I’m turning 65 soon and am deciding whether to buy a Medicare Advantage plan or a Medicare Supplement plan. If I follow your book’s advice, decide to go with a Medicare Supplement, and purchase Medicare Plan “G”, do I miss out on the Maximum Out-Of-Pocket (MOOP). I also noticed that Medicare Supplements K and L have an “Out-of-Pocket Limit” is this the same thing as a MOOP?
What is Medicare MOOP?
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I’m glad you asked this question because it’s a good one and 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 the silly name reminds me of a Muppets routine. It’s fun.
First, let me explain the concept of a Maximum Out-Of-Pocket. Usually, there’s always something called a MOOP clause in an insurance policy. These are either episodic or annual. A MOOP is financial protection should you have an unfortunate health year accompanied by 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, 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 the rest.
Original Medicare doesn’t have a MOOP. If you have Original Medicare and no other Medicare insurance, you have no annual or lifetime cap on how much you can pay. There’s no limit to how much you can be charged if you get sick and only have Original Medicare, which is why many people buy other Medicare insurance.
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 specific dollar amount or a certain percentage. I can’t come up with any other examples in the wild, wonderful insurance world where there’s simply no cap, 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 currently, none have one higher than $7,550 in-network and $11,000 outside of the network (for PPO plans) annually. The popular Medicare Supplement plans (F and C, G and N) also limit your MOOP.
Do Medicare Supplement Plans Have a MOOP or Out of Pocket Limit?
Medicare Supplement Plan G covers all leftover 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,” you’ll notice in the chart below this paragraph, is that 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, so they list (and require) a MOOP for those plans. They don’t call it a “MOOP”; instead, they call it an “Out of Pocket Limit.”
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 firstname.lastname@example.org and I’ll pick a few for a future blog post!
To your wealth, wisdom and wellness!
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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. Matt is also the host of The Matt Feret Show. He has held leadership roles at numerous Fortune 500 Medicare health insurers in sales, marketing, operations, product development, and strategy for over two decades.