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What is the Medicare Part D RxMOOP?

Category: ANOC: Annual Plan Changes
Updated: Sep, 18 2022

The Inflation Reduction Act of 2022 establishes a maximum out-of-pocket limit - or RxMOOP - that a person will pay each year for Medicare Part D prescription drugs covered by their Part D drug plan (either a stand-alone Medicare Part D prescription drug plan, PDP or Medicare Advantage plan that includes drug coverage, MAPD).

The Part D RxMOOP will begin first in 2024 and be equivalent to the 2024 Medicare Part D total out-of-pocket spending threshold (TrOOP).

Then in 2025, the annual RxMOOP will be reduced to $2,000 - and each year thereafter the RxMOOP will be adjusted (increase) based on inflation.  After reaching the RxMOOP, a person will not have additional costs for Part D drugs covered by their Medicare Part D plan.

In summary:

2024 RxMOOP = $7,750 = 2024 TrOOP

For 2024, a Medicare Part D beneficiary will not have any costs after reaching the annual total annual out-of-pocket threshold (TrOOP) (estimated to be around $7,750 in 2024).  In other words, after a person reaches TrOOP and enters the Catastrophic Coverage phase, the 5% coinsurance will be eliminated and the person's 2024 maximum out-of-pocket drug cost (RxMOOP) will be capped at TrOOP.

2025 RxMOOP = $2,000

Beginning in 2025, a new Medicare Part D plan design will be established where Medicare Part D plans will have no more than two phases: (1) the initial deductible (if the plan includes a deductible) and (2) an Initial Coverage Phase that will continue until the end of the plan year (December 31st) or until the Medicare Part D beneficiary reaches the $2,000 maximum cap on out-of-pocket prescription drug spending (RxMOOP).

2026 and beyond RxMOOP  > $2,000

Like other Medicare Part D plan parameters, the 2025 annual $2,000 RxMOOP can (and probably will) increase every year*.

Question:  What would be the retail value of the formulary prescriptions needed to reach the 2025 RxMOOP?

(1) About $6,335 when the plan has a standard deductible.  The 2025 Medicare Part D deductible is estimated at $555 and a Medicare Part D plan member would need to purchase medication with a retail value of around $6,335 before reaching the $2,000 RxMOOP (assuming a standard 25% co-insurance cost-sharing for all formulary drugs).  So a person with a $555 deductible using Part D formulary medications with a retail value of over $528 per month would reach the RxMOOP at some time during 2025 and not have any additional costs for Part D formulary drugs for the remainder of 2025.

(2) About $8,000 for drug plans with a $0 deductible.  If a 2025 Medicare Part D plan (PDP or MAPD) has a $0 deductible and standard 25% co-insurance, a Medicare Part D plan member would need to purchase medication with a retail value of around $8,000 before reaching the annual $2,000 RxMOOP.  So a person with a $0 Rx deductible using Part D formulary medications with a retail value of over $667 per month would reach the annual RxMOOP at some time during 2025 and not have any additional costs for Part D formulary drugs for the remainder of 2025.

*Section 1860D-2(b)(6) (of the Social Security Act) - Annual percentage increase -  The annual percentage increase [for Medicare Part D plan parameters] specified in this paragraph for a year is equal to the annual percentage increase in average per capita aggregate expenditures for covered part D drugs in the United States for part D eligible individuals, as determined by the Secretary for the 12-month period ending in July of the previous year using such methods as the [HHS] Secretary shall specify.


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