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

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.

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.

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.

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.

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

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

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.

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

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

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