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Understanding Medicare Advantage Premiums

Since Medicare Advantage plans are offered by private insurance companies, they have some freedom in how they set their monthly costs, or premiums. Medicare Advantage premiums may vary from plan to plan depending on the insurance company offering the plan, the location of the plan, and the benefits the plan offers. Sometimes the plan with the lowest premium is not always the lowest-cost plan.

What is a Medicare Advantage premium?

A premium is an amount you pay monthly to have the plan, regardless if you use covered services or not. For example, if you pay $55 a month for a Medicare Advantage plan, you will pay $660 yearly to be covered by that plan, even if you don’t see one doctor that year.

How much will I pay for a Medicare Advantage premium?

According to the Centers for Medicare & Medicaid Services in 2018, the average Medicare Advantage premium was $30 monthly. Some Medicare Advantage premiums may be $0 for certain plans and other plans may have premiums over $100 a month.

Medicare Advantage plans that have more comprehensive dental coverage or coverage for other services may have higher monthly Medicare Advantage premiums.

Can I really pay a $0 Medicare Advantage premium?

Medicare Advantage plans with $0 monthly premiums do exist, but may not be available in all areas. Even if you have a $0 Medicare Advantage premium you still have to pay your monthly Medicare Part B premium.

What are other Medicare Advantage costs?

Keep in mind that a Medicare Advantage premium is just one cost of a Medicare Advantage plan. Other costs include copayments/coinsurance, and deductibles.

A copayment is a dollar amount you pay when you receive a service, for example $10 to see a primary care physician. A copayment is a percentage, for example 20% for a certain prescription drug.

A deductible is an amount you pay out of pocket before your plan begins to pay. Some Medicare Advantage plans have $0 deductibles, meaning the plan will cover you from the first dollar you have to spend. Some plans might have $1,000 deductibles, meaning you have to spend $1,000 on copayments and coinsurance before the plan begins to pay.

All Medicare Advantage plans also have out of pocket maximums. This is a cap on your out of pocket spending for covered medical benefits, which can vary from plan to plan within limits set by the federal government.

Is a plan with a low Medicare Advantage premium my best option?

The Medicare Advantage premium is just one cost of the plan. Keep in mind that plans with lower premiums may also have more basic coverage and plans with higher premiums may have more extensive coverage.

For example, Medicare Advantage plan 1 has a $0 monthly premium and $0 coverage for routine dental services. If you get $2,000 of dental work, you could pay $2,000.

Medicare Advantage plan 2 has a $50 monthly premium and $1,000 coverage for routine dental services. You pay $600 in premiums, but with the $1,000 dental coverage, your total spending is only $1,600 compared to $2,000.

Do you have more questions about Medicare Advantage plan premiums? Just enter your zip code on this page to begin searching for plans in your area.

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