| Tue, Nov 29, 2016 @ 09:00 AM

How to Compare Medicare Advantage Plan Costs

Posted by Medicare Made Clear

Senior woman reading tabletCost can be a big factor when choosing a Medicare Advantage plan. But comparing costs among plans is sometimes easier said than done.

Comparing monthly plan premiums is pretty simple. But it’s just one cost, and it may not be the most important one.

Deductibles, co-pays and co-insurance are ways that Medicare Advantage and other health plans share costs with the people they insure.

  • A deductible is an amount that the insured person must pay for their own care before the plan starts to pitch in.
  • A co-pay is a set amount paid for a medical service or prescription drug, $20 for example.
  • Co-insurance is when the cost is split between the plan and the insured person. For example, the person pays 20% and the plan pays 80%.

Deductibles, co-pays and co-insurance are called “out-of-pocket costs.” You can compare each of these costs from one plan to another. For example, the co-pay for a doctor visit may be $15 with one plan and $20 with another. But that’s still only part of the story.

Total out-of-pocket spending for each person depends on what kind of health care he or she uses and how often—not just on the cost for each service. A low co-pay amount might be important for a person who goes to the doctor often or who takes several medications. It may be less important for someone who doesn’t. So it helps to understand your health care needs when comparing plan costs.

There may be trade-offs, too. Plans with low premiums may have high out-of-pocket costs, and vice versa. Some plans may include no-cost benefits such as gym memberships or a nurse line that could offset other costs. Plans that offer prescription drug, dental and vision benefits may be compared to those that don’t.

Estimating the total cost of each plan you’re considering may be a good way to compare them. Just don’t forget to factor in all the plan benefits and how they stack up against your health care needs. The Medicare Plan Finder worksheet (pdf) can help you look at plans side by side.

One final note: Medicare Advantage plans are required to put a cap on how much members may pay in out-of-pocket costs. After the cap is reached, the plan pays 100% for the rest of the year. Each plan sets its own cap, but it can’t be higher than the maximum out-of-pocket limit set by Medicare ($6700 in 2015). Deductibles, co-payments and co-insurance for medical services count toward the cap. Plan premiums and prescription drug costs do not.


Medicare Advantage plan premiums may be easy to compare, but don’t stop there. Understand the out-of-pocket costs for each plan you’re interested in as well as no-cost and other plan benefits. Then estimate total cost for plans you might be interested in based on your health care needs. And remember, you continue to pay the Part B premium to Medicare (and the Part A premium, if you have one).


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For more information, explore MedicareMadeClear.com or contact the Medicare helpline 24 hours a day, seven days a week at 1-800-MEDICARE (1-800-633-4227), TTY 1-877-486-2048.

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