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Glossary of Health Insurance Terms To Know


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A Formulary is a list of medications an insurer will pay for. 

In order to encourage insureds to purchase less expensive drugs, formularies are often divided into sections with differing tiers. Each tier has a different co-pay you have to pay. For instance, a formulary could have three tiers:

  • Tier 1: New branded drugs which have a high co-pay
  • Tier 2: Branded drugs which have a less expensive co-pay
  • Tier 3: Generic older drugs which have the lowest co-pay.

Since no insurance policy is set in stone, exceptions can be made. If a plan has a formulary and a drug is not on the formulary, an insured can ask that the drug be added to the formulary as an exception in his particular case.

NOTE: If you want an exception:

  • Speak with your doctor or other health care provider. Find out:
    • Would a less expensive drug do the same thing for you?
    • If not, ask the doctor for evidence that will convince the insurance company that the drug is necessary for you. 
  • You can also ask your health care provider to apply for the exception for you.



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