A Medicare Advantage plan is an alternative way to receive your Original Medicare (Part A and Part B) benefits (except for hospice care, which is still covered by Medicare Part A). Medicare Advantage plans have several different out-of-pocket expenses. You may want to do some research on these out-of-pocket expenses before making any decisions about enrollment into a plan. Some of these out-of-pocket expenses are as follows:
Medicare Advantage plan premiums vary by plan and some plans offer different levels of benefits for different premium amounts. There are some Medicare Advantage plans that may have a monthly plan premium as low as $0; however, availability varies depending on your location.
The deductible is the amount of money you will pay out-of-pocket before your plan will start to pay for medical expenses such as procedures and supplies. It is a yearly amount, and if it applies, once it is paid, your plan will begin to pay its share for the rest of the calendar year. After the deductible is satisfied, you will start paying either a copayment or coinsurance for prescription drugs and/or services. These costs are often inversely related to a plan’s premium, meaning that a high deductible Medicare Advantage plan will most likely have a lower premium than a low-deductible Medicare Advantage plan. Deductibles vary by insurance company and location; also some Medicare Advantage plans that cover prescription drugs have a separate annual deductible for prescription drug costs.
Copayments are the additional costs associated with Medicare Advantage plans, and you will have to pay these fixed amounts every time you visit a doctor, specialist and obtain other services. These copayments, like other Medicare Advantage out-of-pocket costs, are different for every plan.
Coinsurance is similar to copayments in that it is a part of your Medicare Advantage out-of-pocket costs that you pay each time you receive a service or medication. The difference is that, while copayments are a fixed fee, coinsurance is a percentage of the cost of the service or medication. For instance, if your coinsurance for a particular service is 25% and the cost of this service is $200 then the amount of the coinsurance for this service will be $50. This payment by percentage begins after you have paid the plan deductible, if applicable, and before the plan’s Maximum Out-of-Pocket (MOOP) is met.
Maximum Out-of-Pocket Costs
Your annual maximum Medicare Advantage out-of-pocket costs must be stated to you up front by your Medicare Advantage plan. Your out-of-pocket maximum may be lower than CMS (Centers for Medicare & Medicaid Services) established maximum amounts.
Medicare Advantage plan costs may change annually, so you may want to compare Medicare plans in your area every year to avoid high out-of-pocket expenses. You can compare out-of-pocket costs of Medicare plans using the free, no obligation Medicare Advantage plan comparison tool, which allows you to customize your search based on your specific needs.