Medicare Advantage plans, also called Medicare Part C, offer an alternative way to get your Part A and B coverage through Medicare-approved private companies. Along with your hospital and medical insurance, you can get extra benefits like vision, dental, and hearing coverage plus fitness and transportation benefits. Most Medicare Advantage plans include drug coverage, or Part D prescription coverage, as well.
The projected average premium for a Medicare Advantage plan in 2023 is $18 per month. But costs can vary widely depending on the level of benefits you choose, your deductibles and copays, and the company you go with.
Learn about average costs in 2023 by company, including average drug deductibles and maximum out-of-pocket costs by plan.
Average Cost of Medicare Advantage Part C
While the average cost of Medicare Advantage is projected to be $18 per month in 2023, the amount you end up paying can vary quite a bit. The cost differences can be due to a variety of factors such as the plan types, copays, drug coverage or the lack thereof, and extra benefits. For example, premiums on Medicare Advantage Plans in Miami, Florida ranged from $0 to $111 per month.
Here’s an example of two Humana Medicare Advantage plans available in the Miami area; one with a $0 premium and one with a $111 premium:
- Humana Gold Plus H1036-054C (HMO): $0 monthly premium, $0 deductible, and $0 copays for health and drug coverage. There’s a $500 maximum out-of-pocket (OOP) limit for in-network services. The plan’s benefits include certain vision services, dental, hearing, limited transportation services, certain fitness services, and certain telehealth services, and it provides partial coverage for over-the-counter drugs and in-home support. However, the plan doesn’t include home and bathroom safety devices and personal emergency response devices.
- HumanaChoice R5826-005 (Regional PPO): $111 monthly premium that includes health and drug coverage. The health deductible is $750 and the drug deductible is $100. Doctor visits require a $5 copay. The OOP limit for in-network services is $6,700 and $10,000 for all services. This plan’s benefits include limited vision services, hearing visits (but not hearing aid or hearing aid fittings), dental, certain fitness expenses, certain over-the-counter drugs, and certain telehealth services. Transportation, in-home support, home safety device, and personal emergency response devices are not covered.
The second plan is much more expensive and has fewer perks, but it gives policyholders the freedom to choose the doctors and providers they want to use. Additionally, it has better vision and dental coverage than the first plan.
Most Medicare Advantage Plan premiums don’t include the Part B premium of $164.90. The total you’ll end up paying is the Medicare Advantage premium plus the Standard Part B premium.
Here’s a look at nationwide averages for monthly premiums, annual drug deductibles, and out-of-pocket maximums from several of the biggest Medicare Advantage providers.
|Medicare Advantage Company||Average 2023 Plan Medicare Star Ratings||Average 2023 Premium (Monthly)||Average 2023 Drug Deductible (Annual)||Average 2023 Maximum OOP|
|Blue Cross Blue Shield||4.3||$35.96||$146.62||$5,188.70|
Source: Centers for Medicaid and Medicare Services (CMS) Source Files (2023 Medicare Advantage Plans with Prescription Drug Coverage)
Factors Influencing Cost
Prescription Drug Coverage
Medicare’s prescription drug coverage, or “Part D,” covers the costs of a wide range of prescription drugs. Most Medicare Advantage plans include Part D coverage, but not all. For example, of the 54 Medicare Advantage plans available in the 33101 zip code, 49 included drug coverage (90%). Part D may increase the cost of the plan as well as the type and quantity of drugs you need.
But not all Medicare Advantage plans with drug coverage are created equally. How much they pay for drugs in the Medicare donut hole or Medicare coverage gap can vary greatly. Providers can charge you up to 25% of the cost of drugs while you’re in the gap, but many provide additional drug coverage in the gap. For example, some plans will cover generic drugs in the gap coverage phase, while others may cover preferred, non-preferred, and/or specialty tier drugs. The more Part D drug coverage, the higher the premium is likely to be.
The Medicare Advantage plan type you choose can also play a big factor in your cost, as the example above demonstrated. The two main plan types are Health Maintenance Organizations (HMOs) and Preferred Provider Organizations (PPOs). Here’s a closer look at each:
- HMO: HMO plans come with a network of health care providers, doctors, and hospitals that you must use for your plan to cover the services you receive. They’re often cheaper than PPOs.
- PPO: PPO plans also typically have a network of doctors but provide coverage if you want to visit an out-of-network health care facility or provider. Also, you typically don’t have to get a referral to see a specialist. But with the increased flexibility comes higher premiums and higher out-of-pocket costs.
You may also come across a few Medical Savings Accounts (MSAs). These have two parts: a high-deductible health plan and medical savings account. The health plan only begins to cover your costs once you meet your deductible. However, the MSA plan deposits money into a special savings account that you can use to pay for your health care expenses right away. Once you’ve used all the money in your savings account, you’ll need to cover the costs out of pocket until your deductible is met. An MSA may end up being cheaper than other plans if your expenses are less than the yearly deposit from the plan or much higher than your annual out-of-pocket limit.
If your Medicare Advantage plan includes drug coverage, it may have a drug deductible—the amount you pay per year for drugs before your plan kicks in and covers the costs. When comparing quotes for Part C plans with drug coverage on Medicare.gov, you can add the drugs you need and your preferred pharmacy. The site will then calculate your drug costs based on your specific situation so you can compare plans side by side.
A copay is the dollar amount you’re required to pay for a particular service. Medicare Advantage plans can have a variety of copays for services such as:
- Primary doctor visits
- Specialist visits
- Diagnostic radiology services
- Outpatient x-rays
- Outpatient hospital coverage
- Drug copay
It’s important to compare a plan’s copays so you can decide which one gives you the best value. A plan could have a $0 monthly premium but high copays that end up costing you more than a plan with a higher monthly premium and lower copays.
Annual Maximum Out-of-Pocket Cost
Medicare Advantage Plans place a yearly maximum limit on the amount that you can pay out of pocket for qualifying health services. Qualifying expenses include copays, coinsurance, and deductibles. Once you’ve hit the annual limit, the plan pays 100% of your additional covered cost. So, the lower the limit, the better. However, lower limits may come with higher plan costs.
Medicare Advantage plans also provide additional benefits that Original Medicare doesn’t, including:
- Worldwide emergency
- Over-the-counter drugs
- In-home support
- Home safety devices & modifications
- Emergency response devices
Each of these benefits may increase the cost of your plan. Be sure to check a plan’s benefits to understand the full value being offered.
Medicare Star Ratings
Medicare star ratings can help you quickly understand a plan’s quality and performance. The star rating is based on multiple factors including:
- Drug plan ratings: The drug plan ratings take into consideration factors such as customer service, member complaints, member experiences with the plan, drug safety practices, and the accuracy of drug pricing provided.
- Health plan ratings: The health plan ratings consider various aspects like customer service, member complaints, members leaving the plan, and the quality of preventative care and care for long-term conditions.
How To Save Money on Medicare
Four state-run programs can help qualifying policyholders pay for Medicare expenses including Part A and B premiums, deductibles, copays, and/or coinsurance. To qualify, you must meet certain requirements. Here’s a closer look at each program.
- Qualified Medicare Beneficiary (QMB) Program: The QMB program covers the costs of Part A and B premiums, copayments, coinsurance, and deductibles, and doesn’t allow providers to bill you. It also limits the amount you can pay for each drug covered by your plan. To qualify, single individuals must make $1,153 or less in all states but Alaska and Hawaii, and have $8,400 or less in “resources” (checking, savings, retirement, stocks, and bonds). Those numbers go up to $1,546 and $12,600 for married couples.
- Specified Low-Income Medicare Beneficiary (SLMB) Program: The SLMB covers Part A and B premiums and limits the amount you can pay for each drug covered by your plan. The resource limits for the SLMB program are the same as QMB, but the income limits are slightly higher: $1,379 and $1,851.
- Qualifying Individual (QI) Program: The QI program covers Part B premiums and limits the amount you can pay for each covered drug you need. Resource limits are the same as the QMB and SLMB programs, and income limits are $1,549 and $2,080.
- Qualified Disabled Working Individual (QDWI) Program: You may qualify for the QDWI program if you are working with a disability and lost your social security disability benefits and premium-free Part A because you returned to work. This program covers Part A premiums. Resource limits are $4,000 for single individuals and $6,000 for married couples. The income limits are $4,615 and $6,189, respectively.
You can also save by comparing Medicare Advantage plans and all the features we covered above. Doing so will help you find the best overall value for your situation and avoid surprise expenses.
What Is the Medicare Donut Hole?
The Medicare donut hole refers to a temporary limit on Medicare Part D drug coverage. In 2023, you’ll enter the gap once you and your plan have spent $4,660 on covered drugs but are not yet at your plan’s annual maximum out-of-pocket limit. During that time, you’ll pay up to 25% of the cost for covered brand-name prescription drugs and 25% of the cost of generic drugs.
When Can I Enroll in a Medicare Advantage Plan?
You can enroll in a Medicare Advantage plan during your initial enrollment period or the annual open enrollment period. In general, the initial enrollment period starts three months before you turn 65 and continues for seven months. The annual open enrollment period runs from Oct. 15 to Dec. 7 each year. You can also switch Medicare Advantage plans during Medicare Advantage open enrollment, which runs from Jan. 1 to March 31 each year.
Does Medicare Advantage Include Part D?
It depends. Medicare Advantage Plan providers can decide whether or not their plans will include Part D drug coverage. While most plans do include Part D, you may be able to buy a standalone Part D plan if your plan doesn’t.
Can You Get Medicare Advantage Without Part B?
No, you can’t get a Medicare Advantage plan without Part B. It requires enrollment in Part A (hospital insurance) and Part B (medical insurance).
How Much Is Medicare Part B?
The standard premium amount for Medicare Part B in 2023 is $164.90, which is considerably higher than the average cost of a Medicare Advantage plan. You may pay more if your 2021 annual income was over $97,000 as a single filer or over $194,000 as a joint filer. Medicare looks at your modified adjusted gross income (MAGI) two years back when determining your premium.