True out-of-pocket (TrOOP) costs are what a person pays toward a prescription drug plan’s out-of-pocket maximum. Once they meet this amount, they will not pay for prescriptions for the rest of the year.

Most Medicare plans have out-of-pocket costs, such as deductibles, coinsurance, and copayments.

True out-of-pocket (TrOOP) costs are specific to Medicare Part D drug plans. They are the amount a person pays toward eligible prescription medications.

In 2025, Medicare Part D prescription drug plans have an out-of-pocket cap of $2,000.

Glossary of Medicare terms

  • Out-of-pocket cost: This is the amount a person must pay for care when Medicare does not pay the total amount or offer coverage. Costs can include deductibles, coinsurance, copayments, and premiums.
  • Premium: This is the amount of money someone pays each month for Medicare coverage.
  • Deductible: This is an annual amount a person must spend out of pocket within a certain period before Medicare starts to fund their treatments.
  • Coinsurance: This is the percentage of treatment costs that a person must self-fund. For Medicare Part B, coinsurance is 20%.
  • Copayment: This is a fixed dollar amount a person with insurance pays when receiving certain treatments. For Medicare, this usually applies to prescription drugs.

Anything individuals pay toward eligible prescription drugs will usually count toward their maximum TrOOP costs.

TrOOP costs include payments toward a person’s deductible, if their prescription drug plan has one, and the 25% coinsurance they pay toward prescriptions after they have paid their deductible.

Specific deductible amounts can vary by plan, but in 2025, they cannot be more than $590.

For TrOOP costs to be eligible, they must be for medications included in a person’s plan formulary. This is the list of drugs a prescription drug plan covers, and formularies can differ between plan providers.

A person must also have purchased their medications from an in-network pharmacy or plan-approved out-of-network pharmacy.

Eligible TrOOP costs can also include payments made on a person’s behalf by:

Some costs associated with Medicare Part D prescription drug plans do not count toward TrOOP costs. These include:

  • monthly premiums
  • amount paid by a person’s plan, such as the remaining 75% after they have paid their 25% coinsurance
  • prescription drugs purchased from outside of the country
  • prescription drugs that the plan does not cover
  • over-the-counter medications, such as vitamins
  • excluded prescription drugs, such as those for fertility, hair growth, or weight loss and weight gain

Additionally, payments made on a person’s behalf by the following programs do not count toward TrOOP costs:

  • group health plans, such as the Federal Employees Health Benefits (FEHB) Program
  • government-funded healthcare programs, such as TRICARE, the Department of Veterans Affairs (VA), the Children’s Health Insurance Program (CHIP), and Medicaid
  • Patient Assistance Programs (PAPs) that operate outside of Medicare

There are different stages to Part D prescription drug plans.

  • Deductible stage: Individuals are at this stage when they are paying toward their deductible.
  • Initial coverage stage: At this stage, a person has met their deductible and is paying a 25% coinsurance toward eligible drug costs.
  • Catastrophic coverage stage: An individual at this stage has paid $2,000 in eligible out-of-pocket costs and will pay nothing further for the remaining calendar year.

The $2,000 TrOOP cap is new for 2025 and may be subject to change.

If a person needs help with the costs of their prescription medications, some programs can help.

Extra Help

Medicare’s Extra Help program is available for people with limited income and resources and may cover some TrOOP costs. The costs that Extra Help covers count toward a person’s TrOOP costs.

Individuals may be enrolled in Extra Help automatically if they:

  • have full Medicaid coverage
  • have a Medicare savings program
  • are in receipt of Supplemental Security Income (SSI) payments

A person must meet the following criteria to apply for Extra Help:

  • Individuals: An individual’s income must not exceed $23,475, and their resources must not exceed $17,600.
  • Married couples: A married couple’s income must not exceed $31,725, and their resources must not exceed $35,130.

Medicare Prescription Payment Plan

Medicare offers a payment plan option for out-of-pocket drug costs. This does not reduce a person’s overall TrOOP costs, but it can help them budget as they can spread the costs over a calendar year.

Instead of paying the pharmacy, individuals receive monthly bills from their plan provider for part of the cost.

All plans offer this payment option, but participation is voluntary. To choose this payment option, a person can contact their plan provider.

True out-of-pocket (TrOOP) costs are what a person pays for eligible prescription drugs throughout the year, including payments made on their behalf through Extra Help.

If they wish to spread the cost of their medications over the calendar year, they can opt for optional payment plans.

Once individuals have paid $2,000 in TrOOP costs, they will not pay any more for their prescription drugs for the rest of the calendar year.