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Q: What does Medicare Advantage cost?
A: Those who enroll in Medicare Part C (Medicare Advantage, sold through private insurers) pay the $148.50/month that most enrollees will pay for Part B in 2021, in addition to the premium that’s charged for their Medicare Advantage plan.
According to CMS, the average Medicare Advantage plan premium is $21/month for 2021 — the lowest it’s been since 2007. But there’s wide variation in the premiums that people pay. More than half of all the available Medicare Advantage plans have no premiums at all (ie, enrollees only pay the Part B premium), while others have premiums of more than $100/month.
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Medicare Advantage premiums fall into a wide spectrum, depending on a variety of factors. Nearly all Medicare Advantage enrollees (96 percent in 2021) have access to at least one zero-premium policy. Although these plans can have higher out-of-pocket costs and/or more limited provider networks than plans with premiums, they make it possible for enrollees to have full coverage yet pay only the monthly premium for Medicare Part B, and 60 percent of people with Medicare Advantage coverage were enrolled in these zero-premium plans as of 2020.
Regardless of the plan’s premium, all Medicare Advantage plans have to cap enrollees’ out-of-pocket costs at no more than $7,550 in 2021. This cap on out-of-pocket costs for Medicare Advantage plans is significantly higher than it was in prior years; from 2011 through 2020, it was $6,700, but CMS had noted in 2019 than they intended to start gradually changing it in future years.
But this out-of-pocket cap only applies to services that would be covered under Medicare Part A and B. It does not include the cost of prescription drugs under the Part D benefit that’s integrated with most Medicare Advantage plans. There is no cap on out-of-pocket costs under Part D, and that’s the case whether the Part D plan is sold on a stand-alone basis or as part of an Advantage plan. Part D covers nearly all of the cost of prescriptions once an enrollee hits the catastrophic coverage limit for the year, but there does continue to be some ongoing out-of-pocket exposure.