Frequently Asked Questions
14 sourced answers about drug insurance coverage, formularies, prior authorization, and savings. Editorial-reviewed.
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General (8)
What is a formulary?
A formulary is a list of prescription drugs covered by a health insurance plan. Plans organize drugs into tiers, with lower tiers generally having lower out-of-pocket costs. Not all drugs are on every formulary, and tier placement varies by plan.
What do drug tiers mean?
Most plans use a tier system: Tier 1 (preferred generics, lowest cost), Tier 2 (non-preferred generics or preferred brands), Tier 3 (non-preferred brands, higher cost), Tier 4 or 5 (specialty drugs, highest cost). Your copay or coinsurance depends on which tier your drug is placed on.
What is prior authorization?
Prior authorization (PA) is a requirement from your insurance plan that your doctor must get approval before the plan will cover a specific drug. The plan reviews whether the drug is medically necessary based on your diagnosis, treatment history, and their clinical criteria.
What is step therapy?
Step therapy requires you to try one or more less expensive drugs before your plan will cover a more expensive drug. For example, a plan might require you to try metformin before covering a GLP-1 drug like Ozempic. Your doctor can request an exception if there is a clinical reason to skip a step.
How do I know if my drug is covered by my plan?
Check your plan's formulary, which lists all covered drugs and their tier placement. You can usually find it on your insurance company's website. InsureWith.ai aggregates formulary data from Medicare Part D, ACA Marketplace plans, and major commercial insurers so you can search across plans in one place.
What should I do if my drug is denied coverage?
First, ask your doctor for the specific denial reason. Common paths forward: request a formulary exception from your plan (your doctor submits a letter of medical necessity), appeal the denial through your plan's formal appeals process, ask your doctor about therapeutic alternatives that are on formulary, or check if the drug manufacturer offers a patient assistance program.
What is the difference between a copay and coinsurance?
A copay is a fixed dollar amount you pay for a prescription (e.g., $10 for a generic). Coinsurance is a percentage of the drug's cost (e.g., 20% of a $500 specialty drug = $100). Plans may use copays for lower tiers and coinsurance for higher tiers and specialty drugs.
How often does formulary data change?
Plans can update their formularies throughout the year. Major changes typically happen at the start of the plan year (January for Medicare, plan renewal date for employer plans). Mid-year changes are less common but can occur. CMS requires Part D plans to provide 60 days notice before removing a drug or moving it to a less favorable tier.
GLP-1 coverage (2)
Does Medicare cover Ozempic for weight loss?
Medicare Part D covers Ozempic (semaglutide) when prescribed for Type 2 diabetes. Medicare does not currently cover GLP-1 drugs prescribed solely for weight loss. The Treat and Reduce Obesity Act has been introduced in Congress to change this, but as of 2026 it has not been enacted.
Which GLP-1 drugs are available and what are they approved for?
Ozempic (semaglutide injection, for Type 2 diabetes), Wegovy (semaglutide injection, for weight management), Mounjaro (tirzepatide injection, for Type 2 diabetes), Zepbound (tirzepatide injection, for weight management), and Rybelsus (oral semaglutide, for Type 2 diabetes). Coverage varies significantly by plan type and indication.
medicare-part-d (1)
How will Medicare Part D oncology copays change after CMS drug price negotiations?
For 2026, CMS’s negotiated prices for Eliquis, Imbruvica, and Entresto are driving major tier and coinsurance shifts. Part D plans are trimming specialty coinsurance from about 33% to roughly 25% on selected drugs, introducing preferred specialty tiers, and rebalancing oncology costs to offset reduced manufacturer rebates.
Medicare Part D (2)
What is the Medicare Part D coverage gap?
The coverage gap (or "donut hole") was a phase in Part D where you paid more for drugs after initial coverage was exhausted but before catastrophic coverage kicked in. The Inflation Reduction Act eliminated the coverage gap starting in 2025, and in 2026 caps total out-of-pocket costs at $2,000 per year.
How does the $2,000 out-of-pocket cap work in 2026?
Starting in 2026, Medicare Part D beneficiaries will pay no more than $2,000 out of pocket for prescription drugs in a calendar year. Once you reach that threshold, you pay nothing for covered drugs for the rest of the year. This replaces the old catastrophic coverage phase where you still paid 5% coinsurance.
Summary of Benefits & Coverage (1)
What is an SBC and where do I find mine?
A Summary of Benefits and Coverage (SBC) is a standardized document that every health plan must provide. It outlines your plan's deductible, copays, coinsurance, and out-of-pocket maximum in a consistent format. You can find yours through your employer's HR portal, your insurance company's website, or on Healthcare.gov if you have a Marketplace plan.