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How Much Do Medicare Advantage Plans Cost

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Types Of Medicare Advantage Plans

How Can Medicare Advantage Plans Cost $0? | (Hint: They Aren’t Free!)

There are four common types of Medicare Advantage plans to compare when making your selection.

Health Maintenance Organization

  • Must receive your care from providers in your plans network except in the case of emergency care or out-of-area dialysis
  • Requires choosing a primary care provider
  • Typically covers prescription drugs
  • Doesnt require you to select a primary care provider

Special Needs Plans

  • Benefits, drug coverage and provider choices are tailored to best meet the needs of the groups served by the plan.
  • Membership is limited to people with specific chronic diseases or conditions that are disabling, those who require institutional or nursing home care and people who have both Medicare and Medicaid coverage.

Its easy to switch Medicare Advantage plans if youre already using a Medicare Advantage plan. Enroll in a new plan during one of the open enrollment periods, and your old plan will disenroll you once your new coverage begins. If you receive medical insurance through an employer or elsewhere, speak with your provider to understand how you and your familys coverage may change while under Medicare Advantage before deciding to make the switch.

Is Selling Medicare Lucrative

Is Selling Medicare Lucrative? In short, yes. The average Medicare Advantage policy pays around $262 a year in commission if the purchase replaces an existing plan. However, you can get approximately double that $525 if you write up a new Medicare Advantage plan for someone who hasn’t had one before.

Cost Of A Medicare Advantage Plan

The average cost of a Medicare Advantage plan with prescription drug benefits is $33 per month in 2022.

Cheaper options are available, and many people have access to Medicare Advantage plans that cost $0 per month. With these plans, you wouldn’t pay anything on top of what you pay for Medicare Part B. In fact, nearly half of all plans offered cost $0 per month, demonstrating the widespread availability of affordable options.

In addition to the free Medicare Advantage plans, there are also a large number of moderately priced plans. More than a quarter of plans have some monthly cost of less than $50. Plans in this cost range are a popular way to get better coverage than the basic set of benefits. These plans could have lower deductibles, better copayments or more add-on benefits such as dental or vision care, as compared to $0 plans.

Depending on your health care needs, a Medicare Advantage plan with moderate monthly costs may be a good value if the plan’s benefits help you save money on health care.

For example, spending $25 per month on a Medicare Advantage plan would be worth it if the better benefits can save you more than $300 in medical costs, as compared to a $0 Medicare Advantage plan.

There are also more expensive Medicare Advantage plans offered. Plans costing between $50 and $99 account for 14% of plans. Medicare Advantage plans that cost more than $100 are less common, only accounting for 10% of all plans offered.

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What Are The Benefits Of Medicare Advantage

Medicare Advantage plans provide all the same benefits provided by Original Medicare, plus coverage for items and services not covered by Original Medicare, including some vision, some dental, hearing and wellness programs like gym memberships.

Some plans even provide transportation to doctor visits and adult day care services, says Amanda Baethke, director of corporate development at Aeroflow Healthcare in North Carolina, referring to newly expanded supplemental benefits. Plans can also tailor their benefit packages to offer benefits to those who are chronically ill.

Cigna, for example, launched free COVID-19 vaccination transportation for its Medicare Advantage customers. Over 500,000 customers in 23 states are eligible for four one-way trips, up to 60 miles each way, to get a vaccine.

Another bonus to consider is that coverage is expanding. According to a new report commissioned by the Better Medicare Alliance, the number of Medicare Advantage plans offering Special Supplemental Benefits for the Chronically Ill rose from 245 plans in 2020 to 845 in 2021. Some of the top new non-medical benefits offered includeNORC at the University of Chicago. Innovative Approaches to Addressing Social Determinants of Health for Medicare Advantage Beneficiaries. Better Medical Alliance. Accessed 9/6/21. :

  • Resources addressing social needs

Types Of Medicare Health Plans

Medicare Advantage Plans Costs

People in Medicare are either in Original Medicare, or fee-for-service Medicare, or theyre in a Medicare Advantage plan, says Gretchen Jacobson, Ph.D., vice president of Medicare at The Commonwealth Fund, a foundation that supports independent research on health care issues and makes grants to improve health care practice and policy.

Generally, you need to pay a portion of the cost for each service Original Medicare covers out of pocket. And, according to the U.S. governments official Medicare handbook for 2022, theres no limit to what you may pay in a year unless you have other coverage, such as a Medicare Supplement, Medicaid or employee or union coverage, or you enroll in a Medicare Advantage plan.

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How Much Does The Government Pay For Medicare Advantage Plans

Remember that how much you pay for a Medicare Advantage plan only represents a portion of the plan’s cost. The federal Medicare program also pays the insurance company a flat rate for each Medicare enrollee, typically more than $1,000 per month. The actual payment amount varies based on adjustments for location, plan benefits and overall community health.

Paying For A Medicare Advantage Special Needs Plan

Along with having a qualifying medical condition, you must have Original Medicare to be eligible for a Special Needs Plan . Some people who meet these requirements also have Medicaid. For those who have both Medicare and Medicaid, Medicaid helps pay for most of the costs in joining a plan. These costs include premiums, coinsurance, and copayments.

CMS requires that Medicaid pay for copayments and coinsurance for certain people enrolled in MSPs. However, Medicaid is not required to help pay for Medicare Part C insurance premiums. Federal Medicaid laws allow each state Medicaid agency to decide if they will pay Medicare Part C premiums for those enrolled in a MSP as a qualified Medicare beneficiary.

An insurance company can also decide to charge a premium for Part C SNP enrollees who have both Medicare and Medicaid as well as those who dont have both. In this case, you would pay the full Part C premium . SNPs typically have the same basic costs as other Part C plans. This means you could pay around the same average monthly premiums as shown in the table above or maybe even $0 in premiums.

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How To Get The Best Deal With A Medicare Advantage Plan

How you can save:

  • Choose a plan that has benefits that match your medical needs
  • Get a comprehensive bundle that includes prescription drugs, dental and vision
  • Use discounts if you qualify for low-income programs, Medicaid or Special Needs Plans

Ways you could spend more than you need to:

  • Going outside the network for medical care
  • Getting penalties for signing up late
  • Having a plan with a high out-of-pocket maximum when you need expensive medical care

What Are The Benefits Of A Medicare Supplement Plan

How Can They Offer $0 Cost Medicare Advantage Plans?

A Medicare Supplement plan makes your out-of-pocket costs more predictable and easier to budget.

From a cost-sharing perspective, many people like it because you dont need to worry about how much is owed every time you go to the doctor or are hospitalized, said Jacobson. You can literally see any doctor around the country that you would like to see. For example, if you live in Arizona, you can fly to Minnesota to go to the Mayo Clinic.

Unfortunately, Jacobson says having this benefit tends to be much more important for people when theyre sicker. When people first go on Medicare, theyre usually relatively healthy and not thinking necessarily about when theyre sick and what type of plan would be best for them in that situation. The inability to easily switch back and forth between Medicare Advantage and Medicare Supplement makes it pretty complicated for people, she says.

For example, if you join a Medicare Advantage plan for the first time and arent happy with it, federal law grants you special rights if you return to Original Medicare within the first 12 months. After that, you can only disenroll or change plans during the Open Enrollment Period or if you qualify for a Special Enrollment Period. Depending on the type of Special Enrollment Period, you may or may not have the right to buy a Medigap policy.

At the end of the day, the decision often comes down to whether you can afford a Medigap plan, as they can be more expensive.

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Find A $0 Premium Medicare Advantage Plan Today

1 MedicareAdvantage.com’s The Best States for Medicare report.

2 10-minute claim is based solely on the time to complete the e-application if you have your Medicare card and other pertinent information available when you apply. The time to shop for plans, compare rates, and estimate drug costs is not factored into the claim. Application time could be longer. Actual time to enroll will depend on the consumer and their plan comparison needs.

3 TZ Insurance Solutions LLC internal sales data, 2019. This data is based on the Medicare Supplement Insurance policies TZ Insurance Solutions LLC has sold. It is not a comprehensive national average of all available Medicare Supplement Insurance plan premiums.

About the author

Christian Worstell is a senior Medicare and health insurance writer with MedicareAdvantage.com. He is also a licensed health insurance agent. Christian is well-known in the insurance industry for the thousands of educational articles hes written, helping Americans better understand their health insurance and Medicare coverage.

Christians work as a Medicare expert has appeared in several top-tier and trade news outlets including Forbes, MarketWatch, WebMD and Yahoo! Finance.

Christians passion for his role stems from his desire to make a difference in the senior community. He strongly believes that the more beneficiaries know about their Medicare coverage, the better their overall health and wellness is as a result.

How Do You Enroll In Medicare

If you are already collecting Social Security benefits, the government will automatically enroll you in Medicare Parts A and B. However, in certain circumstances you can choose to decline Part B since it has a monthly cost if you opt to keep the coverage, Medicare will deduct the cost from any Social Security benefits you are collecting.

If you arent drawing Social Security benefits yet, your first chance to sign up for Medicare is when you turn 65. Although Medicare provides your healthcare coverage, you have to sign up through Social Security or the Railroad Retirement Board to determine if youre eligible and to find out if you paid Medicare taxes long enough to get Part A without having to pay a monthly premium.

The seven-month enrollment period starts three months before you turn 65 and ends three months after the month of your birthday. Medicare coverage begins based on the month you signed up.

If you miss the seven-month initial enrollment period, you can sign up for Part B during general enrollment, which runs from January 1 to March 1, and coverage will begin on July 1. Note that you will pay a penalty for signing up late: The more years you delay, the higher the penalty.

There are some scenarios where you might want to wait to and you wont be penalized for example, if you or your spouse are still working, and you have health insurance through your job.

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Premiums Paid By Medicare Advantage Enrollees Have Declined Since 2015

In 2022, the average enrollment weighted MA-PD premium, including among those who do not pay a premium, is $18 per month. However, average MA-PD premiums vary by plan type, ranging from $16 per month for HMOs to $20 per month for local PPOs and $49 per month for regional PPOs. Nearly 6 in 10 Medicare Advantage enrollees are in HMOs , 38% are in local PPOs, and 3% are in regional PPOs in 2022. Regional PPOs were established to provide rural beneficiaries with greater access to Medicare Advantage plans.

Average MA-PD premiums have declined from $36 per month in 2015 to $18 per month in 2022. The reduction is driven in part by the decline in premiums for local PPOs and HMOs, that account for a rising share of enrollment over this time period. Since 2015, a rising share of plans are bidding below the benchmark, which enables them to offer coverage without charging an additional premium. More plans are bidding below the benchmark partly because Medicare Advantage benchmarks relative to traditional Medicare have increased over time, and when benchmarks increase, plans are able to keep more for Part A and B services as well as for extra benefits. Further, rebates paid to plans have increased over time, and plans are allocating some of those rebate dollars to lower the part D portion of the MA-PD premium. Together, these trends contribute to greater availability of zero-premium plans, which brings down average premiums.

How Much Does A Medicare Advantage Plan Cost

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The average Medicare Advantage plan costs about $18 per month in 2022, including plans that charge a $0 premium, according to health policy nonprofit KFF

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A Small Share Of Medicare Advantage Enrollees In Individual Plans Have Access To Special Supplemental Benefits For The Chronically Ill But A Larger Share Of Enrollees In Snps Have Access To These Benefits

Beginning in 2020, Medicare Advantage plans have also been able to offer extra benefits that are not primarily health related for chronically ill beneficiaries, known as Special Supplemental Benefits for the Chronically Ill . The majority of plans do not yet offer these benefits. Fewer than half of all SNP enrollees are in plans that offer some SSBCI. The share of Medicare Advantage enrollees who have access to SSBCI benefits is highest for food and produce , meals , transportation for non-medical needs , and pest control .

Medicare Part A : Out

Most people don’t need to pay monthly premiums for Part A. You won’t pay a premium if you or your spouse paid Medicare taxes for at least 10 years while working.

However, you will need to help cover the cost of some fees when you receive care. These expenses come in the form of deductibles and copayments.

If you are admitted to the hospital, you should expect to pay the following:

A deductible is the amount you pay before your insurance pays.

For Part A , the deductible is $1,556 per benefit period.1

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Why Do Medicare Advantage Plans Cost More And How Are They Paid

The government pays Medicare Advantage plans a set rate per person, per year under what is called a risk-based contract.12 That means that each plan agrees to assume the full risk of providing all care for that inclusive amount. This payment arrangement, called capitation, is also intended to provide plans with flexibility to innovate and improve the delivery of care.

But there are layers of complexity built into and on top of that set rate that allow for various adjustments and bonus payments. While those adjustments have proved useful in some ways, they can also be problematic and are the main reason for the extra cost of Medicare Advantage vis-à-vis traditional Medicare.

Benchmarks. Plan benchmarks are the maximum amount the federal government will pay a Medicare Advantage plan. Benchmarks are set in statute as a percentage of traditional Medicare spending in a given county, ranging from 115 percent to 95 percent. For counties with relatively low spending, benchmarks are set higher than average spending for traditional Medicare for counties with relatively high spending, benchmarks are set lower than average traditional Medicare spending . Special Needs Plans and other Medicare Advantage plans are paid in the same manner, with the same benchmarks.

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A resident in a wheelchair at an assisted living facility in Boston on Sept. 2, 2020. In 2021, 43 percent of Medicare beneficiaries were enrolled in Medicare Advantage plans. Photo: Craig F. Walker/Boston Globe via Getty Images

A resident in a wheelchair at an assisted living facility in Boston on Sept. 2, 2020. In 2021, 43 percent of Medicare beneficiaries were enrolled in Medicare Advantage plans. Photo: Craig F. Walker/Boston Globe via Getty Images

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Is Medicare Advantage More Expensive Than Medicare

A Medicare Advantage plan is usually the cheaper overall option for those with low or moderate medical needs, after considering the cost of the plan and expenses for medical care. Medicare Advantage enrollees typically pay very little each month but will pay a larger portion of medical costs. However, choosing a combination of Medicare, Medicare Supplement and a Medicare Part D plan is usually cheaper for those with chronic health problems or ongoing medical needs. This option has higher monthly costs, but enrollees have fewer medical expenses overall.

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