Medicare Part D Formularies: How Generic Coverage Works in 2025

By 2025, nearly 92% of all prescriptions filled under Medicare Part D are generics. That’s not just a statistic-it’s the backbone of how millions of seniors and people with disabilities manage their monthly drug costs. If you’re on Medicare and take any kind of medication, understanding how generic coverage works isn’t just helpful-it’s essential to avoid surprise bills and maximize your benefits.

What Is a Medicare Part D Formulary?

A formulary is simply a list of drugs your Medicare drug plan covers. Every Part D plan-whether it’s through a standalone prescription drug plan (PDP) or a Medicare Advantage plan with drug coverage-has its own formulary. But they don’t just pick drugs randomly. The Centers for Medicare & Medicaid Services (CMS) sets strict rules: each plan must cover at least two different generic drugs in every major therapeutic class, like blood pressure meds, diabetes drugs, or antidepressants. And for six protected classes-immunosuppressants, antidepressants, antipsychotics, anticonvulsants, antiretrovirals, and antineoplastics-plans must cover every single FDA-approved generic version.

How Generics Are Organized in Tiers

Part D plans use a tier system to guide you toward the most affordable options. Generics almost always land in the lowest tiers:

• Tier 1: Preferred Generics - These are the cheapest. Most plans charge $0 to $15 for a 30-day supply. Examples include metformin for diabetes or lisinopril for high blood pressure.
• Tier 2: Non-Preferred Generics - These are still generics, but they cost more-usually $15 to $40 per month. Your plan may cover one generic blood pressure drug in Tier 1 but require you to pay more for another generic in the same class.

Brands? They’re usually on Tiers 3 to 5. You might pay $40 to $100+ for a brand-name drug, while the generic version next to it costs $5. That’s the whole point of the system: make generics easy and cheap to choose.

How Much You Pay for Generics in 2025

Your out-of-pocket cost depends on what phase of coverage you’re in. Here’s how it breaks down for generics in 2025:

• Deductible Phase: You pay 100% until you hit the $615 deductible. Not all plans have one-52% of stand-alone Part D plans in 2025 have a $0 deductible for generics.
• Initial Coverage Phase: After you meet the deductible, you pay 25% coinsurance. The plan pays 75%. This applies whether you’re on Tier 1 or Tier 2 generics.
• Catastrophic Coverage Phase: Once your out-of-pocket spending hits $2,000 (up from $1,900 in 2024), you pay $0 for the rest of the year. That includes all generics, no matter the tier.

This $2,000 cap, introduced by the Inflation Reduction Act in 2025, is a game-changer. Before, people hit a “donut hole” where they paid full price until they spent a lot more. Now, once you hit $2,000, you’re done paying for the year.

Why Generics Cost So Much Less Than Brands

Generics work the same way as brand-name drugs-they have the same active ingredients, dosage, and effectiveness. But they cost less because they don’t need to recoup billions in research and marketing. In 2023, generics made up 92% of prescriptions but only 18% of total drug spending under Part D.

Here’s the kicker: when you pay for a brand-name drug, 70% of the drug’s total cost (including manufacturer discounts) counts toward your $2,000 out-of-pocket cap. But for generics, only what you actually pay counts. That means if you take mostly generics, you reach the cap faster-and get $0 costs sooner.

What to Watch Out For

Even with all the benefits, there are traps:

• Therapeutic substitution: Your pharmacist might swap your generic for another one in the same class. If your plan doesn’t cover that specific generic, you could get stuck paying full price. One Reddit user reported being charged $120 for a generic blood pressure pill because his plan only covered a different version-even though both worked the same.
• Formulary changes: Every fall, plans send an Annual Notice of Change. About 37% of plans adjust which generics are covered or move them to a higher tier. Don’t assume your $0 generic will stay $0.
• Authorized generics: These are brand-name drugs sold as generics by the same company. They’re not always listed clearly on formularies, and some plans treat them like brands. Check the details.

How to Save Money on Generics

You don’t have to guess your way through this. Here’s what works:

1. Use the Medicare Plan Finder: Enter your exact medications, including generic names. Compare plans side by side. People who use this tool save an average of $427 a year.
2. Check the Formulary Finder: CMS’s tool lets you search for specific generics and see which plans cover them. 28% of people end up with coverage gaps because they picked a plan without checking.
3. Ask for a coverage determination: If your generic isn’t on the formulary, you can request an exception. In 2023, 83% of these requests were approved.
4. Choose a $0 deductible plan: If you take multiple generics, skipping the deductible can save you hundreds.
5. Look for $0 copays: By 2027, 95% of beneficiaries will have access to $0 copays for at least half of commonly used generics. Start looking for those plans now.

What’s Changing in 2026 and Beyond

The rules keep evolving:

• In 2026, the out-of-pocket cap rises to $2,100.
• Starting in 2026, every Part D plan must include a generic price comparison tool in their member portal. You’ll be able to see which generic version of your drug costs the least.
• In 2029, the Medicare Drug Price Negotiation Program will kick in. Insulin glargine (generic Lantus) is already on the list. More generics will follow.
• Some lawmakers are pushing to require plans to cover all generics in a class if they cover any one. That could end the “therapeutic substitution” problem for good.

Real Stories, Real Savings

One beneficiary in Ohio switched plans in 2025 after her $5 generic heart medication moved to Tier 2 and cost $35. She found a new plan that covered the same drug in Tier 1 for $0. She saved $420 a year.

Another in Florida takes three generics for heart disease and diabetes. With the $2,000 cap, she hit it by August. Since then, her monthly drug costs are $0. “I used to stress every month,” she said. “Now I don’t even think about it.”

Final Thoughts

Medicare Part D’s generic coverage system works-because it’s designed to. Generics are cheaper, safer, and just as effective. The tiers, caps, and rules exist to steer you toward the best value. But you have to be active. Don’t wait for a bill to come in. Review your plan every fall. Use the tools CMS gives you. Ask questions. The difference between $0 and $100 a month isn’t luck-it’s knowledge.