications?

Question

Anthony Castelluccio · Accepted Answer

Normally there are 5 tiers with most prescription plans. Tier 1 is preferred generic, Tier 2 is generic, Tier 3 preferred Brand name prescriptions, Tier 4 Nonpreferred And Tier 5 is speciality drugs. Most cases. The lower the Tier, the lower your co-pay. But that's not true all the time, it depends on your prescriptions that you take, your zip code you live in, and what Pharmacy you like to use. I will show you how you can check to see which prescription plan is the best for you and it could change annually!

Answered by Anthony Castelluccio on April 4, 2025

Agent Licensed in PA, DE, MD, NJ & VA

Answered by Anthony Castelluccio Medicare Insurance Agent

Larry Dalton · Answer

Medicare Part D drug tiers are the drug manufacturers' way of controlling costs. It is extremely important to make sure that your drugs are in the formulary, and these tier structures change annually. All Medicare Part D stand-alone drug plans and the Part D drug plans embedded in the Medicare Advantage plans must be analyzed yearly to ensure that you have the proper plan to cover your prescription drugs. Many drug plans utilize the tier structure to determine whether to allow the drug to be used towards the annual deductibles of that drug plan; this should be paid special attention to when selecting a drug plan.

Answered by Larry Dalton on April 3, 2025

Broker Licensed in OK & TX

Answered by Larry Dalton Medicare Insurance Agent

Mitch Anderson · Answer

There are normally 5 tiers of medication on a Medicare Part D plan. Tiers 1 and 2 are generally generic medications, Tier 3 and 4 are generally brand name medications and Tier 5 is generally for specialty medications. One medications may be listed as Tier 1 on one Part D plan and may be listed as Tier 2 or Tier 3 on another Part D plan; there is not consistency on tiers from one plan to the next so it is always important to discus your plan options with an agent before enrolling in a plan. Usually, the higher the tier for a medication, the higher the risk of copay / coinsurance will be when filling the medication at the pharmacy.

Answered by Mitch Anderson on June 10, 2025

Agent Licensed in MN, IA & WI

Answered by Mitch Anderson Medicare Insurance Agent

Yasmine Lopez · Answer

This can be very confusing for most. Especially as a drug can be a different tier on a different plan. Think of drug tiers like shelves in a store.

The bottom shelf (Tier 1) has the cheapest stuff — mostly common generics, and they usually cost just a few dollars.

The next shelf up (Tier 2) still has generics, but maybe not the preferred ones, so they’re a little more.

Tier 3 and 4 are where you find brand-name drugs — the ones you see on TV. These cost more.

And Tier 5? That’s the top shelf — the really expensive medications for serious conditions, like cancer or autoimmune diseases. Those are the priciest of all.

So the higher the tier, the higher your cost.

That’s why I always check which “shelf” your medications are on before recommending a plan — so we know your drugs on the formulary and what the estimated costs will be. Remember that these are estimates...no agent will be able to dial in exact costs. The tools are not precise enough to offer this as much as I would like to.

Nolan Popel · Answer

There are five different levels for prescriptions. They are called formulary tiers.Tier one and two are for your preferred generics and non preferred generics. Tier three and tier four are for your preferred and non preferred name brands and tier five is for your specialty drugs. The price you will pay will vary by tier. Also some plans will have a drug deductible that will apply first before the coverage begins for more expensive prescriptions.

Answered by Nolan Popel on July 8, 2025

Agent Licensed in NY, AZ, CA & 15 other states

Answered by Nolan Popel Medicare Insurance Agent

David Moscowitz · Answer

It is based on the expense of the drugs or medications that you have, also if they have an generic alternative at retail pricing.
I.E most prescribed medications are are rated @ tier 1 or 2, whereas a medication like Eliquis is rated @ tier 3 level which is more expensive with a maximum annual out of pocket expense.

Steven Bleicher · Answer

Most Part D plans exhibit 5 tiers of drugs: 1) Preferred Generic, 2) Non-Preferred Generic,       3) Preferred Brand Name, 4) Non-Preferred Brand Name, and 5) Specialty Drugs. The lowest the tier, the cheaper the copay. 

Tiers are determined by Medicare (CMS) and are based upon the costs of bringing the drug to market (research & development, plus the ingredients). There are some categories of drugs that don't fit into that rule like Insulin ($35.00 apiece) and the ever-escalating costs of various inhalers. 

My tip on paying the least amount of money is to always check with the online discount websites like GoodRx.com, costplusdrugs.com, simplecare.com, etc. There are also a number of Canadian online discount pharmacies that are available in order to check their cost to you. Please remember that should you decide to use a Canadian pharmacy, the drug cost will NOT be applied toward the 2025 annual drug deductible (max: $2,000.00). 

Be advised that in 2025, you have 2 options: A) Using your Part D(rug) plan or in checking the drug formulary within your Advantage plan, vs. B) using an online pharmacy which you've investigated and contains a less expensive amount by printing a coupon from your PC. BUT, you cannot use both for the same drug. You CAN use either A or B for the various drugs you take, some of which might point you to your favorite local drug store, while others might dictate that you drive further away from your home to a "different" pharmacy which has better pricing for your drug. The only inconvenience is that you must check that your doctor knows which pharmacy to fax to with each individual drug/Rx.

Timothy Brown · Answer

Typically the lower the tier, the lower the cost.
Listed are the tiers found in most plans:

Tier 1-Preferred Generic: Lisinopril, Atorvastatin and Metformin are a few example.  $0 copay for these prescriptions

Tier 2-Generic: Little to No Copay

Tier 3-Preferred Brand: A deductible may be required in addition to a higher copay. Eliquis, Ozempic and Trulicity are few examples. 

Tier 4-Non Preferred Brand: Same rules apply as Tier 3 but with a higher copay.

Tier 5-Specialty Drugs-Usually has a percentage instead of a copay because of the high cost.

Jim Willis · Answer

Medication’s fall into several tiers, depending on the age, commonality, patents, etc.  most common medication’s, like blood pressure, meds, statins, antibiotics, and some COPD and asthma drugs, generally fall into tier one or tier 2 and will likely have very low or no co-pays. 

Newer drugs, biologics and some drugs popular due to their use and success rate will generally be priced in tiers three or tier 4 and have co-pays ranging from $40 to several hundred dollars.  You may be able to get a tier exception from the drug plan working with your doctor that can drop a co-pay several hundred dollars.

Satoshi Aoki · Answer

Each prescription drug has a tier, and the amount you have to pay out of pocket varies depending on the type of drug.

Example:

TIER 1: Preferred Generic
TIER 2: Other Generic
TEAR 3: Preferred brand
TEAR 4: Brand
Special: Special

If you already have a Part D plan, we recommend you check with your insurance company or agent to find out what tier the drug you are taking is.

Tammie Rutledge · Answer

Tier 1 and Tier 2 are Generic brands 
Tier 3 are Brand Name 
Tier 4 are specialty drugs   
Each tier has a copay associated with it.  Tiers 3 and 4 will trigger the annual deductible to be satisfied. Ask your representative for a breakdown of your Drug Plan.

Fred Manas · Answer

In summary, the tier your medication is placed on in your Part D plan significantly impacts your out-of-pocket costs. Lower tiers generally mean lower copays, while higher tiers can lead to higher costs.

Answered by Fred Manas on April 21, 2025

Agent Licensed in NY, CT, DC & 7 other states

Answered by Fred Manas Medicare Insurance Agent

Steve Brauer · Answer

This answer is provided in a video format. Watch the agent's video response here: https://medicareagentshub.com/questions/medicare-part-d-tiers-medication-costs-explained#steve-brauer

Ross Landon · Answer

There is always a Benefit Summary that shows you exactly what you will pay, depending upon what Tier the drug has been assigned!  You can look those up online at the Carrier’s website under Formulary lists, or you can call the Customer support # on the back of your card & they will help you know the right Tier.  

Then just look up the Tier # on your Benefit Summary,  & it will tell you the copay $ amount, or the Co-insurance % amount that you will pay for that Prescription!

Betty McCarty · Answer

Medicare Part D organizes drugs into tiers (1-5) within a formulary, based on cost. 

Tier 1 includes the lowest-cost generic drugs, while Tier 5 covers high-cost specialty medications. Monthly premiums and drug deductibles vary by plan, with some offering no monthly premiums.

If you would like additional information, or have further questions, please feel free to email us at bkconnections@comcast.net.

Donald Heath · Answer

The part D Medicare drug plan tiers in 2025 run from Tier 1- preferred generics to Tier 2- non preferred generics to Tier 3- preferred brand name to Tier 4- non preferred brand name to (sometimes) Tier 5- specialty or compounded meds.

Tier 1 and 2 are typically not subject to the annual part D drug deductible of $590 in 2025.  Part D medication costs are capped at $2000 for the calendar year including the $590 deductible and all co-pays and co-insurance.   This is new for 2025 under the Inflation Reduction Act passed in 2022.

Kathleen Emert · Answer

Good Afternoon,

There are 5 Tiers for Prescriptions within Medicare Plans.  Starting with Tier 1 being the least expensive. 

Each Carrier has a different formulary for how they classify a prescription in what Tier and how much your monthly copay would be for that prescription. Additionally if the drug is classified as a Tier 3 - Tier 5 it may also have an annual deductable amount assoicated with it.

If you are required to pay an annual deductible you only pay it once a year regardless of how many T3 - T5 scripts you are on.  

Therefore, prescription drug costs vary by Carrier and  plans.  It is very important to provide all of you prescription drug information to a representative so they can research your best options.  Or you can research this information yourself through the  CMS website.

Typically the costs in NY for 2025 are something like this:

Tier 1 - Preferred Generic (often no $0 monthly copay)
Tier 2 - Generic (range from $10 to $20 monthly copay)
Tier 3 - Preferred Brand Name Drugs (range from $42 - $47 monthly copay)  and an annual deductible may apply
Tier 4 - Non-Preferred Drugs (your copay maybe a flat $ for a % of the drug cost (coinsurance) and an annual deductibe may aply
Tier 5 - Specialty Drugs (your copay will most likely be a % of the drug cost) and an annual deductible may apply.

Keep in mind most of the carriers have direct mail order services which typically offer you the ability to pay two months of copayments for a 90-day supply.

I hope this helps clarify your confusion.