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Matt,

I bought and read your book on Amazon today and found it extremely helpful, thank you!

I’m turning 65 soon and am deciding whether to buy a Medicare Advantage plan or a Medicare Supplement plan.  If I decide to go with a Medicare Supplement and purchase Medicare Plan “G” which you recommend as having the most comprehensive medical coverage, I noticed that it doesn’t have the Maximum Out-Of-Pocket (MOOP) you mention is important to have.  

However, I noticed Medicare Supplements K and L have what’s called an “Out-of-Pocket Limit.”  Is this the same thing as a MOOP? 

Alan B.

Alan,

Thanks for buying my book!  I’m so glad you asked this question, not only because it’s a good one but also because the Medicare MOOP is one of my favorite acronyms.  Medicare insurance is chock-full of them, and this is probably the best one because it sounds funny and reminds me of a Muppets routine.  MOOP.  MOOP!  It’s fun.

Anyway, let first me explain the concept of a Maximum Out-Of-Pocket (MOOP). In every other personal insurance I can think of, there’s always, always, something called a MOOP, which is a Maximum Out-Of-Pocket clause. These are either episodic or annual. But basically, a MOOP is financial protection should you have a bad health year accompanied by very expensive medical bills. It limits how much money—worst case scenario—you’d have to pay out of your pocket during a year. In insurance-speak, these are also called Annual Maximums, stop-loss amounts, annual plan maximums, or some other variation of those terms, but the concept is the same. Once you spend a certain amount, you’re done paying out of your pocket, and the insurance company covers 100% beyond that amount.

Original Medicare doesn’t do that. I don’t know why. It doesn’t make any sense why it doesn’t. It just doesn’t have a MOOP. If you’ve got Original Medicare and no other Medicare insurance on top of that or in place of that, you have no annual or lifetime cap on how much you could pay. There’s simply no limit to how much you can be charged if you get really sick and you only have Original Medicare, which is why many people buy other Medicare insurance.  Think about it. When you buy homeowner’s insurance and your house burns down, you typically pay your deductible, and the insurance company pays 100% of the cost of replacement or re-build.  When you buy car insurance and total your car, you’ll usually pay your deductible, then the insurance company pays for a new one or cuts you a check for 100% of its residual value.

In other words, insurance in those situations limits your maximum out-of-pocket responsibility to a certain dollar amount or a certain percentage. I can’t come up with any other examples in the wild, wonderful world of insurance where there’s simply no cap—no limit on the amount of out-of-pocket you could potentially be on the hook for except if you stay on Original Medicare Parts A and B with no additional medical insurance like a Medicare Supplement or Medicare Advantage.

All Medicare Advantage Plans Have a MOOP

ALL Medicare Advantage plans must have a MOOP for medical, and none have one higher than $7,550 in-network and $11,000 outside of the network (for PPO plans) annually in 2021 and 2022. The popular Medicare Supplement plans (F and C, G and N) also limit your MOOP.

Medicare Supplement Plans Have a “MOOP” or “Out of Pocket Limit”

Medicare Supplement Plan G covers all that’s left over after Original Medicare parts A and B pay doctors and hospitals – except the Part B annual deductible.  So, there’s no “MOOP” – unless you count the Part B deductible.  You’ll have to pay that Part B deductible every year (unless you don’t go to the doctor).  In other words, the “MOOP” is the Part B deductible, because after you pay that, Plan G pays everything else approved by Original Medicare.

The reason Medicare Supplements K and L have a “MOOP” is because if you’ll notice in the chart below this paragraph, those plans only cover coinsurance percentages of many categories. In other words, you’d be on the hook for that coinsurance.   That could get expensive, fast – which is why they list (and require) a MOOP for those plans.  They just don’t call it a “MOOP.”  Instead, they call it an “Out of Pocket Limit.”

 

Medigap Comparison Chart

 

 

Thanks for the question, Alan!  Good one!  If you’d like to learn more about Medicare Supplements, be sure to check out the links section of the site for more.  

I love answering Medicare questions.  Send me yours at questions@prepareformedicare.com and I’ll pick a few for a future blog post!

To your wealth, wisdom and wellness!

-matt feret

 

Author Bio: Matt Feret is the author of the Prepare for Medicare book series and launched prepareformedicare.com to help people get objective answers to questions about Medicare. He’s also the host of The Matt Feret Show.

He’s held leadership roles at numerous Fortune 500 Medicare health insurers in sales, marketing, operations, product development and strategy for over 20 years.  Matt holds a BA from Virginia Tech and an MHA from Washington University in St. Louis. 

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