What You Pay in a Medicare Advantage Plan

Last Updated : 11/27/20194 min read

Medicare Advantage plans frequently offer more benefits than Original Medicare and may have lower out-of-pocket costs. Your health insurance rate and out-of-pocket costs will depend on the particular Medicare Advantage plan you choose. Some plans charge monthly premiums, and many plans have an annual deductible.

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Other costs may include copayments for each doctor or hospital visit, and premiums for optional benefits, such as vision, hearing, and/or dental coverage.

Medicare Part B and Medicare Advantage premiums

Even if you enroll in a Medicare Advantage plan, you are still required to pay your monthly premium for Medicare Part B coverage. Medicare Part B premiums must be paid directly to Medicare. The monthly cost may increase based on your annual household income from two years prior.

In addition to the Medicare Part B premium, Medicare Advantage plans often charge a monthly premium for coverage. You may even find $0 premium Medicare Advantage plans; however, in these plans, you may be responsible for higher cost sharing. A detailed comparison of the Medicare plan options available in your service area will help you control your overall Medicare costs.

Medicare Advantage annual deductibles

Health insurance premiums are often based partly on each health plan’s annual deductible. Some Medicare Advantage plans require you to meet an annual deductible before your coinsurance takes effect. These deductibles vary by plan, with higher annual deductibles often meaning lower monthly plan premiums.

If you are worried about your Medicare costs, you may consider whether a Medicare Advantage plan with a higher monthly premium or one with a higher annual deductible will save you the most money. Typically, if you are ill or fall sick often, a plan with a higher monthly premium and a lower annual deductible may be able to save you the most money in the long run. You should also pay attention to the plan’s Maximum Out-of-Pocket (MOOP) amount. This is the maximum you’ll spend out of pocket for covered services in a given year. Once you reach this spending limit, the Medicare Advantage plan typically covers 100% of the cost for covered services. Enrolling in a plan with a low MOOP limit could be another way to lower your Medicare costs.

Medicare Advantage deductibles decreased 13 percent in 2019, according to eHealth reseach.

Copayments in Medicare Advantage plans

Medicare Advantage copayments can vary drastically between plans. Some plans charge copayments for doctors’ visits, hospital stays, ambulance rides, and/or visits to the emergency room. Copayments are sometimes structured on a two- or three-tier system. For example, visits to your primary care physician may have lower copayments than a visit to a specialist. Emergency care copayments, if applicable, are often the most expensive. The Summary of Benefits provides a detailed review of the Medicare Advantage plan and will explain your plan’s particular copayment structure.

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Prescription costs in Medicare Advantage Prescription Drug plans

Medicare Advantage plans that include prescription drug coverage will have a formulary, which is a list of covered prescriptions. The formulary places prescriptions into tiers, with generic prescriptions generally located in the lowest one. The lowest-tiered prescriptions are typically cheaper than the drugs located in the higher tiers.

Medicare Advantage plan spending limits

It is important to note that most annual out-of-pocket spending limits apply only to in-network Medicare providers. If you choose to go out-of-network for services, you may either be subject to a higher out-of-network MOOP limit or your payments may not be figured into your annual expenditures at all.

The average out-of-pocket limit for Medicare Advantage plans decreased from $5,815 to $5,164 in 2019, according to eHealth research.

Medicare Advantage Out-of-Pocket Limits


Source: Medicare 2019 Open Enrollment: Costs and Sentiments

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