Most brokers spend more time on premium and deductible comparisons than on formulary review. That changes the first time a client calls in February because their medication is not covered on the plan you recommended. A formulary check for three active prescriptions takes under five minutes, and it is the step that prevents most drug-coverage complaints.
Key Takeaways
- Every ACA Marketplace plan publishes a formulary: the list of covered drugs and the tier each drug is placed in. Tier placement determines the client's out-of-pocket cost at the pharmacy.
- Most plans use four or five drug tiers. Generic drugs typically carry the lowest copay. Specialty and biologic drugs typically sit on the highest tier, with costs that can exceed $500 per fill even after the deductible is met.
- The ACA requires plans to cover at least one drug in each therapeutic class of the United States Pharmacopeia (USP). The requirement is category-level coverage, not specific-drug coverage.
- Plans can move a drug to a higher tier mid-year, subject to CMS rules. Clients on high-cost medications should be enrolled in a plan where their specific drug is on the formulary before coverage starts.
- Before recommending any plan to a client with ongoing prescriptions, look up each medication by name in the plan's formulary on the plan's website or healthcare.gov. This takes less than five minutes and prevents a significant enrollment error.
What a formulary is and why it varies by plan
A formulary is the list of prescription drugs a health plan agrees to cover. Every ACA Marketplace plan publishes one. The formulary organizes drugs into tiers, with each tier carrying a different out-of-pocket cost for the enrollee. Plans negotiate separate contracts with drug manufacturers and pharmacy benefit managers, so the same medication can sit on Tier 2 in one plan and Tier 4 in a plan sold next to it in the same county.
The ACA requires every plan to cover at least one drug in each therapeutic class defined by the United States Pharmacopeia (USP). That is a category-level requirement, not a specific-drug requirement. A plan can decline to cover a client's preferred brand-name medication entirely and still be compliant, as long as it covers at least one drug in that therapeutic class. The drug covered may be a generic equivalent, a different brand, or an older formulation. For clients with specialty medications, that distinction matters.
The standard tier structure
| Tier | Examples | Typical copay | Notes |
|---|---|---|---|
| Tier 1 — Generic | Generic metformin, lisinopril, atorvastatin | $5 to $15 per fill | Usually available before the deductible is met on most plans. |
| Tier 2 — Preferred brand | Brand-name drugs with preferred status, selected biosimilars | $40 to $75 per fill | Copay applies after medical deductible or drug-specific deductible, depending on plan. |
| Tier 3 — Non-preferred brand | Brand-name alternatives where a generic exists | $90 to $150 per fill | Step therapy to a preferred alternative is common. |
| Tier 4 — Specialty | Biologics, oncology drugs, injectable medications | $250 to $500+ per fill, or coinsurance | Prior authorization almost always required. Subject to OOPM cap after deductible. |
Illustrative examples. Copay ranges vary by plan, carrier, and plan year. Confirm specific copay amounts in the Summary of Benefits and Coverage for each plan before presenting to a client.
Prior authorization and step therapy
Prior authorization (PA) requires the insurer to approve a prescription before it will be covered. Most specialty and biologic drugs require PA. Many brand-name drugs do as well. Plans list PA requirements in the formulary, usually noted with an abbreviation or symbol next to the drug name. Step therapy adds another requirement: the client must try and document failure of a lower-cost drug before the plan approves the preferred medication.
The practical problem for a client switching plans: a prior authorization approved under the old plan does not carry over. The client restarts the PA process with the new plan, which can take days to weeks. For clients on drugs that cannot be interrupted, this is a meaningful enrollment risk. The broker who flags this at intake and confirms PA requirements before recommending a switch saves that client a gap in their medication.
How to check a formulary before enrollment
On Healthcare.gov, click the plan name in the search results. The plan detail page includes a link to the formulary or drug list. For most plans, the formulary is a searchable PDF or an interactive drug lookup tool on the carrier's website. Type the medication name, confirm the tier, note any PA or step therapy requirements, and record the copay or coinsurance amount.
For a client on a biologic medication who is switching plans, this check should happen before any plan recommendation, not after enrollment. Inshura includes formulary lookup as part of its integrated workflow for clients who are already enrolled in their system. For brokers using a standalone quoting tool, the formulary check is a manual step that runs parallel to the premium comparison.
The Silver CSR tiers can significantly reduce cost-sharing on prescription drugs for income-eligible clients. A client with high drug costs who qualifies for a 94 percent actuarial value Silver plan pays substantially lower copays on every drug tier. For how Silver CSR works in detail, read ACA Silver plan CSR tiers explained.
When a client's drug is not on the formulary
A formulary exception allows a client to request that the plan cover a non-formulary drug. The request requires a letter of medical necessity from the prescribing physician explaining why the covered alternative is not appropriate for this patient. Plans must respond to a standard exception request within 72 hours and an urgent request within 24 hours.
If the exception is denied, the client can file an internal appeal. If the internal appeal is denied, the client can request an external review by an independent organization. The external review decision is binding on the insurer.
The exception process works. It is also slow. The better answer is to confirm formulary coverage before enrollment rather than resolving it afterward through an exception request. Network type also matters here: an HMO that requires referrals for specialist prescribers adds another layer to the prior auth process. Read ACA network types explained for how HMO, PPO, EPO, and POS structures interact with specialty drug access.
Adding formulary review to the intake process
At intake, ask the client to list every medication they take regularly, including the drug name, dosage, and whether it is brand or generic. For each drug, run the formulary check on any plan you are seriously considering before the quote call. Flag any drug on Tier 4, any drug with PA requirements, and any drug subject to step therapy. Present the formulary findings alongside the premium and deductible comparison so the client can make an informed decision about total drug costs, not just monthly premium.
A client on a biologic that costs $400 per fill on Tier 4 with a separate drug deductible may pay more annually on a lower-premium plan than on a slightly higher-premium Silver plan where the same drug is Tier 3 with CSR. The premium number in the comparison view does not show that. The formulary check does.
FAQ
Questions brokers ask about prescription drug coverage and formularies on ACA Marketplace plans.
Where do I find the formulary for a specific ACA plan?
Every plan must post its formulary online. On Healthcare.gov, click the plan name in the search results, then look for a link to the plan's drug list or formulary PDF. The formulary is also available directly on the insurance carrier's website, usually under the plan's individual coverage page. Search for the plan name plus 'formulary' or 'drug list.' Some carriers maintain interactive drug search tools where you can type a drug name and see the tier and any restrictions instantly. When in doubt, the carrier's member services line can confirm tier placement before enrollment.
Can a plan drop a drug from the formulary mid-year?
Generally, no. CMS rules prohibit plans from removing drugs from the formulary mid-year that enrollees are actively taking, with narrow exceptions for drugs that lose FDA approval or are removed for safety reasons. However, plans can move a drug to a higher tier at renewal, and they can apply new prior authorization requirements at the start of a plan year. This is why formulary review at the start of each plan year matters, not just at initial enrollment. If a client is on a specialty medication that was Tier 3 last year and is Tier 4 this year, the out-of-pocket math changes significantly.
What is prior authorization in an ACA plan and which drugs require it?
Prior authorization (PA) is a requirement that the insurer must approve a prescription before the plan will cover it. PA is common on brand-name drugs, specialty drugs, and biologics. Plans list PA requirements in the formulary, usually noted with a symbol or abbreviation next to the drug name. Some plans also require step therapy, meaning the client must try and fail a lower-cost drug before the plan will approve the preferred medication. Brokers should check for PA requirements on any specialty drug the client uses before enrollment, since a new plan may require PA documentation that takes days to weeks to process.
If a client's drug is not on the formulary, what are their options?
The client can request a formulary exception, asking the insurer to cover a non-formulary drug as if it were a lower-tier drug. The exception request typically requires a letter of medical necessity from the prescribing physician. The insurer must respond within 72 hours for a standard request or 24 hours for an urgent request. If the insurer denies the exception, the client can file an internal appeal and then an external review request to an independent organization. While appeals are pending, the client may need to pay out-of-pocket or explore a temporary prior authorization.
Does the drug deductible reset when a client switches plans?
Yes. Every ACA plan year starts with a fresh deductible, including the drug deductible if the plan separates medical and drug deductibles. Some plans have an integrated deductible that applies to both medical and pharmacy claims. Other plans have a separate drug deductible that must be met before copays apply to brand and specialty drugs. When a client switches plans, any deductible accumulation from the prior plan does not transfer. This is particularly relevant for clients on specialty medications who switch plans mid-year and suddenly face months of drug-deductible payments before coverage resumes.
