True out-of-pocket (TrOOP) costs refer to your Medicare Prescription Drug Plan’s maximum out-of-pocket amount. This is the maximum amount you would need to spend each year on medications covered by your prescription drug plan before you reach the “catastrophic” level of coverage. The TrOOP amount for 2021 is $6,550, meaning that once you have paid that much out-of-pocket, your drug plan’s catastrophic coverage kicks in to cover most of your prescription drug costs for the rest of the year. Read below to understand which out-of-pocket expenses count toward the TrOOP amount.
You may want to keep track of how much you spend on your prescription medications throughout the year. Your plan also keeps track of this, however, so they know once you have reached the TrOOP limit. You should receive an Explanation of Benefits (EOB) in the mail each month that details your TrOOP costs for the year so far.
If you switch from one prescription drug plan to another, the TrOOP amount transfers across plans so that you do not have to start over in the event that you have to change drug plans.
TrOOP examples and exclusions
Medicare defines TrOOP as whatever amount you pay out-of-pocket for your prescription medications that count toward your prescription drug plan’s out-of-pocket threshold. This amount resets to zero at the start of each year. The TrOOP amount includes your annual deductible amount. It also includes the copayment or coinsurance amount that you pay for each individual prescription that’s covered by your plan. If/when you enter your plan’s coverage gap (the point in your drug coverage where you pay more for your medications out of your own pocket, before the catastrophic coverage phase kicks in), these costs are generally applied to your TrOOP also, unless the prescription is not covered by your plan’s formulary (a list of covered drugs), and therefore has not been allowed into your coverage through an exception rule.
State Pharmaceutical Assistance Programs (SPAPs) are available in some states and might count toward your TrOOP. These programs may help with your prescription drug costs.
This may also count toward TrOOP: AIDS Drug Assistance Programs (ADAPs), which only cover HIV/AIDS-related medications
There are other scenarios where out-of-pocket spending may not be applied to your TrOOP. If you purchased the prescription outside the U.S. and its territories or if the drugs are not covered by Medicare Part D at all (such as weight loss or weight gain agents), those costs will not count towards your TrOOP.
Vitamins are not covered, and if a group health plan, such as the Federal Employees Health Benefit Program, makes payments on your behalf, then it does not count as an out-of-pocket expenditure and therefore will not be applied to your TrOOP. This is also true for any third-party groups that may be legally obligated to pay for your drug costs and also for manufacturer’s Pharmaceutical Assistance Programs (PAPs) that circumvent the Part D benefit.
If you belong to other government assistance programs, like TRICARE, Medicaid, Workers’ Compensation, the Department of Veterans Affairs (VA), Federally Qualified Health Centers (FQHCs), Rural Health Clinics (RHCs), the Children’s Health Insurance Program (CHIP), and/or black lung benefits, then that paid assistance does not count towards your TrOOP.
Once you have reached your TrOOP amount, Medicare covers most of your prescription drug costs for the rest of the year. You’ll typically pay a small copayment or coinsurance amount.