Medicare Part D is the federal prescription drug program for people on Medicare. In 2026, over 51 million beneficiaries rely on it. Surprisingly, 92% of all prescriptions filled under Part D are generic drugs. Yet many people struggle to understand how these generics are covered. This guide breaks down exactly how Part D formularies handle generic drugs-what you pay, how tiers work, and key changes coming in 2026. No jargon, just clear facts.
How Medicare Part D Formulary Tiers Work for Generics
Medicare Part D plans organize drugs into tiers to manage costs. For generic medications, this usually means two tiers: Tier 1 (preferred generics) and Tier 2 (non-preferred generics). Tier 1 drugs typically have low copays-often $0 to $15 for a 30-day supply. For example, common medications like lisinopril (for blood pressure) or metformin (for diabetes) often fall here. Tier 2 generics might cost more-maybe $15 to $40 copay or 25-35% coinsurance. This tier system pushes beneficiaries toward cheaper options, but it’s not always obvious which drugs are in which tier.
| Generic Drug Tier | Typical Cost | Example Medications |
|---|---|---|
| Tier 1 (Preferred) | $0-$15 copay | Lisinopril, Metformin, Amlodipine |
| Tier 2 (Non-Preferred) | $15-$40 copay or 25-35% coinsurance | Generic versions of specific brand-name drugs |
Each Part D plan must follow strict CMS rules. For instance, they must include at least two chemically distinct drugs in every therapeutic class. This ensures you have choices even for generics. But plans can still restrict certain generics through prior authorization or step therapy. Always check your plan’s formulary before enrollment-CMS data shows 28% of beneficiaries experience coverage gaps due to incorrect plan selection.
Key Changes to Generic Coverage in 2026
The Inflation Reduction Act of 2022 brought major shifts to Part D starting in 2025. For 2026, the out-of-pocket spending cap is $2,100-up from $2,000 in 2025. This means once you hit that limit, you pay nothing for the rest of the year. Before this change, beneficiaries faced a "donut hole" where they paid 25% coinsurance until reaching a certain threshold. Now, that gap is eliminated entirely for generics.
Another big change is the deductible. In 2026, the standard deductible for Part D plans is $615, up from $590 in 2025. After meeting this deductible, you pay 25% coinsurance for generics during the initial coverage phase. But remember: the $2,100 cap applies to all drugs, so even if you take multiple generics, your total out-of-pocket costs won’t exceed that amount.
CMS Administrator Chiquita Brooks-LaSure confirmed in January 2025 that plans must now include a "generic price comparison tool" in member portals by 2026. This helps you instantly see the lowest-cost therapeutic alternatives. For example, if you take a generic blood pressure medication, the tool might show a similar drug with a $0 copay instead of $10.
How Generic Coverage Differs From Brand-Name Drugs
Generics aren’t treated the same as brand-name drugs in Part D. For example, during the initial coverage phase, Part D plans pay 75% of generic drug costs versus 72.5% for brands. This means beneficiaries pay slightly less for generics-25% coinsurance for generics versus 27.5% for brands in some cases. The out-of-pocket calculation also varies: for generics, only your actual payment counts toward the $2,100 cap. For brand-name drugs, 70% of the cost (including manufacturer discounts) counts toward the cap. This makes generics more cost-effective for both you and the program.
Formulary placement reflects this difference too. Generics usually sit in lower tiers (Tier 1-2), while brand-name drugs occupy higher tiers (Tier 3-5). According to AARP data, average generic copays range from $1-$15, while brand-name copays can exceed $100. This structure helps keep overall program costs down-generics make up 92% of prescriptions but only 18% of total Part D spending.
How to Maximize Savings on Generic Drugs
Understanding Part D formularies takes effort, but these steps can save you money:
- Use the Medicare Plan Findertool for comparing drug coverage across plans every fall. KFF research shows users save an average of $427 annually by checking this tool.
- Review your Annual Notice of Change (ANOC) each September. CMS data shows 37% of plans change tier placements for generics yearly. Missing this could mean unexpected cost increases.
- If a needed generic isn’t on your plan’s formulary, request a coverage determination. CMS data indicates 83% of these requests are approved.
- For multiple generics, choose a plan with a $0 deductible (available in 52% of 2026 stand-alone PDPs). This avoids paying the deductible upfront for each medication.
- Always ask your pharmacist to confirm which generic version they’re dispensing. Some plans only cover specific generics in a class-like covering only amlodipine besylate but not amlodipine besylate 5mg.
Common Problems With Generic Coverage and Solutions
Even with the system’s strengths, issues arise. For example, therapeutic interchange-when a plan covers one generic but not another in the same class-can cause problems. User "MedicareVeteran82" on Reddit reported being charged full price for a generic blood pressure medication because their plan only covered a different generic in the same class. This happens because formularies don’t always cover all generics in a therapeutic class.
Here’s how to handle these issues:
- Always check your plan’s formulary before enrollment. Use the CMS Formulary Finder tool to verify coverage for your specific medications.
- If a substitution occurs at the pharmacy, ask the pharmacist why. You can request the exact generic your plan covers to avoid higher costs.
- For critical medications, consider switching plans during Open Enrollment. The Medicare Rights Center found 62% of beneficiaries face formulary differences when comparing plans in their area.
Another common issue is when pharmacies substitute a generic not on your plan’s formulary. In these cases, you can file a complaint with CMS. The 2024 Medicare CAHPS survey showed 23% of formulary-related grievances involved generic substitution issues. But remember: you have the right to appeal. CMS data shows 78% of appeals for generic coverage are successful.
Frequently Asked Questions
What is the out-of-pocket maximum for Medicare Part D in 2026?
The out-of-pocket spending cap for Medicare Part D in 2026 is $2,100. This means once you’ve paid this amount for covered drugs in a calendar year, you pay nothing for the rest of the year. This cap applies to all drugs, including generics and brand-name medications. Before the Inflation Reduction Act, beneficiaries faced a "donut hole" where they paid 25% coinsurance until reaching a certain threshold. Now, this gap is eliminated entirely.
How do I know if my generic drug is covered?
Check your plan’s formulary using the Medicare Plan Finder tool or your plan’s website. Enter your specific medication name to see its tier and cost. If you’re unsure, call your plan’s customer service. They must provide a written formulary listing upon request. Remember: plans must cover all FDA-approved generics unless specifically excluded under federal rules.
Can I switch plans if my generic medication isn’t covered?
Yes, you can switch during Open Enrollment (October 15 to December 7). If your current plan doesn’t cover a needed generic, find a plan that does. The Medicare Plan Finder shows which plans cover specific drugs. You can also request a coverage determination from your current plan. If denied, you can appeal-78% of appeals for generic coverage are approved. Don’t wait: missing Open Enrollment means waiting until next year.
What is therapeutic interchange, and how does it affect me?
Therapeutic interchange happens when a plan covers one generic drug but not another in the same class. For example, your plan might cover lisinopril but not ramipril, even though both treat high blood pressure. If your pharmacist tries to substitute the non-covered drug, you’ll pay full price. Always ask your pharmacist which generic version they’re dispensing. If it’s not on your formulary, request the covered version or file a coverage determination request. CMS requires plans to cover at least two chemically distinct generics in each therapeutic class to prevent this issue.
Do all Part D plans cover the same generics?
No. While all plans must cover at least 85% of drugs in each therapeutic class, they can choose which specific generics to include. For example, one plan might cover only amlodipine besylate 5mg, while another covers amlodipine besylate 10mg. This is why comparing formularies is crucial. The Medicare Rights Center found 62% of beneficiaries face formulary differences for at least one generic medication when comparing plans in their area. Always check your specific medications before enrolling.
