What is a formulary in health insurance?

• A. A formulary is a list of covered medications and preferred alternatives.
• B. A formulary is a list of hospitals in the plan.
• C. A formulary is a schedule of appointment times.
• D. A formulary is the form used to apply for coverage.

Answer: (A)

A formulary is the list of prescription drugs covered by a health insurance plan, including which medications are preferred. Plans use this list to guide cost sharing, often placing drugs into tiers so generics are cheaper and some brand-name medications cost more. The formulary may require trying a preferred, lower-cost option first (step therapy) or obtaining special approval for certain drugs (prior authorization). This approach helps control costs while ensuring patients have access to effective therapies. It isn’t a list of hospitals, a schedule of appointments, or a form to apply for coverage.