On average, the monthly premiums for Medicare Advantage in 2021 are $148.50 for Medicare Part B and $25 for an Advantage plan.
However, some Advantage plan premiums cost nothing, while others cost considerably more than the average. A person can choose from low, medium, or high premium plans, depending on their preferred coverage.
Premiums are not the only costs. When calculating the expense, a person must factor in deductibles and copayments.
In this article, we examine the premiums of Medicare Advantage plans and the factors that influence the total costs. We also look at how they compare with other plans.
A person who has enrolled in Medicare Advantage must pay Medicare Part B monthly premiums in addition to premiums for their Advantage plan.
Part B monthly premiums in 2021 are $148.50, although this amount may vary with income.
For instance, some individuals with social security benefits may pay a little less, and some Medicare Advantage plans pay all or part of Part B premiums.
The average premium for a Medicare Advantage plan in 2020 was $25 per month. Although this is the average, some premiums cost $0, and others cost well over $100.
Aside from monthly premiums, the costs of Advantage plans include deductibles and cost sharing in the form of copayments or coinsurance.
We may use a few terms in this piece that can be helpful to understand when selecting the best insurance plan:
- Deductible: This is an annual amount that a person must spend out of pocket within a certain time period before an insurer starts to fund their treatments.
- Coinsurance: This is a percentage of a treatment cost that a person will need to self-fund. For Medicare Part B, this comes to 20%.
- Copayment: This is a fixed dollar amount that an insured person pays when receiving certain treatments. For Medicare, this usually applies to prescription drugs.
The amounts of the above payments vary with both the state and the plan. Other factors that affect costs are the following:
- the scope and frequency of healthcare services that a person needs
- whether a person’s plan offers extra benefits, which involve higher premiums
- whether a person goes to a healthcare provider that accepts Medicare
- whether a person goes to an in-network or out-of-network provider
People can use this tool to find plans on offer in their area. Each plan provides details on coverage, copayments, and deductibles.
Medicare Advantage plan providers put a yearly cap on costs, meaning that a person does not have to pay for any expenses that exceed the cap.
In 2021, the cap for out-of-pocket costs in Medicare Advantage plans was $7,550. This amount is the limit for plans that do not include prescription drug coverage.
However, this is the upper limit, and many plans have lower caps.
Medicare has a tool that a person may use to compare the yearly cost of Original Medicare with that of Medicare Advantage plans.
When using the tool, people select either a low, medium, or high premium Advantage plan. Regardless of which premium they choose, the estimated yearly cost is lower with Medicare Advantage than with Original Medicare.
The cost comparison tool also allows a person to check whether they want to include Part D, which is prescription drug coverage, and Medigap, which is supplemental insurance to cover costs that Medicare does not.
If a person adds these plans, the cost of Original Medicare increases, making the cost difference between Medicare Advantage and Original Medicare greater.
For people receiving social security retirement benefits, Medicare Part B premiums will come out of their monthly check.
Those who do not receive benefits may pay their premiums every 3 months by check, credit card, or automatic debit from a checking account.
An individual pays their Advantage plan premium to the private company that provides it.
Methods of payment vary among providers, but they often include check, credit card, and automatic debit.
Not everyone can afford to pay Medicare premiums, including those for Medicare Advantage.
People with a limited income may receive help with payments if they qualify for Medicare Savings Programs (MSPs) or Medicaid.
Medicare Savings Programs
A person may apply for MSPs if they have or are eligible for Medicare Part A.
They must have an income below a set threshold, as well as limited resources in the form of stocks, bonds, and money in a bank account.
The four kinds of MSPs include:
- Qualified Medicare Beneficiary Program: The monthly income limit to enroll is $1,084 for an individual and $1,457 for a married couple. This program helps pay for premiums for Part A and B, along with copayments, coinsurance, and deductibles.
- Specified Low-Income Medicare Beneficiary Program: The monthly income limit to enroll is $1,296 for an individual and $1,744 for a married couple. This state program helps pay for Part B for people with Part A.
- Qualifying Individual Program: The monthly income limit is $1,456 for an individual and $1,960 for a married couple. This state program also helps pay for Part B for people with Part A.
- Qualified Disabled and Working Individuals Program: The monthly income limit is $4,339 for an individual and $5,833 for a married couple. This program helps a working person with a disability pay for Part A premiums.
Medicare may change the costs for each plan annually.
Medicaid is an alternative program that provides help with healthcare costs. Some states call the program Medi-Cal or Medical Assistance.
Medicaid is a joint federal and state program for people with a low income and limited resources.
It may provide coverage of services that Medicare does not fully cover, such as personal care, community services, and transportation to healthcare facilities.
States vary in their income and resource requirements for enrollment in Medicaid.
Many factors can cause Medicare Advantage expenses to vary.
In 2021, this amount includes the Medicare Part B premium of $148.50 and an average Medicare Advantage plan premium of $25.
Medicare Advantage plans also put a yearly cap on costs, which is a benefit that Medicare Part A and B do not offer.
The costs and benefits of different Medicare plans can vary depending on an individual’s situation, so it is best to consider the pros and cons of each.