A Medicare Advantage plan is a way to get your Medicare coverage from a private insurance company that has a contract with Medicare.
A premium is an amount you pay monthly to have coverage from your Medicare Advantage plan. You must pay this premium whether or not you use covered services. What you pay in premiums doesn’t count towards your out-of-pocket maximum.
Learn more about premiums and out-of-pocket maximum for your Medicare Advantage plans below.
The average premium for a Medicare Advantage plan is on a downward trend
Premiums vary among Medicare Advantage plans. It’s not just that they come from private, Medicare-approved insurance companies who set their own premiums. It’s also true that some Medicare Advantage plans may offer more benefits beyond Medicare Part A and Part B coverage.
According to the Centers for Medicare & Medicaid Services (CMS), the average Medicare Advantage premium was $23.63 in 2020. CMS expects the average premium to be $21 in 2021.
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What will I pay in premiums?
Since you get Medicare Advantage plans from private, Medicare-approved insurance companies, premiums vary widely among plans. For example:
- If you pay a $25 premium per month, you’ll pay $300 a year in Medicare Advantage premiums.
- If you pay a $40 premium per month, you’ll pay $480 a year in Medicare Advantage premiums.
Some plans have premiums as low as $0, but plans may have other costs – deductibles, copayments, and/or coinsurance, for example.
If you have Medicare Advantage you also must pay your Medicare Part B premium. The standard Part B premium is $148.50 in 2021, or $1,782 a year. If you pay $148.50 monthly for your Medicare Part B premium and $40 a month for your Medicare Advantage premium, you’ll pay a total of $2,262 a year in health coverage premiums. This is just an example – again, Medicare Advantage plans premiums vary among plans.
What is an out-of-pocket maximum?
An out-of-pocket maximum is a limit on the amount you pay for medical bills in one calendar year. This amount may vary year to year, and among plans. Every Medicare Advantage plan has an out-of-pocket maximum amount. After you reach that limit, the plan pays all your covered Medicare costs for the rest of the year.
Knowing you have a maximum can be very reassuring. If you have a $50,000 surgery, for example, your out-of-pocket costs could be much less than that if you have a Medicare Advantage plan.
What costs count towards an out-of-pocket maximum?
Usually your coinsurance and copayments for covered services count towards your out-of-pocket maximum. For example, if you visit a primary care doctor and pay $10 and visit the emergency room and pay $100, these amounts will generally count towards your out-of-pocket maximum.
Costs that typically do NOT count towards your out-of-pocket maximum include:
- Bills from out-of-network health-care providers
- Services not covered by the plan
Would you like to search for a Medicare Advantage plan with a low out-of-pocket maximum? Just enter your ZIP code on this page to start browsing for Medicare Advantage plans.
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