Medicare is a resource that many people use to help with healthcare costs, but it can be expensive. Depending on your condition or what procedures you need, you could spend thousands of dollars on healthcare costs throughout the course of a year.
However, there are limits on how much you’ll be required to spend out-of-pocket. Both MOOP Medicare and TrOOP are protections that limit your spending if you have a Medicare Advantage plan, and/or a Medicare Part D plan. Original Medicare does not provide the same protections.
Maximum out of Pocket Medicare Advantage Costs
The Centers for Medicare and Medicaid (CMS) regulates Medicare Advantage plans. In 2019, the Medicare Advantage MOOP is $6,700 for in-network services. If you combine in- and out-of-network limits, MOOPs for some plans can be up to $10,000.
Be aware that not every cost you receive will count toward your MOOP limit. For example, if you have a Medicare Advantage Prescription Drug plan, your monthly premiums and prescription costs may not count toward your MOOP. Also, your plan may not cover out-of-network services even after you reach the out-of-pocket spending limit.
What Happens When You Hit Your Limit?
Once you hit your max out-of-pocket spending limit, your Medicare Advantage plan should pay for the rest of your out-of-pocket expenses for qualifying services.
Note: Look at your plan’s Evidence of Coverage (EOC) document for specific details about qualifying covered services.
Let’s look at a real-world example of this. Let’s say your doctor recommends a hip replacement and your Medicare Advantage plan has a $6,700 MOOP. The average hip replacement surgery is $39,000, which is much more than your MOOP.
In this example, you haven’t had any MOOP-qualifying costs, so your total out-of-pocket expenses will be $6,700. That means that your insurance carrier will pay more than $32,000.
TrOOP stands for True Out-Of-Pocket costs. While it may sound similar to MOOP, it is not the same thing. While MOOP applies to Original Medicare-covered services with Medicare Advantage Plans, TrOOP applies to prescription drug coverage, whether that’s from Medicare Advantage Prescription Drug plans or stand-alone Medicare Part D plans.
How Does the TrOOP Work?
The TrOOP starts when you reach the annual out-of-pocket threshold after you’ve left the donut hole. In order for your costs to count, they must meet the following conditions:
- Your generic or brand-name prescriptions are on your Medicare Part D plan’s formulary or list of prescription drugs.
- One exception to the “formulary rule” is if Medicare and your plan approves your drugs even if the prescription drugs aren’t on your plan’s formulary. In this case, your medications will still count toward TrOOP because both Medicare and your plan approved the formulary exception.
- You purchased your approved medications at one of your Medicare plan’s in-network pharmacies.
Note: Medicare Part D plans vary by location and coverage policies can depend on the individual plan.
Other Costs That Count Toward TrOOP
Other Medicare Part D costs can count toward TrOOP including:
- Your Annual Initial Deductible: If your plan has an initial deductible, this is the amount you’ll pay before your Medicare Part D coverage “kicks in.” This means that you’ll pay 100 percent of your prescription costs until you reach that initial deductible*.
- Cost-Sharing Costs After You’ve Met the Initial Deductible: If your plan requires you to pay a copay or coinsurance, those costs will go toward your TrOOP. For example, if your plan requires a $10 copay for a medication, that money will go toward your out-of-pocket limit.
- Payments While You’re in the Donut Hole: This is where things may get a little confusing. According to CMS, the manufacturer discount on “applicable drugs” is 70 percent, your cost is 25 percent, and your plan pays the remaining five percent. The five percent your plan pays does not count toward TrOOP, meaning that only 95 percent of the total drug cost counts*.
- State Pharmaceutical Assistance Programs (SPAPs): Some, but not all states have assistance programs called SPAPs that work with your Medicare Part D plan. In qualifying cases, the SPAP program may help pay for your Part D premiums, deductible and copays. If the SPAP program assists with your plan costs, those payments may count toward TrOOP.
*If you receive income-based subsidies or other assistance, you may pay a different amount depending on your needs-based program.
What Is the Medicare Donut Hole?
The “donut hole” is a gap in coverage that some Medicare enrollees will see in their prescription drug coverage. It works like this: In 2019, Medicare Part D has a $415 deductible (some plans may be less) and a $3,820 initial coverage limit for total out-of-pocket costs. The donut hole is the gap between the initial coverage limit and the annual out-of-pocket-threshold ($5,100 ).
The donut hole will effectively be going away in 2020. This means that you’ll pay 25 percent of both generic and prescription drug costs after you reach the initial coverage limit.
According to CMS, the 2020 Part D deductible will be $435, the initial coverage limit will be $4020, and the out-of-pocket threshold will be $6,350.
What Doesn’t Count Toward TrOOP?
Not all the money you spend on your prescriptions counts toward your out-of-pocket limit. For example, the amount your plan covers does not count.
For example, let’s say your prescription costs $50. Your copay is $15 and your insurance policy pays $35. Only the $15 you pay for your prescription goes toward your limit. Other items that don’t count include monthly premiums and excluded drugs.
CMS considers excluded drugs to be optional, and are therefore not covered. According to the Center for Medicare Advocacy, excluded drugs include:
- Over-the-counter (OTC) medications (even your doctor prescribes them)
- Drugs to promote weight loss or weight gain, even if they cosmetic use, such as to treat morbid obesity. One exception is that that drugs to treat AIDS wasting are not considered to be for cosmetic purposes and are therefore NOT excluded.
- Fertility medications
- Erectile dysfunction drugs, except when medically necessary and when they aren’t used to treat sexual dysfunction
- Hair growth and other cosmetic drugs. Note that drugs to treat acne, psoriasis, rosacea and vitiligo are not considered cosmetic drugs.
- Foreign drug purposes
- Vitamins and minerals, except niacin, Vitamin D supplements (when used for a documented medical reason), prenatal vitamins and fluoride
Consult your formulary if you have more questions about what medications are included in your plan.
Let Us Help You Navigate MOOP Medicare and TrOOP
Medicare may seem complicated, and Medicare Plan Finder is here to help. Our licensed agents are highly trained and can help you determine what plan will save you the most money. Call 833-438-3676 or contact us here to set up a no-cost, no-obligation appointment to learn more.