Medicare Part D Formularies: How Generic Coverage Works in 2026

What Medicare Part D Formularies Actually Cover

Medicare Part D doesn’t just cover any drug you need. It covers only what’s on your plan’s formulary - a list of approved medications. And here’s the key: 92% of all prescriptions filled under Part D are generics. That’s not a coincidence. The system is built to push you toward cheaper, equally effective versions of brand-name drugs.

Generic drugs are chemically identical to their brand-name counterparts. They work the same way. They’re just cheaper because they don’t carry the cost of research, marketing, or patents. Part D plans make money by steering you toward these lower-cost options. And you save money too - if you know how the system works.

The Five-Tier System: Where Generics Live

Every Part D plan puts drugs into five tiers. Think of it like a pricing ladder. The lower the tier, the less you pay.

• Tier 1: Preferred Generics - These are your best deal. Copays are usually $0 to $15 for a 30-day supply. Most common medications like lisinopril, metformin, or atorvastatin fall here.
• Tier 2: Non-Preferred Generics - Still generics, but not the plan’s top pick. You might pay $15-$40 or 25-35% coinsurance. This tier often includes newer generics or ones with less competition.
• Tier 3: Preferred Brand-Name Drugs - Brand-name drugs your plan encourages. You’ll pay more than generics, usually $40-$80.
• Tier 4: Non-Preferred Brand-Name Drugs - These are expensive. Copays can hit $100 or more. Often, you’ll need prior authorization to get them covered.
• Tier 5: Specialty Drugs - High-cost medications for complex conditions. These can cost hundreds or even thousands. Some plans put certain generics here too - especially newer ones for conditions like rheumatoid arthritis or hepatitis C.

Generics dominate Tiers 1 and 2. That’s intentional. Plans want you to pick the cheapest option. If your doctor prescribes a Tier 2 generic, you can often ask for a switch to a Tier 1 version. Many times, they’ll agree.

How Much You Pay in 2026

As of January 1, 2026, the rules changed again. The biggest change? You now pay a maximum of $2,100 out of pocket for all your drugs in a year - including generics.

Here’s how it breaks down:

1. Deductible: You pay the first $615 of drug costs in 2025 (it’s $630 in 2026). Not all plans have a deductible - about half of them don’t. Check your plan’s details.
2. Initial Coverage Phase: After you meet the deductible, you pay 25% of the cost for generics. Your plan pays the other 75%. This continues until your total out-of-pocket spending hits $2,100.
3. Catastrophic Coverage: Once you hit $2,100, you pay nothing for the rest of the year. Not $0. Not $5. Not $10. Zero. For any drug - brand or generic.

That’s huge. Before 2025, people hit a coverage gap called the “donut hole.” You paid way more in that gap. Now, it’s gone. The cap means if you take three or four generics daily, you’ll likely hit the cap by late summer - and then your meds are free for the rest of the year.

Why Some Generics Aren’t Covered - Even If They’re the Same

Here’s where people get tripped up. Just because a generic exists doesn’t mean your plan covers it.

Example: Your doctor prescribes a generic version of losartan (a blood pressure drug). But your plan only covers valsartan - another drug in the same class. They’re both angiotensin II receptor blockers. They work similarly. But your plan doesn’t list losartan. So you pay full price unless you get an exception.

Plans do this to control costs. They pick one or two generics per class and encourage you to stick with them. If your preferred generic isn’t covered, you can file a coverage determination. In 2023, 83% of these requests were approved. You just have to ask.

Also, some plans don’t cover “authorized generics” - brand-name drugs sold under a generic label by the same company. They’re confusing because they look and cost like generics, but aren’t listed on the formulary. Always check the drug name exactly as it appears on your prescription.

How to Save Big on Generics

Knowing the rules isn’t enough. You need to act.

• Use the Medicare Plan Finder: Go to medicare.gov and enter your exact medications. Sort by lowest total cost. Don’t just pick the cheapest monthly premium. A $10 plan with high copays on your meds could cost you $1,200 more a year than a $40 plan with $0 generics.
• Check your Annual Notice of Change (ANOC): Every fall, your plan mails you a letter. It tells you if your drugs are moving tiers, getting removed, or if copays are changing. If your favorite generic is now Tier 3, it’s time to switch plans.
• Ask for a therapeutic interchange: Tell your pharmacist or doctor: “Is there a Tier 1 generic that works the same?” Often, they’ll switch it without you even needing a new prescription.
• Choose a $0 deductible plan: If you take multiple generics, a plan with no deductible saves you money from Day 1. 52% of stand-alone Part D plans offer this in 2026.
• Use mail-order pharmacies: Many plans give you a discount if you get a 90-day supply by mail. That cuts your copay in half.

Who Benefits the Most?

People on multiple generics win big. If you take three or more daily - say, metformin, lisinopril, and atorvastatin - you’re likely to hit the $2,100 cap by July or August. After that, your meds are free. That’s a $1,500+ annual savings.

Fixed-income seniors benefit most. Before the cap, a $40 copay on three generics added up to $1,440 a year. Now, if you hit the cap, that $1,440 disappears. And you’re not paying anything for the rest of the year.

But there’s a catch: confusion. A 2024 survey found that 62% of people taking generics understood their tier system. Only 42% of brand-name users did. If you don’t know your tiers, you’ll overpay.

What’s Coming Next

By 2026, every Part D plan must include a generic price comparison tool in their online member portal. You’ll be able to see which generic version of your drug costs the least - even across different brands.

In 2029, the government will start negotiating prices for certain generics. Insulin glargine (a common generic) is already on the list. That could bring prices down even further.

And by 2027, 95% of beneficiaries will have access to $0 copays for at least half of their commonly used generics. That’s up from 78% today.

Final Tips

Don’t assume your plan stays the same. Every year, 37% of plans change at least one generic’s tier. If you’re taking the same meds year after year, you’re vulnerable to surprise cost hikes.

Always double-check your formulary before enrollment. Use the Medicare Plan Finder. Don’t trust memory. Don’t trust your neighbor’s plan. Your drugs matter more than anything else.

If a generic isn’t covered, ask for an exception. You have a right to it. And if you’re spending over $2,100 a year on meds, you’re doing something wrong. The system is designed to cap you. Use it.

Frequently Asked Questions