Key takeaways:
A formulary is the list of generic and brand-name medications covered by your health insurance plan. Employers decide which drugs will be included, which means they can exclude medications and limit access to those that do appear on the list.
There are several types of formularies, which differ by the types of medications covered and other coverage restrictions.
If a medication is not on your plan's formulary, you could still get coverage. You may be able to persuade your insurer to make an exception and cover the medication. You may also be able to get help from your employer's human resources department in appealing a coverage decision.
About two-thirds of people in the U.S. take prescription medications, and more than 30% take at least four medications. About half of the U.S. population is covered by employer-based health insurance. For most people, a prescription plan is included. You need to review the formulary — an associated list of medications — to find out what prescriptions are covered by the plan and which restrictions, if any, apply. This means that not every medication on the formulary may be available to you unless you meet certain criteria.
Here's how to find out if a medication is covered by your employer-sponsored plan and what to do if it's not.
What is a formulary?
A formulary is the list of medications covered by your health insurance plan. In most instances, the formulary will include generic and brand-name medications.
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Formularies typically organize medications in tiers. The lower the tier, the less you pay out of pocket. For example, low-cost generic medications often appear in Tier 1. Specialty medications that treat complex, chronic conditions typically appear in the top tier, often Tier 4 or Tier 5, and have the highest copays.
What are the different types of formularies?
Formularies vary depending on the included medications and coverage limits. Here are five types of formularies:
Open formularies are the least restrictive and cover most medications. However, this wide access typically comes with higher premiums than other formulary types. An open formulary is particularly valuable for people who need costly specialty medications.
Closed formularies are the most restrictive and only cover medications on an approved list. Your prescriber may be able to get a coverage approval known as a formulary exception that allows your medication to be covered if there’s no appropriate alternative on the list.
Partially closed formularies will cover most medications but will typically have rules that exclude certain classes of medications from coverage. For example, a plan might approve enrollees in a certain age group for a specific medication, or it might exclude medications because of high cost.
Restricted formularies typically cover a broad range of medications, but they often require you to take certain steps before your insurer will pay for them. For example, you might have to get a coverage review known as prior authorization before you'll be approved for the medication, or you may be required to try a less costly or “preferred” medication first, which is known as step therapy.
Incentive-based formularies cover a broad range of medications but issue rewards (or penalties) depending on the drug prescribed. Plan providers can offer incentives to patients, pharmacists, and prescribers. For example, you may pay less for choosing a certain medication, while a pharmacist may earn a higher dispensing fee for filling a certain drug.
How does employer coverage of formulary medications work?
An employer often partners with a pharmacy benefit manager (PBM) that works with health insurance plans, pharmacies, and pharmaceutical companies to administer prescription drug benefits. PBMs have many roles, including designing formularies — which is one way employers balance offering ample pharmacy benefits to health plan enrollees while managing costs.
Will your employer always cover drugs on your formulary?
While your employer will cover all of the drugs on your formulary, that doesn't mean you will necessarily get access to every medication on the list. For one thing, your employer can change the formulary and drop medications at any time. An employer might, for example, stop covering one medication in favor of another that costs less or is considered more effective.
There are other reasons you would not get access to a medication that is on your employer's formulary. For example, there could be rules known as quantity limits, which restrict how much of the medication can be covered and/or filled within a certain period of time. You may also face prior authorization reviews, including step therapy, for certain medications, such as glucagon-like peptide-1 (GLP-1) receptor agonists.
In addition, some plans will only cover a medication when it’s prescribed to treat certain conditions. For instance, this issue can arise for people seeking the popular GLP-1 medications for weight loss. Sometimes medications are helpful for conditions that they are not FDA approved to treat. Known as off-label prescriptions, these medications may be on your formulary but will not be covered for your condition unless you are approved for a formulary exception. (You may still be able to access the medications, however, as a self-pay or cash-pay consumer.)
Where can you find your health plan’s formulary?
Health insurance plans are legally obligated to publish a formulary so that enrollees know which medications are on the list. You should be able to find your formulary by checking your health plan’s online portal or app, if one is available. You can also contact your health plan by calling the customer service number on your insurance card.
What can you do if a medication isn’t on your plan’s formulary?
A plan provider may choose to exclude a medication from its formulary for many reasons, such as the medication's high cost or the availability of a preferred generic option.
If you need a medication that is not on the formulary, you have options:
Ask for a formulary exception. A healthcare professional can request a coverage exception on your behalf by explaining why the drug is medically necessary and that other options won’t work for you.
File an appeal. If your exception request is turned down, you can file an internal appeal for the plan to consider or ask for a third-party external review.
Try an alternative. You may find that a generic medication or a different brand-name medication that’s covered is just as effective in treating your condition.
Explore financial assistance programs. Some pharmaceutical companies and nonprofits offer patient assistance programs to people who don’t have insurance or whose plans won't cover prescribed medication.
Pay on your own. You may be able to afford to self-pay or pay cash. GoodRx offers discounts that can lower the cash price for many medications if insurance won’t cover your prescription. You can search for your medication on GoodRx.com or in the GoodRx app; select the right dose and quantity; and then text, email, or print the coupon to show your pharmacist when you fill your prescription. You may also find an affordable price with direct-to-consumer self-pay programs offered by drugmakers.
Can your doctor override a drug’s nonformulary status?
While a doctor can't override a drug's nonformulary status, they may be able to help you get an exception from your plan. Your prescriber can explain why you need the medication and show that there is not a suitable alternative on the formulary. This appeal can prompt your plan to approve coverage.
How can HR help you with an insurance denial?
If your health plan declines to cover the medication you need, your human resources (HR) department may be able to help you get the decision reversed. Some employers have self-funded insurance, meaning they pay for health benefits themselves rather than buy coverage from an insurance company. If this is the case, the employer makes the decision about what the plan covers, so it's possible that your HR department could advocate within the organization on your behalf.
Even if your workplace has a contract for coverage with an insurance company, your employer may be able to help you appeal the decision or provide legal assistance.
Frequently asked questions
Prior authorization is a coverage review by your insurance plan. You might face this hurdle most often for prescription medications, but you may also face prior authorization for surgery and other care.
Step therapy, which requires you to try another medication first before your original prescription is approved, is a type of prior authorization. For example, you may be asked to try a lower-cost medication or a preferred treatment that has shown better clinical results for your condition before your prescribed medication is considered for coverage. If the Step 1 medication does not work well, your insurance plan might then approve your original request.
Your medical history is protected by law. In other words, no one — including your employer — has the right to access your medical records without your permission. Even if your insurance plan is funded by your employer, you must give your employer permission to access your medical records, including the prescriptions you take. If you don't give that permission, your employer will not gain access to the information. However, your employer may have a legal right to ask you what prescription drugs you're taking if the medication could impact your ability to safely perform your job duties.
Prior authorization is a coverage review by your insurance plan. You might face this hurdle most often for prescription medications, but you may also face prior authorization for surgery and other care.
Step therapy, which requires you to try another medication first before your original prescription is approved, is a type of prior authorization. For example, you may be asked to try a lower-cost medication or a preferred treatment that has shown better clinical results for your condition before your prescribed medication is considered for coverage. If the Step 1 medication does not work well, your insurance plan might then approve your original request.
Your medical history is protected by law. In other words, no one — including your employer — has the right to access your medical records without your permission. Even if your insurance plan is funded by your employer, you must give your employer permission to access your medical records, including the prescriptions you take. If you don't give that permission, your employer will not gain access to the information. However, your employer may have a legal right to ask you what prescription drugs you're taking if the medication could impact your ability to safely perform your job duties.
The bottom line
A formulary is the list of generic and brand-name medications that your health insurance plan covers. It’s important to remember that drugs can be dropped and added to a formulary at any time. Even if a drug appears on the formulary, the medication may not be covered for you or your condition. Employers have the right to restrict coverage through quantity limits, prior authorization, and other reviews. If your employer won’t cover your prescription, you can try to reverse the denial by asking for a formulary exception, filing an appeal, or asking your human resources department for help. Even without coverage, you may still be able to access the medication as a self-pay or cash-pay consumer.
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References
Goldberg, R. B. (2020). Managing the pharmacy benefit: The formulary system. Journal of Managed Care & Specialty Pharmacy.
Hydery, T., et al. (2024). A primer on formulary structures and strategies. Journal of Managed Care & Specialty Pharmacy.
Kearney, A., et al. (2026). Public opinion on prescription drugs and their prices. KFF.
KFF. (2024). Health insurance coverage of the total population.
National Association of Specialty Pharmacy. (n.d.). NASP definitions of specialty pharmacy and specialty medications.
Patient Advocate Foundation. (n.d.). How to read your medication formulary.
U.S. Department of Health and Human Services. (2020). Employers and health information in the workplace.
