Switching Health Plans? How to Check Generic Drug Coverage and Save Money

When you switch health plans, your meds shouldn’t suddenly cost three times more. Yet every year, thousands of people find out the hard way that their $5 generic blood pressure pill is now a $40 copay - not because the drug changed, but because the formulary did.

Why Generic Drug Coverage Matters More Than You Think

Generic drugs make up 90% of all prescriptions filled in the U.S. But they account for just 23% of total drug spending. That’s because they’re cheaper - sometimes 80-90% cheaper than brand names. But if your new health plan doesn’t cover them well, you’ll pay more out of pocket, even if you’re taking the exact same medicine.

Most plans use a tier system to organize drugs. Tier 1 is where you want to be. That’s where the cheapest generics live - often with $3 to $20 copays. Tier 2? That’s usually brand-name drugs or non-preferred generics. Tier 3 and 4? Specialty meds, high costs. If your levothyroxine, metformin, or lisinopril moves from Tier 1 to Tier 2 when you switch plans, you could be paying hundreds more a year.

How Formularies Work - And Why They’re Not the Same Everywhere

A formulary is just a list of drugs your plan covers. But here’s the catch: every plan builds its own. Even two plans from the same insurer can have different tiers for the same drug.

In the individual marketplace (like Healthcare.gov), plans must follow federal rules. Silver plans with Standardized Plan Design (SPD) are the gold standard for generic users. They waive your deductible for Tier 1 generics. That means even if you haven’t met your $2,000 medical deductible, your $10 generic copay still applies. Non-SPD plans? You pay the full deductible first - sometimes $5,000 - before your generic copay kicks in.

Medicare Part D plans are even trickier. The base deductible in 2023 was $505. Most plans charge $0-$10 for preferred generics after that. But some have no deductible at all. Others charge $15 for non-preferred generics - even if they’re the same active ingredient.

And then there’s state rules. In New York, many plans cover generics with $0 copay before any deductible. In California, you pay a $85 outpatient deductible first - then 20% coinsurance, capped at $250. That’s a big difference if you’re on three daily meds.

What You Need to Check Before You Switch

Don’t just look at monthly premiums. Don’t even just look at the “Tier 1” label. Here’s what actually matters:

• Exact drug name and manufacturer - Metformin made by Teva might be Tier 1. Metformin made by Mylan might be Tier 2. Same drug, different price.
• Strengths covered - Your 500mg metformin might be covered, but your 1000mg isn’t. That forces you to take two pills instead of one - and pay twice the copay.
• Pharmacy network - Your local CVS might be in-network. But if your plan only offers $3 copays at Walgreens, you’re stuck paying $12 at CVS.
• Deductible integration - Is your prescription deductible separate? Or is it bundled with your medical deductible? Bundled means you pay $3,000 in doctor bills before your $5 generic copay starts.
• Mail-order options - Some plans charge $0 for 90-day mail-order generics. Others charge full retail. That’s a $200 annual difference.

Real Cost Differences: A Quick Example

Let’s say you take three generics: metformin 500mg, lisinopril 10mg, and atorvastatin 20mg. You fill each monthly.

Annual cost for three common generics under different plan types

Plan Type	Generic Copay	Deductible Applied?	Annual Cost
Silver SPD Marketplace Plan	$3 per pill	No	$108
Non-SPD Marketplace Plan	$3 per pill	Yes - $2,000 deductible	$2,000+ (until deductible met)
Medicare Part D (Preferred Generic)	$0-$10 per pill	Yes - $505 deductible	$505 + $108 = $613
California HMO (with $85 drug deductible)	20% coinsurance	Yes - $85 deductible	$85 + $108 = $193
New York HMO (no drug deductible)	$0	No	$0

Notice the gap? In New York, you pay nothing. In a non-SPD plan, you pay thousands. That’s not a typo.

Tools That Actually Work

Stop guessing. Use these tools:

• Medicare Plan Finder - Type in your drugs, zip code, pharmacy. It shows exact costs across all Part D plans. Used by over 4 million people in 2022.
• Healthcare.gov Plan Selector - Filter by “prescription drug coverage” and enter your meds. Shows you which plans waive deductibles for generics.
• Insurer’s own formulary tool - Go directly to the plan’s website. Look for “Drug List” or “Formulary Search.” These are 96% accurate - better than third-party tools.
• eHealthInsurance’s calculator - Plug in your drugs and pharmacy. It compares 50+ plans in minutes.

A 2023 CMS study found people who used these tools reduced unexpected drug costs by 73%. That’s not a small number. That’s hundreds - sometimes thousands - of dollars saved.

Common Mistakes People Make

Most people think: “It’s a generic. It’s cheap. It’ll be covered.” That’s not true. Here’s what goes wrong:

• Assuming all metformin is the same - Manufacturer changes matter. Teva vs. Mylan vs. Sandoz - each can be on a different tier.
• Not checking mail-order prices - Your $15 retail copay could be $0 for 90-day supply. That’s $180 saved per year.
• Ignoring pharmacy networks - A plan might offer $3 copays - but only at CVS. Your local pharmacy? $18. You didn’t switch plans. You switched pharmacies.
• Forgetting to check next year’s formulary - Plans change their lists every January. What was Tier 1 in 2025 might be Tier 3 in 2026.
• Not asking about therapeutic interchange - Your doctor prescribed metformin ER. Your new plan wants you to switch to immediate release. That’s legal - but it can cause side effects.

A 2022 study by the American Pharmacists Association found 68% of people switching plans didn’t check if their exact drug formulation was covered. That’s like buying a new car and not checking if it takes regular or premium gas.

What’s Changing in 2025 and Beyond

The rules are shifting. The Inflation Reduction Act capped insulin at $35/month - starting in 2023. By 2025, Medicare Part D will cap total out-of-pocket drug costs at $2,000 per year.

But the real shift is in formulary design. More plans are splitting generics into two tiers: “preferred” and “non-preferred.” That’s new. In 2023, most plans had one generic tier. In 2026, you might see three: Tier 1A (preferred generics), Tier 1B (non-preferred), and Tier 2 (brand-name equivalents).

Experts predict integrated medical and prescription deductibles will vanish from most marketplace plans by 2027. Why? Because people keep getting burned. States like California and New York are pushing for $0 generic copays - and others are following.

Bottom Line: Do the Work

Switching health plans isn’t about the lowest monthly premium. It’s about the lowest total cost for your meds. If you take even one generic drug every day, you need to treat your formulary like your budget - with precision.

Here’s your checklist before you switch:

1. Get your current plan’s formulary. Write down every drug, manufacturer, and strength.
2. Find the new plan’s formulary. Search each drug by name AND manufacturer.
3. Check the pharmacy network. Are your usual stores in-network?
4. Calculate your annual cost: copay × 12 × number of drugs. Add deductible if applicable.
5. Call the insurer. Ask: “Is this exact version of metformin covered on Tier 1? What if I use mail-order?”

It takes 20 minutes if you’re on one drug. Two hours if you’re on five. But that time saves you $1,000 a year - or more.

Frequently Asked Questions