What is Medicare Advantage?

Medicare Advantage, often known as Medicare Part C, is a private insurance company-provided packaged option to Original Medicare. It covers Medicare Parts A and B, usually prescription medication coverage (Medicare Part D), and sometimes other benefits such as dental and hearing coverage. In 2022, 48% of Medicare beneficiaries opted for Medicare Advantage coverage.

What are Medicare Advantage costs?

If you have a Medicare Advantage plan, you may be responsible for the following expenses:

Premiums

Medicare Advantage plans with no premiums are common — 69% of Medicare Advantage enrollees will have no premiums in 2022 — but this is not an absolute. The average monthly cost for individuals with premium plans is $58. Premiums range from $2.10 to $302 per month.

In addition to the Medicare Advantage plan payment, enrollees must pay the Medicare Part B premium, which in 2023 is $164.90 per month. Some Medicare Advantage plans will pay a portion or all of your Part B fee.

Prescription drug costs

Prescription drug coverage is included in Medicare Advantage plans for the vast majority of beneficiaries. If you have a Medicare Advantage plan that does not charge a premium and includes prescription drug coverage, you will not have to pay a premium for Medicare Part D coverage. If your plan provides prescription medication coverage and levies a premium, the drug benefits are covered.

Coinsurance, copayments and deductibles

When you seek medical care, you may be required to pay a deductible, coinsurance, and/or copayments, depending on your Medicare Advantage plan. Because many plans have no premium, understanding the plan's cost structure is important, especially if you have a chronic disease.

• Deductible: The amount you must pay out of pocket before your Medicare Advantage plan begins to cover qualified treatments.
• Coinsurance: A percentage of your medical costs, such as 20% of services, that you pay out of pocket, usually after you have met your deductible.
• Copayment: A flat fee you pay for a specific service, such as a doctor’s visit or emergency room trip.

These are out-of-pocket expenses, and Medicare Advantage plans must set a cap on how much you can spend out of pocket each plan year. In-network service limits cannot exceed $8,300 in 2023, while the average out-of-pocket maximum is $4,972. The average out-of-pocket limit for in-network and out-of-network services combined is $9,245.

Out-of-pocket expenses for prescription drug benefits are separate. Part D expenditure has no out-of-pocket limit, but once you reach $7,400 in medication spending in 2023, you'll only pay 5% of prices for the rest of the plan year. (Out-of-pocket prescription spending will be limited to $2,000 per year beginning in 2025.)

Costs for additional benefits

Medicare Advantage programs often provide access to additional benefits not available under Original Medicare. Some plans demand an extra premium for additional coverage.

Members of some Kaiser Permanente Medicare Advantage plans, for example, have access to the company's Advantage Plus coverage package, which costs $16 per month and includes full dental, hearing, and additional vision care. However, the cost of most Medicare Advantage plans includes additional benefits.