About TrOOP (True Out of Pocket Expenses) and the Donut Hole
By Benjamin Crocker, MD

TrOOP means that Medicare D adds up what you spend yourself on medications purchased through Medicare D. If you buy all your medications through your plan at participating pharmacies, it will be figured automatically. If you buy prescription medications in the US that are not excluded by Medicare D (Some medicines, like clonazepam or Phenobarbital are not allowed in Medicare D so if you buy them it will not count for TrOOP), you may be able to get credit for TrOOP if you submit your receipts to your Medcire D Plan. Consult your plan on how to do this.

The insurance part of Medicare D starts when you have spent a certain amount in TrOOP, at which point Medicare D will pay for 95% of the cost your plan charges for a medication. In 2007, TrOOP is $3850. This will change every year, usually increasing. So getting credit for TrOOP is important if the part of your drug costs you pay yourself will go over this amount early enough in the year for you to get the insurance benefit before the end of the year. Then each year, the process of building up TrOOP till you get the insurance starts over again.

Some plans have a deductible before you get any benefits; until you pay the deductible you have to pay the full price that your plan charges for the medication. Then your initial period of allowance begins. Each beneficiary has the same total dollar amount of benefit they can get during this period, but each plan has different prices and copays. The thing to remember here is that if your plan covers most of the cost of a drug it charges a lot for during this initial benefit period, your copay may be small, but you will use up a lot of your initial benefit allowance. You can see these details if you look at the Medicare Website on the internet and click on the part at the top of the page that says “Compare plans” and follow the directions. People who use a lot of expensive drugs will exhaust their initial benefit allowance sooner, and enter into what is known as the “Donut Hole”. In 2007, many pharmacies that deal with Medicare D are offering some generic medications for less than what the Medicare D plans were planning to charge; this is a good deal, as both your copay and the amount deducted from your benefit allowance is less. Most pharmacies will give you these lower prices, but you may have to ask for them; see my medication pricing spreadsheet.

The Donut Hole

The Donut Hole in most plans is the part after you have exhausted your initial benefit allowance and before you have paid out enough out of your own pocket to qualify for the 95% catastrophic insurance. In most plans, you have to pay the full price of the drug that the plan charges; some plans offer coverage for generic medications. In some cases if your income is low enough, you can get free medicine by mail from the companies that make it, and the donated price of these medications may count for TrOOP, getting you credit that will move you through the donut hole. However, other mail-order plans like Xubex and RxOutreach charge administrative fees and medications you get from them will probably not count for TrOOP. Most people who get to the Donut Hole never get out of it, so TrOOP doesn’t matter for them. The year ends and the process of deductible, benefit allowance, and Donut Hole begin all over again. So if you find yourself in the donut hole late in the year and your plan does not offer generic coverage in the Donut Hole, you may want to buy your medication at the best price regardless of whether you get TrOOP.

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