What Are the Costs for Medicare Advantage Plans?
If you’re considering Medicare Advantage, the cost of Medicare Advantage plans may be a key deciding factor in which option is best for you. There are several factors that go into Medicare Advantage plan cost; this article explains the different out-of-pocket expenses to help you compare plans.
How much is Medicare Advantage?
One key difference between Original Medicare (Part A and Part B) and Medicare Advantage is that Medicare Advantage plans are offered by private insurance companies. This means that each private insurer decides
- which types of plans to offer
- what to charge for premiums and cost-sharing
- what benefits to offer, once they meet the minimum requirements under the law (Medicare requires all Medicare Advantage plans to offer, at a minimum, the same coverage as Part A and Part B).
There is no standard cost of Medicare Advantage plans. You’ll need to look at the documentation for each plan you’re considering to know the actual Medicare Advantage plan cost.
What factors go into the cost of Medicare Advantage plans?
Each Medicare Advantage plan will have some or all of the following out-of-pocket costs:
- Monthly premiums
- Annual deductible
- Cost-sharing, either in the form of a copayment or a coinsurance
Each plan sets its own monthly premium, but it’s important to keep in mind that with all Medicare Advantage plans you must continue to pay your Part B premium. The term “zero premium” doesn’t mean your plan is free, only that there is no additional premium paid to your insurance company.
Under Original Medicare, you have a Part A and Part B deductible. You may or may not have an annual deductible with your Medicare Advantage plan. If you do there is just generally one deductible for both inpatient and outpatient care called your medical deductible. You may also pay a separate prescription drug deductible.
Many Medicare Advantage plans use a copayment system of cost-sharing. Instead of paying 20% of allowable charges for your health care under Original Medicare, with Medicare Advantage you usually pay a flat fee each time you visit the doctor or hospital. A copayment might be $20 for a primary care doctor visit and $50 for an emergency department or urgent care visit, for example. The benefit of copayments over coinsurance, is with copayments you have a better idea of what your costs will be before you receive services.
One thing to remember about Medicare Advantage: The government sets a maximum out-of-pocket limit for Medicare Advantage. In 2018, the limit was $6,700, although some plans set the limit much lower than the federal maximum. Once you reach the maximum, your covered health care costs are paid at 100%.
How do I compare total Medicare Advantage plan cost?
The first place to start is by comparing plan benefits. Many Medicare Advantage plans include Part D coverage for prescription drugs, which means you won’t need to buy a separate prescription drug plan. According to the Centers for Medicare and Medicaid Services, the average base Part D premium in 2018 is $35.02, so if your Medicare Advantage plan includes this coverage, you should factor that into your premium comparisons. You should also consider the cost-sharing for prescription drugs, and what your copayments would be for medications you regularly take.
Many plans also include benefits for routine vision, hearing, and dental care, which are not covered under Original Medicare. If you wear prescription eyewear or visit your dentist regularly, these benefits may reduce your overall out-of-pocket health care costs each year.
Next, look at your cost-sharing for medical care. As a general rule of thumb, Medicare Advantage plans with lower copayments and/or deductibles have higher monthly premiums, and those with lower premiums charge you more out-of-pocket when you get health care.
Compare Medicare Advantage Plan A and Plan B for example:
|Monthly Premium||Doctor visit copayment||Prescription drug copayment||Deductible|
Depending on your health care needs, you may actually save money with Plan B, even though Plan A has a $0 monthly premium.
Finally, consider the out-of-pocket maximum when comparing the cost of Medicare Advantage plans. It may be worth it to you to pay a slightly higher monthly premium for a plan with a lower out of pocket maximum. Keep in mind, however that monthly premiums don’t count toward your out-of-pocket maximum. Only copayments/coinsurance for covered medical benefits are considered in calculating what meets your out of pocket maximum.
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