Prescription Costs & Part D
What are Part D drug tiers?
Last reviewed: · Big Sioux Benefits Data Desk
Tiers are the cost groups a Part D plan sorts its covered drugs into, most commonly five of them, running from preferred generics at the bottom to specialty drugs at the top. Your cost for any given prescription is set by which tier your specific plan assigns it to, combined with that plan's cost share for that tier.
The qualifier, and it is the one that costs people money: the same drug can sit on different tiers in different plans. Tier placement is a plan decision, not a property of the drug. Two plans sold in the same South Dakota county can put an identical medication on Tier 3 and Tier 4 respectively, with meaningfully different costs to you, and neither is doing anything unusual. This is why comparing plans by premium alone is unreliable if you take brand-name drugs.
The standard five-tier structure
| Tier | Typical label | What lands here |
|---|---|---|
| 1 | Preferred Generic | The lowest-cost generics, often the plan's cheapest tier |
| 2 | Generic | Other generic drugs |
| 3 | Preferred Brand | Brand-name drugs the plan has favorable terms on |
| 4 | Non-Preferred Drug | Brands and some generics without those terms |
| 5 | Specialty Tier | The highest-cost drugs, usually charged as a percentage |
Two things follow. First, if a drug you take is on a high tier, ask your prescriber whether a therapeutically equivalent drug sits lower on that plan's list, since the plan's own formulary is public. Second, a plan can move a drug between tiers between plan years, so the plan that priced your prescription well in 2025 may not in 2026. That is the reason to re-check coverage during the fall enrollment window rather than letting a plan renew unexamined. The related mechanics are in prior authorization and step therapy, and free, unbiased local help is available through SHIINE at 1-800-536-8197. Tiers in a local context are worked through in our Sioux Falls guide to Part D formulary tiers.
Sources
- Medicare.gov — What Medicare Part D drug plans cover — accessed 2026-08-21
- Medicare.gov — Costs for Medicare drug coverage — accessed 2026-08-21
- SHIINE — South Dakota's State Health Insurance Assistance Program — accessed 2026-08-21
Related questions
Why is my drug on a different tier than my neighbor's identical prescription?
Because you are on different plans. Tier assignment is made by each plan, not by Medicare or by the manufacturer, so the same medication routinely appears on different tiers across plans sold in the same county. It is one of the main reasons two people with the same prescriptions can pay very different amounts.
Can a plan move my drug to a higher tier mid-year?
Formularies can change during the year under rules CMS sets, and plans must generally give notice or provide a transition supply when a change affects you. The larger changes normally take effect at the start of a new plan year, which is why re-checking your drugs each fall matters more than most people realize.
Drug costs turn on your specific prescriptions, so the arithmetic is worth doing once, properly: book a free, no-pressure conversation, see your county's South Dakota plan lineup, or browse all answers. SHIINE, the state's free counseling program, is at 1-800-536-8197 and sells nothing.
Big Sioux Benefits is a licensed insurance agency, not affiliated with or endorsed by the U.S. government or the federal Medicare program. We do not offer every plan available in your area. Contact Medicare.gov, 1-800-MEDICARE, or SHIINE (South Dakota's SHIP) for all of your options.