How Much Does Medicare Advantage Cost?

27 minute read| Updated for September, 2020
Key Takeaways:
  • There are a number of factors that can affect what you pay for Medicare Advantage, such as if your plan charges a monthly premium or not.
  • Your Medicare Advantage Plan provider, rather than Medicare, determines what you pay for your coverage.
  • What you pay for your Medicare Advantage plan can only change once each year.
  • Along with your Medicare Advantage monthly premium, the costs you’ll incur can include deductibles and cost-sharing (copayments or coinsurance).
  • The federal government has a website that you can use to help you determine costs for a Medicare Advantage plan.

If you are on a budget, it’s important that you determine what your exact costs will be for a Medicare Advantage plan. This is because the cost for a Medicare Advantage plan depends upon a number of factors.

Money Wallet

The plan provider (rather than Medicare) will decide how much you pay for your covered healthcare services. It is also important to note that every year, the plan you select can change the amounts they charge for premiums, deductibles, and services. However, what you pay for your Medicare Advantage plan may only change once a year, on January 1.

Unlike Original Medicare, all Medicare Advantage plans must set an out-of-pocket limit for their plan members.

What is Medicare Advantage?

Medicare Advantage (Medicare Part C) is an alternative you can choose instead of Original Medicare (also known as Medicare Parts A and B). A Medicare Advantage plan covers more than Original Medicare and is sold by private insurance companies that contract with Medicare.

What Can You Expect to Pay for Medicare Advantage?

Along with your Medicare Advantage monthly premium, the costs you’ll incur can include deductibles and cost-sharing (copayments or coinsurance). 

Here’s what we mean:

Deductible: This is the annual cost you must pay out of pocket within a specific period of time. Some Medicare Advantage plans require that you meet a yearly deductible before your coinsurance kicks in.

Coinsurance: This is a percentage of the cost for treatment that you will need to pay. For example, with Medicare Part B, the percentage you’ll pay is 20%. Medicare Advantage plans share costs with plan members, which means that you’ll mostly have copays rather than require coinsurance.

Copayment: This is a small, fixed amount you will pay when receiving certain treatments or services. With Medicare, this typically applies to prescription drugs.

The good news is that, unlike Original Medicare, all Medicare Advantage plans must set an out-of-pocket limit for their plan members.

Some general information to consider:

  • You must pay for Medicare Part B plus your monthly Advantage premium. However, some Advantage plans all or part of your Part B premium.
    • There is typically one annual deductible you must meet. This varies by plan. Some higher-premium plans have a $0 deductible.
  • Coinsurance also varies by plan. The typical copayment is $10 or $20 for primary care.
  • The out-of-pocket maximum in 2020 is $6,700. This amount may be lower for higher-premium plans.
  • If you’re in a Medicare Advantage plan, your plan may have different rules. Some services may only be covered in certain settings or for patients with specific conditions. But, your plan must at least provide you with the same coverage as Original Medicare.

It’s important to select your Medicare Advantage plan during what is known as the Open Enrollment Period each year.

10 Things That Can Affect the Cost of Your Medicare Advantage Plan

There is no one set formula for what all Medicare Advantage plans cost. Instead, the exact amount that you will pay depends on many factors. These factors include:

  • Whether the plan charges a monthly premium or not. Some Medicare Advantage plans don’t require a premium.
  • Whether the Medicare Advantage plan pays any portion of your monthly Medicare Part B (Medical insurance) premium. Some Medicare Advantage plans pay for all, or part, of your Part B premium.
  • Whether the plan you choose requires a yearly deductible (the portion you must pay before the plan does) or any additional deductibles.
  • How much you pay for each healthcare visit or service. This is known as your copay or coinsurance cost. Some plans charge a copayment, like $10 or $20, each time you visit a doctor. These amounts can vary from those with Original Medicare.
  • The type of healthcare services you require, and how often you need these services.
  • Whether you go to a doctor or supplier if:
  • Whether you follow the plan’s rules, like using network providers. If you use healthcare services outside of the network, you’ll be charged more.
  • Whether you require extra benefits outside what the plan covers, and if the plan charges for these benefits.
  • What the Medicare Advantage plan’s yearly limit is on your out-of-pocket costs for all medical services.
  • Whether you are on Medicaid or you get assistance from your state.

*Figures based on 2020 costs as provided by the Centers for Medicare and Medicaid Services.

The Plan You Choose and When You Sign Up For It Determines Your Medicare Advantage Cost

It’s important to select your Medicare Advantage plan during what is known as the Open Enrollment Period each year. This is because private insurance companies are typically allowed to perform medical underwriting to decide whether to accept your application, and how much to charge you. During this Open Enrollment Period, your current health condition won’t impede you from being able to buy any Medicare Advantage plan a company sells for the same price as people in good health.

The annual Medicare Open Enrollment period is from October 15 through December 7 each year. If you enroll during this time period, you can ensure that you get the best price and coverage from the Medicare Advantage plan you select.

Where Can You Go to Get Help Determining Your Medicare Advantage Cost?

The federal government has a handy online tool you can use to determine your specific Medicare Advantage costs. Go to www.medicare.gov/oopc/ and find the answer to all of your important questions.

If you would like to learn additional information to help you during the enrollment process, contact a licensed Medicare professional. They can guide and empower you as you make important decisions about the future of your healthcare coverage.