When you're switching health plans, one of the most overlooked but critical factors is generic drug coverage. If you take even one regular medication - like metformin for diabetes, lisinopril for high blood pressure, or levothyroxine for thyroid issues - your out-of-pocket costs can jump by hundreds or even thousands of dollars depending on the plan. Many people assume all plans cover generics the same way. They don't. And that difference can make or break your budget.
How Formularies Work - And Why They Matter
Every health plan has a list of covered drugs called a formulary. This isn't just a random catalog. It's organized into tiers, and each tier has a different cost to you. Tier 1 is almost always reserved for generic drugs. That’s where you’ll find the lowest prices. But here’s the catch: not all Tier 1 drugs are treated equally. In 2023, 92% of private insurance plans used 3- to 5-tier formularies. Medicare Part D plans follow similar structures. The key is knowing which tier your specific medication falls into - and whether the plan waives your deductible for generics. For example, under a Silver Standardized Plan (SPD), which became more common after 2023, you pay a fixed $20 copay for Tier 1 generics - even before you meet your deductible. That means if you need three generic medications a month, you could pay just $60 total, no matter how much you’ve spent on other medical care. In contrast, a non-standardized plan might require you to pay the full deductible - say $2,000 - before any drug coverage kicks in. That’s a $1,500+ difference in a single year.Cost Differences Between Plan Types
Not all plans are created equal. Here’s how costs break down across major plan types:| Plan Type | Generic Copay (Tier 1) | Deductible Waiver for Generics? | Estimated Annual Cost (3 meds/month) |
|---|---|---|---|
| Silver SPD Marketplace Plan | $3-$20 | Yes | $108-$720 |
| Non-Standardized Marketplace Plan | $3-$20 | No | $1,200-$5,000+ |
| Medicare Part D (Base) | $0-$10 | After $505 deductible | $180-$800 |
| Medicare Advantage (MA-PD) | $0-$10 | Often waived | $120-$600 |
| Employer Plan (Basic Option) | $5 | Yes | $180 |
| Employer Plan (Consumer Option) | $10 | No | $360 |
Notice something? The biggest savings come from plans that waive the deductible for generics. That’s why Silver SPD plans are often the best deal for people on regular medications - even if their monthly premiums are slightly higher.
Medicare Advantage plans with drug coverage (MA-PDs) also tend to outperform standalone Part D plans. In 2022, they saved users 18% on average for generic drugs. But here’s the twist: if you only take Tier 1 generics, the difference shrinks because both types use similar copays. The real advantage shows up if you need higher-tier drugs later.
State Rules Can Change Everything
Where you live matters more than you think. California requires a $85 outpatient drug deductible before generics are covered - and then you pay 20% coinsurance up to a $250 cap. New York, on the other hand, waives the deductible entirely for generics and caps copays at $75 for specialty drugs. That means two people with identical prescriptions could pay $0 in New York and $120 in California. States like DC and Oregon have separate drug deductibles, while others bundle them with medical deductibles. These differences aren’t minor. A 2023 KFF study found that states with separate drug deductibles saw 22% higher adherence to medication regimens. Why? Because people actually fill their prescriptions when they know what they’ll pay.
What You Must Check - Step by Step
Don’t just look at the plan summary. You need to dig into the details. Here’s a simple four-step process that cuts your risk of surprise costs by 73%:- Get the full formulary - not just the tier list. Look for your exact drug name and manufacturer. For example, “metformin ER 500mg” from Manufacturer A might be Tier 1, but the same drug from Manufacturer B could be Tier 2.
- Verify the formulation - Extended-release, delayed-release, or immediate-release versions can be treated differently. A 2022 American Pharmacists Association study found 68% of people switching plans didn’t check this - and ended up paying 3x more.
- Check the pharmacy network - Your preferred pharmacy might not be in-network. OptumRx data shows out-of-network generic costs can be 300-400% higher. Use the plan’s pharmacy locator tool.
- Run a cost estimate - Use the Medicare Plan Finder (for Medicare) or your insurer’s drug calculator. Input your exact medications, dosage, and pharmacy. These tools are accurate 78-96% of the time.
One user on Reddit switched from a plan with $3 generic copays to one that charged $15 - without realizing her levothyroxine had switched manufacturers. Her monthly cost jumped from $9 to $45. She didn’t catch it until her next refill.
Common Mistakes That Cost Thousands
Most people make these three errors:- Assuming all generics are equal - They’re not. Different manufacturers, even with the same active ingredient, can be in different tiers.
- Ignoring mail-order options - Many plans offer 90-day supplies at lower copays. A $20 monthly copay becomes $50 for three months - a 33% savings.
- Not checking next year’s formulary - Plans change every January. What was Tier 1 in December might be Tier 3 in January. Always re-verify during open enrollment.
UnitedHealthcare alone received over 1,200 complaints in 2023 about unexpected copay increases for generics. One customer wrote: “My $5 generic suddenly became $15. No notice. I had to pay $180 out of pocket for one month.”
What’s Changing in 2025 and Beyond
The rules are shifting fast. Starting in 2025, Medicare Part D will cap total out-of-pocket drug costs at $2,000 per year. That’s huge - but it doesn’t mean lower copays. It means you’ll stop paying after hitting that cap. Also, new tier structures are emerging. Some plans are splitting generics into Tier 1 (preferred) and Tier 1+ (non-preferred), with different copays. This isn’t just complexity - it’s a way for insurers to push you toward cheaper alternatives. And states are stepping in. California’s SB 1423 already requires $0 insulin copays. More states are following. By 2027, experts predict 80% of marketplace plans will drop integrated deductibles for prescriptions entirely - because too many people got burned.Final Tip: Do the Math Before You Switch
Don’t pick a plan based on premium alone. Pick it based on what you spend on meds. If you take three generics a month, calculate your annual cost under each plan. Use this formula:Annual Drug Cost = (Copay per prescription × 12 months × number of meds) + (Deductible × if not waived)
Example: $10 copay × 12 months × 3 meds = $360. If the deductible isn’t waived, add $2,000. That’s $2,360 vs. $360.
That’s not a small difference. That’s life-changing.
Are all generic drugs covered the same across health plans?
No. Even if two generics have the same active ingredient, they can be in different tiers based on the manufacturer, formulation, or whether the plan considers them "preferred." A plan might cover metformin from Manufacturer A at a $3 copay but charge $20 for the same drug from Manufacturer B. Always check the full formulary, not just the tier label.
Should I switch plans just because one has lower premiums?
Not if you take regular medications. A plan with a $50/month lower premium might charge $1,500 more in drug costs over the year. Always calculate total annual cost - premium + deductible + copays. For most people on generics, the lowest premium plan isn’t the cheapest.
How do I know if my medication will be covered next year?
Plans update their formularies every January. You can’t assume coverage stays the same. Review your new plan’s formulary during open enrollment. Use your insurer’s online tool or call customer service. Ask: "Is my exact drug and dosage covered, and what tier is it in?"
What’s the difference between a deductible and a copay for generics?
A deductible is the amount you pay before insurance starts covering costs. A copay is a fixed fee you pay at the pharmacy. Some plans waive the deductible for Tier 1 generics - meaning you pay just the copay from day one. Others require you to meet the full medical deductible first. That’s why Silver SPD plans are better for generics: they skip the deductible entirely.
Can I get my generic drug at a lower cost through mail order?
Yes. Many plans offer 90-day supplies through mail-order pharmacies at a lower copay than retail. For example, a $10 monthly copay might drop to $25 for a 90-day supply - saving you $35 per month. Check if your plan offers this and if your pharmacy is in-network.
1 Comments
Just took my mom to the pharmacy yesterday. She’s on three generics - metformin, lisinopril, and atorvastatin. We checked her new plan’s formulary and found out they switched her metformin to a different manufacturer. Copay jumped from $5 to $18. No warning. She’s 72 and on a fixed income. This isn’t just about money - it’s about survival. Always verify the exact brand, not just the drug name.