Medicare Part D Formularies: How Generic Coverage Works in 2025

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Medicare Part D Formularies: How Generic Coverage Works in 2025

When you’re on Medicare and take regular medications, your prescription costs don’t just depend on the drug name-they depend on your plan’s formulary. And if you’re taking generics, which most Medicare beneficiaries do, understanding how those are covered can save you hundreds-or even thousands-of dollars a year. As of 2025, nearly 92% of all prescriptions filled under Medicare Part D are generics. That’s not an accident. It’s by design. The system rewards lower-cost drugs, and if you know how to use it, you can cut your out-of-pocket spending dramatically.

What Is a Medicare Part D Formulary?

A formulary is just a list of drugs your plan covers. Every Medicare Part D plan has one, and it’s not the same across plans. Some cover more generics than others. Some put the same generic in a lower cost tier. And since 2025, the rules around how much you pay have changed in big ways.

These lists aren’t random. They’re built by Pharmacy and Therapeutics (P&T) committees-groups of doctors and pharmacists who review clinical data and cost. Every plan must cover at least two different generic versions of each drug class, and they must cover at least 85% of all drugs in each category. For six protected classes-like antidepressants, antiretrovirals, and anticonvulsants-they must cover every generic available. That’s because these drugs aren’t optional; they’re life-saving.

How Generics Are Tiers in Part D

Medicare Part D plans use a five-tier system to organize drugs by cost. Generics live mostly on the bottom two tiers:

Tier 1: Preferred Generics - These are the cheapest options. Most plans charge $0 to $15 for a 30-day supply. If you’re on blood pressure meds, cholesterol pills, or diabetes drugs, this is where you want to be.
Tier 2: Non-Preferred Generics - Still generic, but not the plan’s top pick. You might pay $15 to $40, or 25-35% coinsurance. Sometimes, your plan covers one generic for a drug but not another-even if they’re chemically identical.
Tiers 3-5: Brand-name and specialty drugs - These cost more. Generics rarely appear here unless they’re new or high-cost (like some cancer drugs).

Why does this matter? Because your tier determines what you pay each month. A Tier 1 generic might cost you $5. A Tier 2 version of the same drug could cost $35. That’s $360 a year difference-just for one medication.

How Much You Pay in 2025 (The New Rules)

The Inflation Reduction Act changed everything in 2025. Before, you hit a coverage gap-called the “donut hole”-where you paid a lot out of pocket. Now, there’s a hard cap: $2,000 per year on what you pay for all your drugs, including generics.

Here’s how it breaks down:

Deductible - You pay the first $615 of drug costs in 2025 (up from $590 in 2024). Some plans have $0 deductible-check yours.
Initial Coverage Phase - After 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 $2,000.
Catastrophic Coverage - Once you hit $2,000, you pay $0 for the rest of the year. No more coinsurance. No more surprises. This applies to all drugs-generics and brands alike.

Here’s the twist: For brand-name drugs, 70% of the cost (including manufacturer discounts) counts toward your $2,000 cap. But for generics, only what you actually pay counts. That means if you’re on mostly generics, you’ll hit the cap faster-and save more.

Senior using a cartoon Medicare Plan Finder screen with bouncing pills in tiered baskets, floating calendar.

Why Generics Are So Cheap (And Why That Matters)

Generics are chemically identical to brand-name drugs but cost way less because they don’t need to repeat expensive clinical trials. In 2024, generics made up 92% of Part D prescriptions but only 18% of total drug spending. That’s the power of competition.

For example, a brand-name statin like Lipitor might cost $150 a month. Its generic, atorvastatin, costs $10. That’s not a typo. That’s $1,680 a year saved. Multiply that by three or four medications, and you’re talking about $5,000+ in annual savings.

But here’s the catch: Not all generics are treated equally. Some plans favor one generic over another-even if they’re the same drug. You might be prescribed atorvastatin, but your plan only covers rosuvastatin. If you switch, you could pay full price. That’s why checking your formulary before enrolling is critical.

What to Do When Your Generic Isn’t Covered

You get a new prescription. You go to the pharmacy. They say, “We don’t cover this generic.” What now?

First, ask if there’s another generic in the same class your plan covers. Sometimes, your pharmacist can swap it out. But if they can’t-or if you’re allergic to the alternative-you can request a coverage determination. That’s a formal appeal to your plan asking them to cover the drug.

According to CMS data, 83% of these requests are approved-especially if your doctor writes a letter explaining why the specific generic is necessary. Don’t assume your plan will deny it. Fight for it.

Also, check your plan’s Annual Notice of Change (ANOC). Every fall, plans send this letter. It tells you what’s changing in 2025-like which generics moved tiers or got dropped. If your drug was on Tier 1 last year and is now Tier 3, you might want to switch plans during Open Enrollment.

How to Pick the Best Plan for Your Generics

You can’t just pick the cheapest monthly premium. You have to look at your actual meds.

Use the Medicare Plan Finder tool. Enter your exact drug names-including the generic version you take-and it will show you:

Which tier each drug is on
Your estimated annual cost
Whether the plan has a $0 deductible
If your pharmacy is in-network

KFF found that people who use this tool save an average of $427 a year. That’s not small change. If you take three or four generics, you could save over $1,000.

Also, look for plans with $0 copays on Tier 1 generics. In 2025, over half of stand-alone Part D plans offer this. If you’re on a fixed income, this is your best bet.

Senior holding appeal letter as shield, pharmacist flying with key to unlock ,000 cap vault.

Real Stories: What People Are Saying

One user on Reddit, “MedicareVeteran82,” said his plan covered one generic blood pressure drug but not another-even though both were FDA-approved. He ended up paying $120 a month out of pocket until he switched plans. Another, “SmartSenior2024,” said her three generic heart meds now cost $0 thanks to her plan’s Tier 1 coverage. She saves over $300 a month.

CMS’s 2024 survey showed that 87% of people on mostly generics were satisfied with their drug coverage-compared to 76% of those on brand names. Why? Because generics are predictable. Once you hit the $2,000 cap, you pay nothing. No more guessing.

The Future: What’s Coming Next

By 2026, all Part D plans must include a “generic price comparison tool” in their member portals. That means you’ll be able to see, right on your phone, which generic version of your drug costs the least.

In 2029, the government will start negotiating prices for certain generics-starting with insulin glargine. That’s the first time Medicare will directly control generic drug prices. It’s a big shift.

And the trend is clear: More generics, lower prices, better access. The Congressional Budget Office predicts 94% of Part D prescriptions will be generic by 2030. That’s good news for everyone.