No, not every healthcare benefits plan includes a prescription drug formulary. Pharmacy benefits are a design choice made by the plan sponsor — typically an employer — shaped by plan type, regulations, and cost. Most comprehensive group health plans in the U.S. include drug coverage. But it's not a universal mandate. For HR leaders evaluating options, this distinction matters.
Understanding Formularies and Plan Types
A formulary is a list of covered prescription drugs, usually split into tiers that set your copay or coinsurance. Whether a plan has one comes down to whether it includes pharmacy benefits. Here's a look at common plan structures:
- Fully Insured Major Medical Plans (e.g., from BUCA carriers): These almost always include an integrated prescription drug benefit with a formulary, often managed by a Pharmacy Benefit Manager (PBM). It's standard and bundled.
- Self-Funded (Self-Insured) Employer Plans: Employers have flexibility. Most include a PBM-managed drug benefit with a formulary to control costs, but carving out pharmacy coverage is theoretically possible — though rare, given employee expectations and ACA small-group requirements.
- Exclusive Provider Organizations (EPOs) & Health Maintenance Organizations (HMOs): Similar to fully insured plans, these typically bundle pharmacy benefits with strict network rules.
- High-Deductible Health Plans (HDHPs): These plans always include prescription drug coverage (subject to the deductible) because it's required for HSA compatibility. They use formularies.
- Stand-Alone or Limited Benefit Plans: This is where you commonly find plans without drug formularies. Examples include:
- Hospital Indemnity or Critical Illness Plans
- Accident-Only Coverage
- Some "Minimum Essential Coverage" (MEC) plans designed only for ACA compliance
- Certain supplemental or niche plans
The ACA, Essential Health Benefits, and Pharmacy Coverage
The ACA is key here. For small group plans (typically employers with 1-50 employees, though some states extend to 100) sold on the Small Business Health Options Program (SHOP) marketplace or off-exchange, the ACA mandates coverage of ten "Essential Health Benefits" (EHBs). Prescription drugs are one of these ten categories. So an ACA-compliant small group major medical plan must include a prescription drug benefit, which inherently includes a formulary.
For large group plans (generally 51+ employees) and self-funded plans of any size, the ACA does not require coverage of the EHBs. But due to market norms and employee demand, the overwhelming majority include strong pharmacy benefits. A large employer without drug coverage would struggle to compete for talent.
Strategic Considerations and the WellthCare Ecosystem Model
Modern benefits strategy isn't just about having a formulary anymore — it's about how it's designed, how much it costs, and whether it actually improves health. Traditional PBM-managed formularies are often opaque, with complex rebate structures that don't always pass savings to the plan sponsor or member. WellthCare, the first Health-to-Wealth Benefit System, offers a direct alternative with its WellthCare Pharmacy™ — a transparent, aligned PBM that eliminates spread pricing and passes savings directly to employers and employees. This misalignment is what innovative models aim to fix.
For instance, the WellthCare ecosystem changes this relationship. While a standard formulary is a passive list, WellthCare integrates pharmacy directly into a proactive Health-to-Wealth system. Its WellthCare Pharmacy™ component acts as a transparent, aligned PBM replacement. Strategically, medication adherence and smart drug use are tracked as preventive health actions within the platform. This data feeds the proprietary WellthCare Readiness Index™, which analyzes actual medication usage against transparent pharmacy pricing to prove savings opportunities — shifting the focus from just having a formulary to optimizing its economics and health impact.
Key Compliance and Employee Communication Points
If a plan includes prescription drug coverage (and thus a formulary), here are the compliance must-dos:
- ERISA & SPDs: The Summary Plan Description (SPD) must clearly describe the pharmacy benefit, including how the formulary works, cost-sharing, and procedures for exceptions.
- HIPAA: Pharmacy data is Protected Health Information (PHI), requiring strong safeguards.
- Formulary Changes: Plans/PBMs can change formularies, but members generally must be given at least 60 days' notice before a change that negatively affects them (like removing a drug).
- Transparency in Coverage (TiC) Rules: Plans must make machine-readable files public that include negotiated rates for covered prescription drugs.
So, while most comprehensive medical plans for active employee groups do include a prescription drug formulary, it's not an absolute rule. The real shift now is from just having a formulary to making pharmacy benefits transparent, cost-effective, and part of a broader strategy that improves health and builds wealth. That turns a cost center into a strategic asset for both employer and employee.