How Expensive is Medicare Advantage?

How expensive is Medicare Advantage? Learn more about annual Medicare costs and Medicare Advantage premiums, copays, and deductibles.


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Every year, the federal government changes the rates for Medicare Part A and B premiums. The Federal government also changes deductibles, coinsurance, and Part D income-based monthly adjustment amounts. While they generally trend upwards over the years, inflation and policy changes can greatly influence these costs. It can be hard to predict how much these adjusted costs will change each year.

If you plan to enroll in Medicare, premiums and deductibles are the primary costs you should take a closer look at when comparing Original Medicare to Medicare Advantage plans. This article outlines a few key things to consider when comparing healthcare plans and costs. 

What is the Average Monthly Cost of Medicare Advantage Plans?

Medical News Today estimates that the average monthly premium for Medicare Advantage plans is $18 in 2023.

Many types of Medicare Advantage plans are available in the market. Some Medicare Advantage plans have a $0 premium but higher deductibles and copays, while other plans have low deductibles and higher premiums. 

Ultimately, the monthly cost depends on your desired amount of coverage, preferred healthcare providers, and the types of services, drugs, and medical devices that are covered under each plan.

Medicare Costs in 2023: Going Up or Down?

For 2023, Medicare Part B premiums decreased $5.20 to $164.90 while the annual deductible decreased by $7 to $226.

The 2023 premium is lower due to the 2022 annual premium containing a contingency margin for the Alzheimer’s drug Aduhelm. Since spending on the drug and other Part B items and services was lower than projected in 2022, the Part B reserves in the Supplementary Medical Insurance Trust Fund were larger than expected and able to limit Part B increases for the 2023 fiscal year.

In contrast, Medicare Part A deductibles and coinsurance have increased for 2023. If you are enrolled in Medicare and admitted to a hospital, the deductible rose by $42 to total $1,600 per benefit period for 2023. Beneficiaries also must pay $400 per day in coinsurance for the 61st-90th days of hospital stays, and $800 per day for lifetime reserve days (up $11 and $22 per day respectively from 2022 rates).

For skilled nursing facility care, daily coinsurance for 21st-100th days is $200 in 2023 (up $5.50 from 2022).

Overall, Medicare costs are trending upwards, despite a small reduction in 2023 Part B costs due to the surplus. With 1 in 6 US residents now being age 65 or older, costs are expected to rise in 2024 and beyond to meet the needs of the influx of Medicare beneficiaries.

Savings Benefits with Medicare Advantage Coverage

Every beneficiary’s healthcare expenses vary by the type and frequency of healthcare services they need. A beneficiary who only has routine check-ups and emergency care as needed is going to examine healthcare costs differently than someone who must manage a chronic illness or needs several medications.

If you need to see a specialist often, you will want to make sure they accept Medicare. While Medicare is widely accepted in comparison to other public insurance, such as Medicaid, not all providers accept it. This is one reason many beneficiaries turn to a Medicare Advantage plan (instead of Original Medicare Parts A and B). Medicare Advantage plans have networks of providers that are locally available and contracted to provide coverage for members.

Depending on the coverage option you choose, you may have to see providers in the network in order to be covered, or you may select a plan that also includes coverage for services you receive outside the network. 

Medicare Advantage plans also have an annual cap, which helps beneficiaries budget their healthcare costs. If you need medical devices, medications, and doctor visits that could quickly escalate your annual medical expenses, the out-of-pocket cap for Medicare Advantage plans is $8,300 for 2023 (if your plan doesn’t include prescription drug coverage).

Some plans have lower caps, depending on the copays, deductible, services and items covered.

Need Help with Medicare Expenses?

Many people with Medicare struggle to pay for their healthcare expenses. Depending on where you live and your income level, there are state-level Medicare savings programs you may be eligible for.

Qualified Medicare Beneficiary Program (QMB)

The Qualified Medicare Beneficiary Program (QMB) assists low-income beneficiaries with Parts A and B premiums, along with copays, deductibles, and coinsurance. Under federal law, Medicare providers, suppliers, and pharmacies cannot bill QMB beneficiaries for coinsurance, provided that the items and services are covered under Original Medicare.

Enrollment in QMB also places you in the Extra Help prescription drug program, which caps prescriptions at $4 for each drug covered under Medicare.

Specified Low-Income Medicare Beneficiary Program (SLMB)

The Specified Low-Income Medicare Beneficiary Program (SLMB) pays Part B premiums for low-income Medicare beneficiaries who have Parts A and B. Eligibility is based on both income and assets, and varies by state.

Enrollment in SLMB also places you in the Extra Help prescription drug program, which caps prescriptions at $9.85 for each drug covered under Medicare.

Qualifying Individual Program (QI)

The Qualifying Individual Program (QI) operates similarly to SLMB in that it’s a state-level program that pays for Medicare Part B premiums. For 2023, individuals cannot have more than $1,426 in monthly income ($1,923 for a married couple). Individuals must have $7,730 or less in countable resources (couples must have $11,600 or less). 

Unlike QMB and SLMB, there are first-come first-serve limits on QI. You must apply to the QI program every year to keep receiving benefits, and previous QI recipients are prioritized in the application process.

Qualified Disabled Working Individual Program (QDWI)

The Qualifying Disabled Working Individual Program (QDWI) is for people with disabilities who need assistance paying Part A premiums. Eligibility is handled on a case by case basis, but is primarily intended for disabled people who cannot afford Part A premiums (due to loss of premium-free Medicare coverage upon returning to work and losing Social Security disability benefits). There are both monthly income limits and asset limits.

Extra Help Prescription Drug Program

The Extra Help prescription drug plan is available to individuals with:

  • Less than $16,660 in countable resources ($33,240 for married couples who live together)
  • Less than $21,870 in annual income ($29,850 for married couples) for 2023 (some beneficiaries with higher annual income may still qualify for certain Extra Help benefits.)

Extra Help benefits are estimated to save beneficiaries about $5,300 per year in prescription drug costs, premiums, deductibles, and copays. The program caps the cost of drugs covered under Medicare.

Conclusion

It is worth researching the different costs of Medicare and assessing your personal healthcare situation so you know what types of services are covered in your plan. While monthly costs can vary, Medicare Advantage coverage can save you thousands depending on your needs. Speak with a Baylor Scott & White Health Plan licensed insurance agent about your Medicare Advantage coverage options. They’re prepared to discuss your healthcare needs and find a plan that works best for you.

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Contact us any time and a Baylor Scott & White Health Plan licensed insurance agent can answer any questions you have about Medicare.