What Is Medicare TrOOP?
- Learn about your Medicare True out-of-pocket (or TrOOP) costs, what counts towards this limit, and what it means for your Medicare Part D prescription drug coverage. By comparing Medicare plans, you may be able to save on your Medicare drug costs.
If you’re a Medicare beneficiary with prescription drug coverage, the chances are that you’ve heard of the True out-of-pocket (TrOOP) costs.
Medicare TrOOP is the maximum amount you’ll have to pay for your prescription drug plan expenses each year before you reach catastrophic coverage.
In 2024, the TrOOP Medicare Part D amount is $8,000 for the year. This means that once you’ve paid this amount out-of-pocket, you exit the “Donut Hole” Coverage Gap, and your Medicare Part D plan’s catastrophic level of coverage begins.
In this phase, your plan covers most of your prescription medication costs for the remaining part of the year, and you only need to cover a small coinsurance percentage or copayment for covered drugs.
Some people like to keep records of how much they spent on prescription medications throughout the year, but your plan also tracks these details and knows when you reach the TrOOP limit.
Each month, the company that administers your prescription drug plan should send you an Explanation of Benefits (EOB) in the mail. This statement outlines what portion of services the plan paid and the parts you’re responsible for covering. It also details your up-to-date TrOOP costs for the year.
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What Happens to My Troop if I Switch Medicare Drug Plans?
Your TrOOP Medicare Part D amount is transferable, so if you change prescription drug plans, you don’t have to start from $0.
If there are any discrepancies, you may need to provide a copy of your most recent EOB to confirm your current TrOOP balance.
The situation may be slightly more complicated if, for example, your old plan had no deductible, and you join a new one that has a deductible. In that case, the coinsurance or copayment amount you paid during the initial coverage period in your old plan and the amount the insurance company paid count toward the deductible in your new plan.
But bear in mind not all payments count towards TrOOP costs, and the amount resets to zero each year.
What Is Covered Under Troop?
The TrOOP includes the annual deductible amount you pay before your Part D drug plan coverage begins. It also covers your formulary drug cost-sharing.
To illustrate, let’s say you have a prescription for a medication with a retail cost of $100. You or someone on your behalf made a $25 copayment or coinsurance amount for this covered medication, and your plan covers $75. Thus, you’d receive a $25 TrOOP credit.
Additionally, TrOOP covers both your actual out-of-pocket costs for prescription medications and drug costs that another party covered on your behalf once you’re in the Coverage Gap. If you receive a brand-name drug Donut Hole discount from the manufacturers of the medication, this amount applies to your TrOOP.
For example, if you’re in the Donut Hole and you buy a covered brand-name drug, you’ll receive a discount of 75%, and you’ll pay 25%. However, you’ll receive a TrOOP credit of 95% of the retail cost, and your Part D plan pays the additional 5%.
You’ll also receive credits for any medication payments made by third-party programs or organizations on your behalf, including:
- Any money you use from your Medical Savings Account (MSA), Health Savings Account (HSA), or Flexible Spending Account (FSA)
- Medicare Extra-Help
- Indian Health Services (IHS)
- AIDS Drug Assistance Programs (ASAPs)
- Qualified State Pharmaceutical Assistance Programs (SPAPs)
- Various qualifying charities providing they are not linked to your current or former employer or union or by a drug manufacturer’s Patient Assistance Program (PAP) that circumvent Part D benefits
What Does Not Count Towards Troop?
Various payments don’t count towards TrOOP, including:
- Monthly plan premiums
- Medicare’s cost-sharing portion of covered drugs
- Prescription medications purchased outside the US and its territories
- Drugs not included on your Part D plan’s formulary
- Drugs that your plan covers but are excluded by Medicare rules, for example, hair growth drugs
- Over-the-counter medications and vitamins
Also, if certain parties make payments on your behalf or reimburse you, they don’t count towards your TrOOP. These include:
- Group health plans, including the Federal Employees Health Benefit Program (FEHBP) and employer or union retiree coverage
- Government-funded health programs, including Medicaid, TRICARE, Children’s Health Insurance Program (CHIP), and others
- Other insurance or third-party groups that have a legal obligation to pay for your prescription medication costs
Remember that you must inform your drug plan if you’re receiving help towards your out-of-pocket cost for prescription drugs from any of these third parties.
