Medicaid Coverage for Prescription Medications: What’s Included in 2025

When you’re on Medicaid, getting your prescriptions shouldn’t feel like a maze. But for many people, it is. Medicaid covers prescription drugs for millions of Americans with low incomes, but what’s actually included-and what’s not-depends on where you live, what drug you need, and even which pharmacy you use. If you’ve ever been told your medication isn’t covered, or had to try three other drugs first before getting the one your doctor prescribed, you’re not alone.

Medicaid Covers Prescriptions-But Not Always the Way You Expect

All 50 states and Washington, D.C., cover outpatient prescription drugs under Medicaid. That’s not optional-it’s standard. But here’s the catch: while federal law says states can cover prescriptions, it doesn’t say which ones. That’s why your coverage in North Carolina might look totally different from someone’s in Florida or Texas.

Medicaid doesn’t just hand out any drug you ask for. Instead, each state creates a Preferred Drug List (PDL), also called a formulary. This list sorts medications into tiers, like a pricing ladder. Tier 1 is usually generic drugs-cheap, effective, and preferred. Tier 2 is brand-name drugs with higher copays. Tier 3 or 4? That’s where specialty drugs live: expensive, high-cost treatments for conditions like cancer, rheumatoid arthritis, or hepatitis C.

For example, in North Carolina, a generic blood pressure pill might cost you $4.90. But if you need a brand-name version of the same drug, your copay could jump to $12.15. And if it’s a specialty drug? You could be looking at hundreds-even thousands-of dollars unless you qualify for extra help.

Step Therapy: Why You Might Have to Fail First

One of the most frustrating parts of Medicaid pharmacy coverage is something called step therapy, or "trial and failure." It means you can’t get the drug your doctor prescribed unless you’ve tried-and failed-two other, cheaper drugs first.

Thirty-eight states, including North Carolina, require this for most therapeutic classes. So if your doctor prescribes Wellbutrin XL for depression, but Medicaid’s formulary lists two other SSRIs as preferred, you’ll have to try those first. If they don’t work-or cause bad side effects-you then submit paperwork proving it. That process can take weeks.

Reddit users in the r/Medicaid community report this is especially common for mental health and chronic pain medications. One person wrote in October 2025: "I had to fail on three antidepressants before they approved my original prescription. I was suicidal by the time they said yes."

There are exceptions. If there’s only one preferred drug in a class, or if your condition is rare, or if your doctor provides detailed clinical notes showing why other drugs won’t work, you might skip the step therapy. But getting those notes approved? That’s where prior authorization comes in.

Prior Authorization: The Paperwork Hurdle

Prior authorization is when Medicaid needs your doctor to prove your drug is medically necessary before they’ll pay for it. It’s not just a form-it’s often a full clinical summary, lab results, or even a letter explaining why cheaper options failed.

In North Carolina, prior authorizations for insulin used by Type 1 diabetics can be approved for up to three years-if the right documentation is submitted. But for other drugs, like the now-removed Trulance or Uceris, coverage was cut entirely because the manufacturer stopped offering a rebate. No rebate? No coverage.

According to the Medicare Rights Center’s 2024 survey, 63% of Medicaid beneficiaries faced delays because of prior authorization. On average, it took 7.2 business days just to get an initial decision. If you had to appeal? That jumped to 14.5 days. And during that time, you might go without your medication.

But here’s the good news: 78% of denied requests were overturned when the doctor included full clinical documentation. That means your doctor’s notes aren’t just paperwork-they’re your lifeline.

Costs: Copays, Deductibles, and the Extra Help Program

How much you pay out of pocket depends on your income and whether you qualify for Extra Help (also called the Low-Income Subsidy). If you get full Medicaid coverage, you’re automatically eligible for Extra Help, but most people don’t know that.

Here’s what Extra Help covers in 2025:

• $0 monthly premium
• $0 deductible
• $4.90 copay for generics
• $12.15 copay for brand-name drugs
• Once you hit $2,000 in total drug costs for the year? You pay $0 for everything else.

That’s a game-changer. The Medicare Rights Center found that 89% of people on Extra Help were satisfied with their drug costs-compared to just 42% of those without it.

But here’s the problem: about 1.2 million people who qualify for Extra Help aren’t enrolled. They think they don’t qualify, or they don’t know how to apply. If you’re on Medicaid, you already qualify. You just need to ask.

What’s Not Covered? The List Keeps Changing

Medicaid formularies aren’t static. They change every few months. In North Carolina’s October 2025 update, nine drugs were removed from coverage entirely: Vasotec, Acanya, Diastat, Relistor, Trulance, Vanos, Bryhali, Solodyn ER, Fenoglide, Apriso, Colazal, Uceris, and Uceris Rectal Foam. Why? They no longer offered a rebate to the state.

Even more surprising? Epidiolex®, a life-changing medication for rare forms of epilepsy, was moved from "Preferred" to "Non-preferred" status in July 2025. That means higher copays and stricter prior authorization.

States remove drugs for one reason: money. The Medicaid Drug Rebate Program requires drugmakers to pay rebates to states in exchange for being on the formulary. If a company stops offering a rebate-or offers too small a one-the state drops it.

That’s why you can’t assume your drug will be covered next year. Always check your state’s current formulary before filling a prescription.

Network Pharmacies and Mail-Order Rules

You can’t just walk into any pharmacy and expect Medicaid to pay. You have to use a network pharmacy. CVS, Walgreens, Rite Aid, and local independent pharmacies are usually in-network-but not always. Some states require you to use mail-order for maintenance medications like blood pressure or diabetes drugs.

In North Carolina, if you’re on a long-term medication, you might be pushed toward mail-order services. It’s cheaper for the state, and you get a 90-day supply instead of 30. But if you’re not set up for it, you’ll get denied at the counter.

And if you’re using a pharmacy that doesn’t accept Medicaid? You’ll pay full price-and get no reimbursement later.

How to Navigate This System

Here’s what works:

1. Check your state’s current formulary every 3-6 months. They update often.
2. Ask your doctor to submit prior authorization paperwork before you go to the pharmacy.
3. If your drug is denied, appeal-with your doctor’s clinical notes attached.
4. Ask if you qualify for Extra Help. If you’re on Medicaid, you do.
5. Use in-network pharmacies. Call ahead if you’re unsure.
6. Call your State Health Insurance Assistance Program (SHIP). They help for free.

SHIP counselors say the top three questions they get are: "Why isn’t my drug covered?", "How do I get prior authorization?", and "Which pharmacy accepts Medicaid?" They handle 64% of all pharmacy-related calls in Q3 2025.

What’s Changing in 2026?

The federal government is stepping in. In September 2025, CMS Administrator Chiquita Brooks-LaSure announced new rules coming in Q1 2026: states must prove their formulary restrictions don’t create "unreasonable barriers" to care. That could mean fewer step therapy rules and faster prior authorizations.

Also, the Federal Upper Limit (FUL) for generics might change. Right now, it’s set at 250% of the average manufacturer price minus 17.1%. But MedPAC recommends lowering it to 225%-which could save Medicaid $1.2 billion a year and possibly lower copays.

And with 12-15 new gene therapies expected to hit the market between 2025 and 2027-each costing over $2 million-states are scrambling to find ways to pay for them without breaking budgets. Some are testing outcome-based contracts: pay only if the drug works.

It’s not perfect. But Medicaid is evolving. And if you know how to use it, you can get the drugs you need-even when the system feels stacked against you.