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What happens after meeting the Medicare Part D out-of-pocket spending limit (TrOOP threshold)?

Category: TrOOP and MOOP: Out of Pocket Costs
Updated: Feb, 02 2024


After meeting your Medicare Part D prescription drug plan's out-of-pocket spending limit (TrOOP), you will exit your Medicare plan's Coverage Gap (Donut Hole) and enter the last phase of Medicare Part D coverage: Catastrophic Coverage - and you will pay nothing for your Medicare Part D formulary drugs for the remainder of the year.

Question:  Does Catastrophic Coverage vary depending on the Medicare plan?

No.  The Medicare Part D Catastrophic Coverage phase has the $0 copay for all formulary drug purchases for all Medicare beneficiaries.

Keep in mind that 2023 was the last year that Medicare Part D beneficiaries paid cost-sharing in the Catastrophic Coverage phase.  For plan year 2024 and beyond, the Inflation Reduction Act (IRA) of 2022 eliminated beneficiary cost-sharing in the Catastrophic Coverage phase, so plan members will not have any out-of-pocket costs for formulary drugs after reaching their plan's 2024 $8,000 total out-of-pocket threshold (TrOOP); therefore, TrOOP becomes the RxMOOP in 2024.

Reminder:  Catastrophic Coverage is only for drugs covered by your Medicare Part D plan

Keep in mind that the Catastrophic Coverage phase $0 copay only applies to medications that are on your Part D plan's formulary (drug list).

Therefore, if you take an expensive medication that is not covered on your Medicare Part D plan's formulary, you will be responsible for 100% of the drug's cost even when in the Catastrophic Coverage phase.

If you reach the Catastrophic Coverage phase, and you begin using a non-formulary medication, you may wish to request a formulary exception to have the drug added to your Medicare Part D plan coverage so that it will be covered during all phases of your Medicare Part D coverage.  Your Medicare plan does not automatically grant a formulary exception request and you may need to appeal a negative decision.  If your Medicare prescription drug plan does approve your request, the medication will usually be added to the specialty drug tier.

Need some help planning your spending throughout the phases of your Medicare drug coverage?
To help you visualize the phases of your Medicare Part D prescription drug plan coverage, we have a Out-of-Pocket Cost Calculator or PDP-Planner online illustrating the changes in your monthly estimated costs based on the established annual standard Medicare Part D plan limits.


For more information, please also see our Frequently Asked Question (FAQ) with information for 2024, 2025, and beyond:
"Who pays for Part D prescription drugs in Catastrophic Coverage?"
q1medicare.com/faq/Who-pays-for-Medicare-Part-D-Catastrophic-Coverage/728



A bit of history...

Prior to 2024, in Catastrophic Coverage, a Medicare beneficiary paid the greater of either a flat co-pay fee (set annually) or 5% of the plan's negotiated retail drug cost for a medication, depending on the type of drug -- generics or preferred brand drugs that are multi-source drugs vs. all other drugs.

For example, in 2023, if you purchased a brand-name drug with a retail cost of $100, you paid the higher of the brand-name drug Catastrophic Coverage cost-sharing $10.35 -- or 5% of the retail drug cost, whichever was higher.  So, your coverage cost in the 2023 Catastrophic Coverage phase was $10.35 (since $10.35 is greater than $5 -- or 5% of $100).

However, if the same brand-name drug had a negotiated retail price of $300 (instead of $100), you would pay $15 for the drug since 5% of $300 is $15 and this amount is greater than the fixed 2023 brand-name copay of $10.35.

The chart below shows the cost-sharing for the Catastrophic Coverage phase over the past few years.  Click the plan year to see examples and more details for a specific year or click here to see a chart of Medicare Part D plan parameters for all years since 2006.


Catastrophic Coverage Phase Cost-Sharing



Plan Year


TrOOP
Generics or
Preferred Brand Drugs
that are Multi-Source Drugs

All Other Drugs
(e.g., brand-name)
2025*
and
Beyond
RxMOOP
$2,000
$0 $0
2024* $7,750 $0 $0
2023 $7,400 $4.15 $10.35
2022 $7,050 $3.95 $9.85
2021 $6,550 $3.70 $9.20
2020 $6,350 $3.60 $8.95
2019 $5,100 $3.40 $8.50
2018 $5,000 $3.35 $8.35
2017 $4,950 $3.30 $8.25
2016 $4,850 $2.95 $7.40
2015 $4,700 $2.65 $6.60
2014 $4,550 $2.55 $6.35
2013 $4,750 $2.65 $6.60



More background:  Catastrophic Coverage as the fourth phase of Medicare Part D Prescription Drug Coverage

Your pre-2024 Medicare Part D plan had four phases of coverage: the Initial Deductible (if any), the Initial Coverage Phase, the Coverage Gap, and Catastrophic Coverage.  If your Medicare part D plan had an Initial Deductible, the following chart will generally show how your pre-2024 drug coverage changed throughout your plan.

Phases of your Medicare Part D plan coverage


When you purchased a 2023 formulary medication with a $100 ($300) retail cost

Retail Cost You Pay Your Medicare
drug plan pays
Pharma
Mfgr. pays
Federal
Govern.
pays
Amount counting
toward your TrOOP
Threshold
Initial Deductible $100 $100 $0 $0 $0 $100
Initial Coverage phase * $100 $25 $75 $0 $0 $25
Coverage Gap - brand-name ** $100 $25 $5 $70 $0 $95
Coverage Gap - generic *** $100 $25 $75 $0 $0 $25
Catastrophic Coverage (brand drug) **** $300 $15 $45 $0 $240 n/a
Catastrophic Coverage (generic drug) **** $100 $5 $15 $0 $80 n/a

* 25% co-pay or cost-sharing
** 75% Brand-name Discount
*** 75% Generic Discount
**** you paid the higher of 5% of retail or $10.35 in 2023 for brand drugs and you paid the higher of 5% of retail or $4.15 in 2023 for generic or multi-source drugs (80% paid by Medicare, 15% paid by Medicare plan, and around 5% by plan member)





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