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

When you switch health plans, your monthly premium isn’t the only thing that changes. Your generic drug coverage might drop off completely - or cost you way more than you expected. Thousands of people find out the hard way that their $5 monthly metformin copay suddenly becomes a $40 coinsurance bill after switching plans. It’s not a glitch. It’s a formulary shift.

What Is a Formulary, and Why Does It Matter?

A formulary is your insurance plan’s list of covered drugs. It’s not just a catalog. It’s a pricing map. Drugs are grouped into tiers, and each tier has a different cost to you. Tier 1 is almost always generic drugs. Tier 2 is brand-name drugs with generic versions available. Tier 3 and 4 are more expensive brand-name or specialty drugs.

The key? Not all generics are treated the same. Even if two pills have the same active ingredient - say, levothyroxine - one might be in Tier 1 (costing $3) and the other in Tier 2 (costing $35). Why? Because your insurer has a deal with one manufacturer and not the other. You don’t get to pick. Your plan does.

How Generic Drug Tiers Work Across Plans

Most plans use 3 to 5 tiers. But the rules change depending on the type of plan you’re in.

Marketplace plans (ACA): Federal rules require a 4-tier structure. Tier 1 generics usually cost $3-$20 per 30-day supply. Silver Standardized Plan Design (SPD) plans go even further: they waive your deductible for Tier 1 generics. That means you pay $20, not $1,500.
Medicare Part D: In 2025, the deductible will be $505, but most plans offer Tier 1 generics at $0-$10 after that. Some plans split generics into Tier 1 (preferred) and Tier 2 (non-preferred), so the same drug can cost twice as much.
Employer plans: These vary wildly. One company might charge $5 for generics before you hit your deductible. Another might make you pay the full deductible first. MHBP Federal plans, for example, offer $5 copays for generics in their Basic Option - but $10 in their Consumer Option, only after the deductible.
High-deductible health plans (HDHPs): These look cheap on paper - low premiums. But if you take daily meds, you could pay thousands before your coverage kicks in. Unless you’re in a Silver SPD plan, your generics won’t be covered until you’ve paid your full medical deductible.

State Rules Change Everything

Where you live can make a bigger difference than your plan choice.

In New York, many plans have $0 copays for generics - no deductible needed.
In California, you pay an $85 outpatient drug deductible first, then 20% coinsurance - capped at $250 per year.
In Washington, D.C., there’s a separate $350 drug deductible, with a $150 cap on specialty drugs.

If you’re moving states or considering a plan from another state, don’t assume your current coverage carries over. California’s rules won’t help you if you switch to a plan based in Texas.

What Happens When Your Generic Gets Moved

Your metformin might be in Tier 1 this year. Next year, it’s in Tier 2. Why? The manufacturer changed. Or your insurer switched suppliers. Or they decided to favor a different version.

A 2023 Reddit analysis of 147 cases showed 63% of unexpected cost spikes came from generic drugs being moved to higher tiers - even though the active ingredient didn’t change. One user paid $0 for levothyroxine under Plan A. Under Plan B? 25% coinsurance. Same pill. Different price.

This is why you can’t just check the drug name. You have to check the brand name of the generic. Metformin made by Teva? Covered. Metformin made by Mylan? Not on the formulary. Even though both are identical.

How to Check Your Generic Coverage Before Switching

Don’t guess. Don’t rely on customer service. Do this:

Get the full formulary - not just the tier summary. Look for your exact drug name and manufacturer.
Verify the strength. Is your 500mg metformin covered? What about 1000mg? They’re listed separately.
Check your pharmacy network. Your $3 generic might cost $12 if you go to a non-preferred pharmacy. OptumRx data shows some people pay 300-400% more at out-of-network pharmacies.
Calculate your annual cost. Multiply your monthly copay by 12. Add your deductible if it applies. Don’t forget mail-order discounts - sometimes 90-day supplies cost less than 30-day ones.

CMS data shows people who do all four steps reduce unexpected drug costs by 73% during plan switches.

Tools That Actually Work

Use these tools - don’t just skim plan brochures.

Medicare Plan Finder (medicare.gov): Use the medication cost estimator. It’s accurate, free, and updated monthly. Over 4 million people used it in 2022.
eHealthInsurance’s drug calculator: Processes 1.7 million queries a month. Lets you compare multiple plans side by side.
Your insurer’s own formulary tool: Often the most accurate. Accuracy ranges from 78% on basic tools to 96% on insurer-specific ones.

Avoid third-party sites that don’t link directly to the plan’s official formulary. They’re often outdated.

A person comparing health plans at night with magnifying glass, mail-order bottle, and deductible bar visible.

Biggest Mistakes People Make

Assuming all generics are equal. They’re not. The manufacturer matters.
Ignoring the deductible. If your plan has a $2,000 medical deductible and integrates drug costs, you’ll pay full price for your pills until you hit that number.
Not checking mail-order options. Some plans offer 90-day supplies for the price of 60. That’s a 30% savings.
Waiting until open enrollment ends. You have 60 days after a life event (like losing a job) to switch. Don’t wait.

What’s Changing in 2025

The rules are shifting fast:

Medicare Part D will introduce a new Tier 1+ for non-preferred generics. Same drug. Higher cost.
2025 brings a $2,000 out-of-pocket cap for Medicare drug users - a big win for those on multiple meds.
Insulin is capped at $35/month nationwide under the Inflation Reduction Act.
Silver SPD plans are expanding to 32 states. More people will get deductible waivers for generics.

Bottom Line: Generic Coverage Can Save You Thousands

Generic drugs make up 90% of prescriptions but only 23% of drug spending. That’s because they’re cheap - if your plan covers them right.

If you take even one daily generic medication - blood pressure, diabetes, thyroid - switching plans without checking coverage is like buying a new car without checking the gas mileage. You might think you’re saving on the sticker price, but you’ll pay more at the pump.

Take 30 minutes before open enrollment. List your meds. Pull up the formulary. Compare the numbers. You could save $780 a year - or $5,000 if you’re on multiple drugs and avoid a high deductible.

Don’t let formulary fine print cost you more than your premium.

How do I know if my generic drug is covered by a new health plan?

You need to check the plan’s full formulary - not just the tier summary. Look up your exact drug name and the manufacturer (e.g., metformin by Teva vs. metformin by Mylan). Many plans list generics by brand name, even if they’re generic. Use the insurer’s official formulary search tool or Medicare Plan Finder for the most accurate results.

Why does my generic drug cost more on my new plan even though it’s the same medicine?

Because insurers negotiate deals with specific manufacturers. Even if two generics have the same active ingredient, one might be on Tier 1 (low cost) and the other on Tier 2 (higher cost) based on which company the plan has a contract with. It’s not about effectiveness - it’s about pricing agreements.

Do all health plans have the same tiers for generic drugs?

No. Marketplace plans must use a 4-tier system, but employer plans and Medicare Part D can use 3 to 5 tiers. Some plans split generics into preferred and non-preferred tiers. Medicare Advantage plans often have more complex structures than standalone Part D plans. Always check the specific plan’s formulary - don’t assume.

Should I avoid high-deductible health plans if I take daily generic medications?

If your plan integrates your drug deductible with your medical deductible, yes - unless you’re in a Silver Standardized Plan Design (SPD). Those waive the deductible for Tier 1 generics. Otherwise, you could pay hundreds or thousands out of pocket before your generic copay kicks in. For people on daily meds, a lower premium with a high deductible often ends up costing more.

Can I switch health plans mid-year if my generic drug gets dropped?

You can only switch outside open enrollment if you have a qualifying life event - like losing job-based coverage, moving to a new state, or getting married. If your plan just changes its formulary, that doesn’t count. But if your drug is removed entirely and you can’t afford the new cost, you may qualify for a Special Enrollment Period. Contact your state’s marketplace or Medicare directly to ask.

Are there any laws that protect me from sudden changes in generic drug coverage?

Federal law requires insurers to notify you at least 60 days before removing a drug from the formulary or changing its tier - unless it’s a safety issue. But if your drug stays on the list but moves to a higher tier, they don’t have to give you advance notice. That’s why checking your formulary every year during open enrollment is critical.

What’s the difference between a copay and coinsurance for generics?

A copay is a fixed amount you pay - like $5 or $15 - no matter what the drug costs. Coinsurance is a percentage - like 20% - of the drug’s total price. A $10 copay is predictable. A 20% coinsurance on a $100 generic could cost you $20. Most Tier 1 generics have copays. Higher tiers often use coinsurance, which can be much more expensive.