Medicare Advantage Costs
The average monthly premium for a Medicare Advantage plan in 2020 was $23, according to U.S. Centers for Medicare & Medicaid Services. But costs may range from $0 to more than $270 per month depending on the Part C plan. You must also pay the Medicare Part B premium, which is $148.50 in 2021, up from $144.60 in 2020.
How Much Do Medicare Advantage Plans Cost?
Most of the 24.1 million Americans enrolled in a Medicare Advantage plan in 2020 paid no premiums for their plan itself. But to enroll in an Advantage plan, they still had to pay the monthly premium for Medicare Part B (medical insurance).
There were more than 3,100 different Medicare Advantage plans sold by private insurance companies that contract with Medicare in 2020. The plans are required to provide all the same coverage offered by Original Medicare — Part A and Part B.
Medicare Advantage plans can offer additional benefits and that can increase their costs. So, monthly premiums for Medicare Advantage plans vary based on the terms of the plan, the benefits offered and other circumstances.
Overall, the average monthly premiums for Medicare Advantage plans have decreased 34 percent between 2015 and 2020, according to the Kaiser Family Foundation. This has been driven largely by steep declines in premiums for local PPO plans.
But regional PPO plans have bucked the trend, increasing by more than 30 percent over the same period.
How Are Medicare Advantage Plans Priced?
It’s important to look beyond just the monthly premium when shopping for a Medicare Advantage plan. You need to consider your total Medicare costs. These include deductibles, copayments, coinsurance and maximum out-of-pocket costs.
Since Medicare Advantage plans are sold by private insurers, the companies can make several decisions that affect the price of each plan.
- Which plans a company chooses to offer
- How the company calculates the price and profit margin for premiums and cost-sharing
- Additional benefits the company offers
Unlike Medigap, which has 10 standardized plans across all companies, there are no standardized Medicare Advantage plans.
You will need to compare Medicare Advantage plans to find the right benefits and prices for your health care needs and personal finances.
Comparing the Costs of Medicare Advantage Plans
A monthly $0 Medicare Advantage premium may sound enticing, but the plan may come with bare bones coverage. When comparing the costs of Medicare Advantage plans, be sure to consider the benefits you are receiving.
A low premium may not be a good bargain if you end up paying hefty copayments on prescription drugs or have to pay the full costs of benefits you passed up for the lower monthly payment.
- Monthly premium
- Doctor visit copayment
- Prescription drug copayment
- Your deductible
- Maximum out-of-pocket costs
- Additional benefits (vision, hearing, dental or other services)
Consider how much you’ll likely pay per year for various health care services, then compare that to the premiums you’d pay over the course of the year.
- Evidence of Coverage (EOC)
- Your insurer will send you an EOC document each fall. It will give you updated information about what your plan covers, your costs and other important information.
- Annual Notice of Change (ANOC)
- Your ANOC will alert you to changes in your costs, coverage and services that take effect on Jan. 1 of the coming year. This document also arrives from your insurer in the fall.
Consider Your Potential Out-of-Pocket Costs
Medicare sets limits on how much a Medicare Advantage plan can require you to pay out-of-pocket each year. It’s $6,000 for in-network services and $10,000 combined for in-network and out-of-network services.
The average is considerably lower than those limits, but it can still cost you thousands of dollars.
8 Cited Research Articles
- U.S. Centers for Medicare & Medicaid Services. (2020, November 6). 2021 Medicare Parts A and B Premiums and Deductibles. Retrieved from https://www.cms.gov/newsroom/fact-sheets/2021-medicare-parts-b-premiums-and-deductibles
- Freed, M., Damico, A. and Neuman, T. (2020, April 22). A Dozen Facts About Medicare Advantage in 2020. Retrieved from https://www.kff.org/medicare/issue-brief/a-dozen-facts-about-medicare-advantage-in-2020/
- U.S. Centers for Medicare & Medicaid Services. (2019, September). Understanding Medicare Advantage Plans. Retrieved from https://www.medicare.gov/Pubs/pdf/12026-Understanding-Medicare-Advantage-Plans.pdf
- U.S. Centers for Medicare & Medicaid Services. (n.d.). Medicare Advantage Plans Cover All Medicare Services. Retrieved from https://www.medicare.gov/what-medicare-covers/what-medicare-health-plans-cover/medicare-advantage-plans-cover-all-medicare-services
- U.S. Centers for Medicare & Medicaid Services. (n.d.). How do Medicare Advantage Plans Work? Retrieved from https://www.medicare.gov/sign-up-change-plans/types-of-medicare-health-plans/medicare-advantage-plans/how-do-medicare-advantage-plans-work
- U.S. Centers for Medicare & Medicaid Services. (n.d.). Medicare Advantage Plans. Retrieved from https://www.medicare.gov/sign-up-change-plans/types-of-medicare-health-plans/medicare-advantage-plans
- U.S. Centers for Medicare & Medicaid Services. (n.d.). Evidence of Coverage (EOC). Retrieved from https://www.medicare.gov/forms-help-resources/mail-you-get-about-medicare/evidence-of-coverage-eoc
- U.S. Centers for Medicare & Medicaid Services. (n.d.). Plan Annual Notice of Change (ANOC). Retrieved from https://www.medicare.gov/forms-help-resources/mail-you-get-about-medicare/plan-annual-notice-of-change-anoc