What Are Medicare TrOOP Costs?
Keeping Track of Your Out-of-Pocket Drug Expenses
If you’re thinking about enrolling in a Medicare Part D plan, it’s likely you’ve heard the term “out-of-pocket,” which refers to the Part D expenses that aren’t reimbursed by insurance. A less familiar term, but one that is extremely important to Medicare Part D prescription drug plan members who enter the Coverage Gap, is “true out-of-pocket” or “TrOOP” costs.
TrOOP costs are amounts you pay for covered Part D drugs that count toward your drug plan’s out-of-pocket threshold. Your yearly deductible, the copayments or coinsurance you pay in the Initial Coverage stage, and what you pay in the Coverage Gap all count toward this out-of-pocket limit. This amount does not include the drug plan’s premium.
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Most Medicare Part D members won’t reach the Coverage Gap or Catastrophic Coverage stages of a plan. However, if you take multiple brand-name or generic drugs for one or various chronic conditions and your total drug costs, in the Initial Coverage stage exceed $3,820 in 2019, you will enter the Coverage Gap stage. (“Total drug costs” include your payments and the plan’s payments for covered Part D drugs.)
Your Part D out-of-pocket expenses determine if and/or when you’ll leave the Coverage Gap, which is the third stage of coverage of the standard Medicare Part D benefit. This amount also determines if and/or when you’ll enter Catastrophic Coverage, the fourth and final stage of the benefit. To better understand these coverage stages, please watch this video.
In the 2019 standard Medicare Part D plan, you’ll leave the Coverage Gap stage when you exceed a year-to-date out-of-pocket amount set by Medicare annually. In 2019, the TrOOP amount (or threshold) is $5,100. This means that once you exceed $5,100 in out-of-pocket costs for Part D drugs, you’ll enter the Catastrophic Coverage stage, where your Part D plan will cover most of your prescription drug costs for the rest of the calendar year.
Since Part D out-of-pocket costs determine if and/or when you will enter the Catatstropic Coverage stage, it’s important to know what payments count and do not count toward this Part D out-of-pocket amount.
Payments that count toward your Part D out-of-pocket costs:
- Your annual deductible amount.
- The copayments or coinsurance that you pay for your medications in the Initial Coverage stage after you meet any deductible.
- The out-of-pocket amounts for covered Part D drugs you purchase in the Coverage Gap stage.
- In the Coverage Gap, some payments made by the Medicare Coverage Gap Discount Program are included. Specifically, the amount discounted by the manufacturer for your brand-name drugs will count.
- Payments for Part D drugs that are made from your Health Savings Account (HSA) or Flexible Spending Account (FSA).
- Payments made on your behalf by family and friends.
- Payments from Medicare’s Extra Help program.
- Payments from the Indian Health Service, State Pharmaceutical Assistance Programs, and most charities (if they are not controlled by you, a former employer/union, or a drug manufacturer’s Patient Assistance Program operating outside Part D).
- Payments from AIDS Drug Assistance Programs (ADAPs), which cover only HIV/AIDS—related medications.
- Any payments you made during the calendar year as a member of a different Medicare prescription drug plan before you joined our plan will transfer to your current plan.
Payments that do not count toward your out-of-pocket costs:
- The monthly Medicare Part D plan premium.
- Prescription drugs that are not on your plan’s formulary (the list of covered drugs).
- Payments made by your plan for brand drugs and generic drugs while you’re in the Coverage Gap.
- Drugs purchased at an out-of-network pharmacy that doesn’t meet the plan’s requirements for out-of-network coverage.
- Drugs that may be covered by your Part D plan but are excluded by law and on the Medicare Part D excluded drug list.
- Over-the-counter drugs or vitamins.
- Prescription drugs purchased outside of the U.S. and its territories.
- Non-Part D drugs, such as those covered by Medicare Part A and Part B.
- Payments made for your drugs by group health plans, including employer health plans.
- Payments made for drugs by certain government-funded health programs like TRICARE and Veterans Affairs.
- Payments made by a third party with a legal obligation to pay for prescription costs, such as workers’ compensation.
If these Medicare TrOOP rules seem a bit overwhelming, don’t worry. Your Part D plan provides an Explanation of Benefits (EOB) for each month that your benefit is used. In addition to other important information, the EOB includes the payments that count toward your Medicare TrOOP expenses to date. This is an easy way for you to track these costs.