What is MOOP (Maximum Out-of-Pocket) in Medicare Advantage?

An acronym standing for maximum out-of-pocket limit, MOOP refers to the maximum amount you could pay for your covered medical services under Medicare in a calendar year. Once you’ve reached your MOOP limit, the insurance company pays for 100% of healthcare services until the end of the year.

Traditionally, there’s been a lot of confusion about Medicare Advantage plans and how MOOP works. This article answers all of your questions, so you’ll have a better understanding of MOOP. Knowing the benefits and limitations of MOOP can potentially save you thousands of dollars each year.  

Why MOOP Is Important

It often comes as a surprise to Medicare beneficiaries that Original Medicare (which is Medicare Parts A and B) does not have a limit to out-of-pocket costs, which puts you at risk for exorbitant medical expenses, especially if you have emergency room visits, expensive treatments, and ongoing health issues.

Remember, under Original Medicare, Medicare Part A covers hospital stays, and Medicare Part B works like traditional insurance, covering outpatient visits, durable medical equipment, and other routine and emergency health services. Even under Medicare Part B, you will likely incur deductibles and other expenses you’ll have to pay.

Without a cap on the maximum out-of-pocket limit for doctors’ visits, hospital stays, and other medical services under Original Medicare, you could be paying a lot more money per year than you have to.

The good news is that all Medicare Advantage plans have a MOOP. In other words, all Medicare Advantage plans will put a cap or a limit on the amount of money you’ll pay in out-of-pocket medical costs each year for covered medical expenses. Once your payments for covered medical expenses meet that limit, you can rest easy knowing that you won’t incur additional costs for medical services, which can save you a lot of money (and stress).

Understanding MOOP and How It Works

The MOOP limit is set annually by the U.S. government, but different Medicare Advantage plans can specify different limits. The government standard as of 2023 was $8,300 for in-network healthcare providers and a maximum of $11,300 for combined in network and out-of-network healthcare.

Each plan can adjust the maximum limit to be lower. However, Medicare Advantage plans cannot make the maximum out-of-pocket limit higher than the government standard.

It is important to note that your MOOP limit resets annually, so if you hit your maximum out-of-pocket limit during the plan year, the 100% paid insurance coverage will last for the rest of the year, but it will no longer be applicable at the start of the new year.

Further, the services and medical treatments you receive will only be paid for if they are already part of your Medicare Advantage plan. Anything outside of your insurance coverage will incur additional out-of-pocket costs.

Covered Medical Costs Under MOOP

Though MOOP can save Medicare Advantage plan holders money on covered medical costs each year, it’s important to note that not everything falls under the umbrella of covered services when calculating maximum out-of-pocket costs.

This list includes covered services that contribute to out-of-pocket costs and the most common exceptions:

These expenses count toward MOOP:

• Copays for inpatient hospital stays, outpatient visits, home health care, doctors, and specialists
• Coinsurance for x-rays, durable medical equipment, and other services
• Services administered by in-network healthcare providers

Some Medicare Advantage plans also allow out-of-pocket costs for dental, vision, and hearing care not part of Original Medicare to count toward MOOP. Each Medicare Advantage plan varies, however, so make sure you check your individual insurance company policy to see which expenses count and which expenses do not apply.

These expenses do not count toward your plan’s MOOP:

• Prescription drug costs
• Your monthly premium
• Unauthorized care from an out-of-network provider (the care costs may be calculated toward MOOP if the care is authorized, however)

Once you have knowledge of what applies to MOOP limits, you’ll be better able to plan your healthcare expenses each year as you reach your maximum out-of-pocket limits.

Benefits of MOOP

MOOP is often referred to as a financial safety net that’s not available with Original Medicare plans.

Benefits of having a maximum out-of-pocket limit (MOOP) include:

• Save money by not having excessive costs for medical care
• Certainty in knowing there is an out-of-pocket limit
• Ability to receive necessary medical treatments, knowing that you won’t have to pay money for health services

As healthcare costs continue to rise, it’s easy to see how you can quickly hit your MOOP, even if you don’t have chronic conditions or health challenges. Since even a single hospital stay can run thousands of dollars, many Medicare Advantage plan holders hit their annual out-of-pocket limit and can save money with a MOOP.

MOOP Limitations

Because MOOP does not apply to prescription drugs, there is no maximum out-of-pocket limit for prescription drug costs. However, Medicare Part D plans have built-in mechanisms to help beneficiaries save money. This includes low deductibles, cost-sharing, and catastrophic coverage.

Medigap and MOOP

Medigap policies can provide additional coverage that could limit your out-of-pocket costs each calendar year, but there is still no limit to what you could end up paying for healthcare. An exception applies to Medigap labeled plans K and L. These Medicare supplement plans do provide for maximum out-of-pocket limits, which CMS sets at $6,620 and $3,310, respectively. For reference, CMS refers to the Centers for Medicare and Medicaid Services.

Keep in mind that Medigap policies can be stacked with Original Medicare, but they cannot be used in conjunction with Medicare Advantage plans.

The Bottom Line

There is a lot of information to be aware of about Medicare, including tips about how to maximize your coverage while lowering your costs and monthly premium expenses. In addition to understanding MOOP, another relevant issue is the 2023 IRMAA brackets.

Knowing how to structure Medicare coverage can be a vital step in protecting your nest egg and having a peaceful retirement. A Medicare Advantage advisor can help you navigate this complex landscape and help you make the best insurance coverage choices for your health and peace of mind.