Medicare Part D Formularies: How Generic Coverage Works in 2025

By 2025, Medicare Part D is simpler for people taking generic drugs than it’s ever been. If you’re on a fixed income and rely on medications like lisinopril, metformin, or atorvastatin, the system now works in your favor. The big change? Out-of-pocket costs for generics are capped at $2,000 a year - no more surprise bills in the middle of the year. That’s not a rumor. It’s federal law, effective January 1, 2025.

How Medicare Part D Formularies Are Built

Every Medicare Part D plan has a list of covered drugs called a formulary. It’s not random. The government requires each plan to cover at least two different generic versions of every common medication type - like blood pressure pills or diabetes meds. This ensures you’re not stuck with just one brand of generic, even if your pharmacy runs out.

Formularies are split into five tiers. Generics almost always land in Tier 1 or Tier 2. Tier 1 is for the cheapest, most commonly used generics. Think of it as the plan’s preferred list. These often cost $0 to $15 for a 30-day supply. Tier 2 includes generics that are slightly more expensive or less commonly prescribed. These might cost $20 to $40, or you might pay 25-35% of the drug’s price.

The higher tiers - 3, 4, and 5 - are for brand-name drugs and specialty medications. That’s where the big costs show up. But if you’re only taking generics, you’re mostly staying in Tiers 1 and 2. And that’s where the savings happen.

What You Pay for Generics in 2025

Here’s how your money flows in 2025:

• Deductible: You pay the first $615 of drug costs. Some plans have $0 deductibles - 52% of them do. Check yours.
• Initial Coverage: After the deductible, you pay 25% of the cost for each generic drug. The plan pays 75%. This continues until your total out-of-pocket spending hits $2,000.
• Catastrophic Coverage: Once you hit $2,000, you pay nothing for the rest of the year. Not $1. Not a copay. Zero. Medicare covers nearly all the cost.

This is a huge shift from just a few years ago. Before 2025, you’d hit a gap - the “donut hole” - where you paid full price after your spending reached a certain point. That’s gone. Now, the $2,000 cap is a hard wall. After that, your drugs are free.

Why Generics Are So Much Cheaper

You might wonder why generics cost so little compared to brand names. It’s simple: generics are chemically identical to the original drug but don’t carry the cost of research, marketing, or patent protection. The FDA requires them to work the same way. So why pay $150 for a brand-name statin when a generic version costs $10?

In 2023, 92% of all Part D prescriptions were for generics. But those generics made up only 18% of total drug spending. That’s because they’re cheap. A single brand-name drug can cost $500 a month. A generic version of the same drug? Often under $20.

Plans encourage this by putting generics in the lowest tiers. They want you to pick them because it saves money for everyone - you, the plan, and Medicare.

What You Need to Watch Out For

Even with all the improvements, there are still traps.

First, plans can change their formularies every year. A generic you’ve been taking for years might get moved from Tier 1 to Tier 2 - or even get removed entirely. That’s why you must read your Annual Notice of Change (ANOC) every fall. It’s mailed to you. It’s also online. Don’t ignore it.

Second, not all generics are treated the same. If your plan covers “lisinopril 10mg” but not “lisinopril-hydrochlorothiazide,” and your doctor prescribes the combo pill, you might get hit with a higher cost. Some plans only cover one version of a generic drug in a class - even if others are equally effective. That’s called “therapeutic interchange.”

Third, your pharmacy might substitute a different generic without telling you. If that generic isn’t on your plan’s formulary, you could pay full price. Always ask: “Is this the exact generic my plan covers?”

How to Save More on Generics

You don’t have to just accept what your plan gives you. Here’s how to take control:

• Use the Medicare Plan Finder. Enter your exact medications - including generic names - and compare plans side by side. KFF found people who use this tool save an average of $427 a year.
• Look for $0 deductible plans. If you take three or more generics, skipping the deductible can save you hundreds.
• Ask for a coverage determination. If your generic isn’t covered, you can formally ask your plan to cover it. In 2023, 83% of these requests were approved.
• Check for $0 copays. Many plans now offer $0 copays for Tier 1 generics. That’s not a promotion - it’s standard.

What’s Changing After 2025

The changes aren’t over. Starting in 2026, Part D plans must include a “generic price comparison tool” in their member portals. That means you’ll be able to see, right on your phone, which generic version of your drug costs the least - even if it’s not the one your doctor prescribed.

In 2029, the government will start negotiating prices for some generics. Insulin glargine (a long-acting diabetes drug) is already on the list. That could bring the cost of some generics down even further.

There’s also talk in Congress about forcing plans to cover every generic in a class if they cover any one of them. Right now, a plan might cover one brand of metformin but not another. That’s confusing and unfair. If that rule passes, it’ll make things much simpler.

Real Stories From People on Part D

One woman in Ohio, 72, takes five generics: for blood pressure, cholesterol, diabetes, thyroid, and arthritis. Before 2025, her monthly drug bill was $280. After hitting the $2,000 out-of-pocket cap in October, she paid $0 for the rest of the year. She didn’t know it was possible until she read her plan’s letter.

A man in Florida, 68, switched plans in 2024 because his old one didn’t cover his generic heart medication. His new plan put it in Tier 1 with a $0 copay. He now saves $320 a month. He says, “I didn’t realize I was overpaying for years.”

But not everyone is happy. One Reddit user reported being charged $120 for a generic blood pressure pill because his plan only covered a different generic in the same class. He had to file a coverage request - and waited six weeks for approval.

What to Do Right Now

If you’re on Medicare Part D and take generics:

1. Log into your plan’s website or call customer service. Ask: “What tier is my generic medication on?”
2. Check if your plan has a $0 deductible. If not, consider switching during Open Enrollment (October 15-December 7).
3. Use the Medicare Plan Finder. Type in your exact drug names. Compare costs across plans.
4. Keep your 2025 Annual Notice of Change. Mark the date when your plan changes its formulary.
5. If you’re paying more than $2,000 a year for drugs, you’re likely missing the cap. Talk to your plan or call Medicare at 1-800-MEDICARE.

The system isn’t perfect. But for the first time, the rules are clearly designed to help people who need daily medications - not the pharmaceutical companies. If you’re on generics, you’re getting the best deal Medicare has ever offered.