Medicare Advantage Costs

Does Medicare Advantage Require a Premium?

There is no black-or-white answer to this question, as each plan varies. Medicare Advantage costs can vary drastically from one location, carrier, or plan to another. That said, many Medicare Advantage plans charge a monthly premium. The average premium of Medicare Advantage plans nationwide is $18.50 per month.2 However, many Medicare Advantage plans offer $0 premiums. Either way, Medicare Advantage premiums tend to be relatively low when compared to non-Medicare private insurance plans.

It’s also important to remember that most Medicare Advantage beneficiaries will still have to pay their Part B premium. As of 2024, the monthly premium for Medicare Part B is $174.70.3 Certain carriers offer a Part B Giveback benefit, which deposits a portion of your Part B premium back into your Social Security check. That said, most plans do not offer Part B Giveback, so you should factor the Part B premium into the overall cost of a Medicare Advantage plan.

Do Medicare Advantage Plans Have a Deductible?

Like premiums, deductibles vary widely between different Medicare Advantage plans. Generally, Medicare Advantage plans use two different kinds of deductibles: medical deductibles and prescription drug deductibles. They may go by different names depending on the carrier, but they refer to the same things. A medical deductible is the amount you may pay each year (or benefit period) toward services covered under Part A and Part B before your coverage kicks in. A prescription drug deductible (sometimes called a pharmacy deductible) is the amount you’ll need to pay toward prescription medications before your plan starts covering drug costs.

Some Medicare Advantage plans have both medical and pharmacy deductibles, while some plans have neither. Choosing a $0 deductible plan helps ensure that you receive coverage for products and services as soon as your plan begins. This is especially enticing compared to Original Medicare, which sets a deductible of $1,632 per benefit period for Part A and $240 per year for Part B. Since Original Medicare does not cover prescription drugs (in most cases), these are only the “medical” deductibles. Whether you get a stand-alone Part D plan or prescription drug coverage through Medicare Advantage, the maximum prescription drug deductible cannot go over $545 (as of 2024).4

In most cases, your Medicare Advantage medical deductible will be lower than the combined deductibles of Original Medicare ($1,872 in total). Similarly, most Medicare Advantage plans that include Part D coverage offer low or no prescription drug deductibles. Even though you may have to pay an additional premium for Medicare Advantage, you can often save with lower medical and drug deductibles.

Do Medicare Part C Plans Have a Copay?

All Medicare Advantage plans have copays. Copays refer to the out-of-pocket costs you pay for services, from primary care physician (PCP) visits to scheduled lab tests. Each plan calculates copays differently and copays can vary substantially based on the type of service you use. Oftentimes, plans with higher premiums or deductibles will have lower copays, though this is not always the case.

Copays can be calculated as a set dollar amount or as a percentage of the total cost of the service. In the sections below, you’ll find the copays for Original Medicare in 2023 (after your deductible has been met). While these will not match the copays of many Medicare Advantage plans, they will help you compare Original Medicare’s costs to Part C plans as you shop.

Part A Copays

• Inpatient hospital stay:
  • Days 1-60: $0
  • Days 61-90: $408 per day
  • Days 91-150: $816 per day
  • After day 150: 100 percent of the cost
• Skilled nursing facility stay:
  • Days 1-20: $0
  • Days 21-100: $204 per day
  • After day 100: 100 percent of the cost
• Home health care: $0 (or 20 percent for durable medical equipment)
• Hospice care: $0 (or 20 percent for respite care)

Part B Copays

• Clinical laboratory services: $0
• Home health care: $0 (or 20 percent for durable medical equipment)
• Inpatient hospital care: 20 percent of the cost
• Outpatient mental health care: $0 for yearly depression screening and 20 percent for doctor visits
• Partial hospitalization mental health care: 20 percent of the cost
• Outpatient hospital care: Usually 20 percent plus a copay for each service provided by the hospital

Out-of-Pocket Maximums With Medicare Advantage Plans

Medicare Advantage carriers set annual out-of-pocket maximums for its plans. Once you spend a specific amount on covered medical expenses in a given year, your Medicare Advantage plan will cover 100 percent of your eligible medical costs for the rest of the year. This is one of the main perks of Medicare Advantage that you won’t get with Original Medicare. That said, you can reduce out-of-pocket costs by combining Original Medicare with a Medicare Supplement (Medigap) plan — something that’s not available with Medicare Advantage.

In any case, the out-of-pocket maximums, like most costs associated with Medicare Advantage, can vary substantially. There is a limit on the maximum a Medicare Advantage carrier can set; as of 2024, the highest out-of-pocket maximum is $8,850, but many carriers and plans offer lower Like most costs associated with Medicare Advantage, you could potentially get a lower out-of-pocket maximum by making concessions. like a higher premium, higher deductible(s), or higher copays.

What Other Costs Are Associated With Medicare Advantage Plans?

While your premium and copays are the primary costs you’ll pay, there are also other costs that may or may not apply to your plan. Most Medicare Advantage beneficiaries will need to continue paying their Part B premium. Additionally, you will need to factor in the cost of coinsurance. Coinsurance refers to the ratio of shared costs between you and your insurance carrier.

The standard coinsurance with Original Medicare is 80/20, where Medicare covers 80 percent of the cost (once you meet your deductible) and you pay the remaining 20 percent. However, coinsurance is not uniform across all Medicare Advantage plans, as many carriers use copays in place of coinsurance. But even within one plan, you may find that some services are paid through copays while others are paid through coinsurance.

Is Medicare Advantage More Expensive Than Original Medicare?

Medicare Advantage can be more expensive than Original Medicare, but it can also be more affordable. It depends on many different factors, including your location, your health needs, and the costs outlined above (premiums, copays, deductibles, etc).

For example, with Original Medicare, you can typically go to any doctor or hospital that accepts Medicare and pay the same copay or coinsurance. Most Medicare Advantage plans (especially HMOs and PPOs) use networks of health care providers. With HMOs or PPOs, seeing an in-network provider will cost less than seeing an out-of-network provider.

At the same time, there are many benefits offered with Medicare Advantage plans that are not available with Original Medicare. With Part C plans, you could potentially get coverage for dental, vision, hearing, and fitness. Some carriers even offer annual spending allowances on a wide range of necessities, from eyewear to over-the-counter wellness products.

Therefore, the differences in cost often come down to your personal needs and habits. If you travel frequently, it may be more advantageous to enroll in an Original Medicare plan, as it will not use networks. On the other hand, if you have regular vision and hearing costs, you could potentially save by choosing a Medicare Advantage plan that already includes these benefits, rather than paying out of pocket or getting individual plans for each type of service. Be sure to speak with your primary care physician and evaluate your overall needs and expenditures to determine if Medicare Advantage is the more affordable option for you.

How to Get the Best Deal on Your Medicare Advantage Plan

If you do choose a Medicare Advantage plan, there are a few ways you could save on the costs of healthcare. Here are some tips to help you make the most of your plan:

1. Know your plan’s network. If you have specific doctors, hospitals, or pharmacies you use, make sure they're included in the plan's network, as going out-of-network can incur much higher out-of-pocket costs, particularly with HMO plans.
2. Know your plan’s drug coverage. If you take prescription medications, you’ll want to ensure that they’re included in your plan’s drug formulary.
3. Research your plan and carrier. Medicare rates plans on a five-star scale, considering factors such as customer service and patient satisfaction. A higher-rated plan might cost more, but it could also provide better care and service.
4. Consider your health needs. Are you planning any surgeries or procedures in the coming year? Do you have a chronic condition that requires treatment? If you expect your health needs to change, make sure your plan offers coverage for them.
5. Use Medicare's plan finder tool. The official Medicare Plan Finder lets you search for available plans using your ZIP code. This includes Medicare Advantage, Medigap, and stand-alone Part D plans.
6. Enroll on time. Medicare Open Enrollment runs every year from October 15 to December 7. If you already have a Medicare Advantage plan and you want to change to a new one or switch to Original Medicare, you can do so during the Medicare Advantage Open Enrollment period, which runs from January 1 to March 31 every year. Enrolling late could incur penalties and make your insurance more expensive.

As you can see, there are many factors to consider when choosing the best Medicare plan for you. If you’d like to learn more about the potential benefits of Medicare Advantage or you want to find a plan today, be sure to check out SeniorLiving.org’s picks for Medicare Advantage plans.