How Much Do Medicare Advantage Plans Cost?

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Medicare Advantage plans are becoming a popular choice with 2 out of 3 new Medicare beneficiaries picking Medicare Advantage.

If you are turning 65 or currently under Original Medicare, you might be thinking of enrolling in a Medicare Advantage plan to get more comprehensive medical coverage which might be necessary because as you age, your medical needs will increase.

This article gives an overview of the costs, including premiums and out-of-pocket expenses contributing to Medicare Advantage plan cost. We will also be a compare the cost of Original Medicare and Medicare Advantage plans. Plus, we will be sharing tips in choosing an affordable Medicare Advantage plan.

What is a Medicare Advantage plan?

Otherwise known as Medicare Part C, Medicare Advantage is a health insurance plan offered by private insurance companies that have been pre-approved by the federal government to deliver Medicare coverage and services to Medicare beneficiaries.

A Medicare Advantage plan includes the primary benefits of Original Medicare (Part A Hospital Insurance and Part B Medical Insurance). However, with Medicare Advantage, you get additional benefits like dental, vision, hearing, and wellness programs.

Unlike Medicare Supplement (also known as Medigap) plans, Medicare Advantage plans have no medical underwriting. As long as you are eligible for Medicare, you will always be accepted into a Medicare Advantage plan and can not be denied coverage.

It is advisable to compare the Medicare Advantage plan cost of MA plans before settling on one.

What do Medicare Advantage plans cost?

The Medicare Advantage costs will consist of:

Medicare Part B Premium: Even if you are enrolled in a Medicare Advantage plan, you still need to pay the standard Medicare Part B premium you would pay under Original Medicare. The standard premium rate is $164.90 in 2023. However, the premiums for the Medicare advantage plan cost higher if your income exceeds a threshold.

Medicare Advantage (Part C) Premium: Based on the Centers for Medicare and Medicaid Services (CMS), the Medicare Advantage premiums have a monthly average of $18 in 2023.

However, many Medicare Advantage plans have $0 premiums in fact 66% of Medicare Advantage plans in 2023 have $0 premiums.

How is this possible? Medicare Advantage companies receive funds from the federal government to deliver you Medicare-approved coverage and healthcare services. In other words Medicare Advantage plans are considered an ‘alternate’ way to get your Medicare services and the Part B premium you pay to Medicare used to pay private insurance companies who contract with the federal government.

Deductible: Deductibles refer to an amount you have to pay first before your plan’s benefits kick in. While most Medicare Advantage plans have no medical deductible, may see a deductible for prescription drugs if you are enrolled in a Medicare Advantage plan that bundles in prescription drug coverage.

Copayment: For most Medicare Advantage plans, you will have a fixed fee for every doctor – known as a copayment. The fee averages $0 to $20 for primary doctors and $20 to $50 for specialists. There are also copayments for the first 5-7 days of your hospital stay.

Coinsurances: This is a percentage of cost-sharing that you should pay after meeting the deductible. Typically you may find coinsurance fee structure for out-of-network services (if you are in a plan that will cover out-of-network costs, such as a PPO plan), or for high-value medical procedures.
Maximum out-of-pocket limit: The federal government sets the absolute maximum out of pocket for consumers using Medicare Advantage plans. In 2023, this is $8,300 for costs within the network and $12,450 for costs in- and out-of-network). Your plan may choose to have a lower maximum out-of-pocket cap; however, it cannot be higher than these limits. Once you exceed your plan’s maximum out-of-pocket cap, your plan pays for 100% of your medical costs.
Prescription Drug Costs: If you are a heavy user of prescription drugs, you may also have other costs such as deductibles and copays. While 89% of Medicare Advantage bundle Part D Prescription Drug Plan – the costs of your prescriptions are separate to the medical/hospital benefits in your Medicare Advantage plan and importantly, do not count towards your Maximum Out of Pocket limit mentions above.
Additional Benefits: 97% or more of individual Medicare Advantage plans offer vision, fitness, telehealth, hearing, or dental benefits. These benefits typically do not require you to pay additional premiums, however, like other coverage noted here – will have its own copays and coverage limits when services are used.

How do I find the most affordable Medicare Advantage plan costs?

Here are some factors to consider in comparing the overall total cost of Medicare Advantage plan for your situation:

Does the plan charge a monthly premium or zero-premium?
Does the plan have a deductible that you have to pay before your insurance kicks in?
How much are copayment and coinsurance fees for every visit or service and how often will you use these services?
Does the plan limit your coverage to a specific network of health providers? Some plans will cover out-of-network services but at a higher cost. This flexibility adds to the Medicare Advantage plan but adds to your total overall cost.
Are there vision, dental, hearing, and wellness benefits included in the plan, and how much coverage is provided if there is?
What is the maximum out-of-pocket cap/limit, and can you afford this in the worst-case scenario? If not, you may want a plan with higher a premium (upfront cost) and a lower max out-of-pocket liability.

It is recommended to get a proper balance of benefits against Medicare Advantage plan cost.

How do Medicare Advantage costs differ from Original Medicare?

Under Original Medicare, your cost includes:

Part A (Hospital Insurance) is free as long as you have paid more than 10 years of Medicare taxes while working. You also have a $1,600 copayment to cover your first 60 days of care in a hospital.
Part B (Medical Insurance) has a standard monthly premium of $164.90. You also have an annual deductible of $226 before Part B insurance kicks in, plus a 20% coinsurance obligation after reaching your deductible for all Medicare-approved services (Original Medicare will pay for 80% of services.

You can get optional prescription drug coverage by paying for a standalone Part D Prescription Drug Plan. The estimated average monthly premium for Medicare Part D stand-alone drug plans is projected to be $43 in 2023, based on current enrollment,

Out-of-pocket expenses under Original Medicare like deductibles, copayments, and coinsurance are considered “gaps” in Original Medicare. A Medicare Supplement plan, otherwise known as Medigap, is intended to pay for out-of-pocket costs that are not covered by Original Medicare, such as Part B coinsurance. Monthly premiums range from $90 to $300.

Depending on your risk appetite, you may decide to pay upfront for healthcare costs instead of paying only when the need arises. You may want to consider that by paying a monthly premium with Medigap. By paying a premium, you pass on the burden/risk of out-of-pocket costs when you use healthcare services to the private insurer.

Read our article which explains the differences between Medicare Advantage vs. Original Medicare in more detail.