What Is an Open Formulary?

Health insurance plans that offer prescription coverage use a preferred drug list to determine what prescription drugs are covered under their insurance plans. This list is called a "formulary."

Types

There are two types of formulary plans used by health insurance companies. Most companies use a closed formulary, which means that only prescription drugs on the list will be covered by the plan. An open formulary may be offered, which means that the health plan may cover the costs of drugs that are not on the formulary list.

Benefits

Open formulary plans are advantageous to consumers because they provide additional coverage for prescription drugs that otherwise might not be covered at all.

Considerations

Open formularies may extend the benefits of a prescription plan, but may increase the health insurance premium. As a result, it is important to always check to see if prescription medications are already covered on the lower-cost closed formulary.

Misconceptions

Many people assume that the health insurance companies decide what prescriptions belong on the formulary. However, formularies are researched and created by independent panels of physicians, pharmacists and medical specialists.

Expert Insight

Most insurance companies have a printable formulary list on their website or per customer request. By bringing a copy of your prescription formulary to the doctor's office, your physician can prescribe the lowest-cost, yet still effective, medications for your plan.