How to compare Medicare Advantage plan costs

Published by Medicare Made Clear®

Cost can be a big factor when choosing any Medicare plan. Many Medicare Advantage plans have low or no-cost premiums, but when choosing a plan, it’s important to consider all the costs a plan may have – premiums, deductibles, copays and coinsurance. Consequently, comparing costs among plans is sometimes easier said than done.

What Medicare costs to compare

When comparing the costs for different Medicare Advantage plans, it’s important to compare your monthly plan premiums and your out-of-pocket costs. Comparing monthly plan premiums is pretty simple, as this cost is consistent regardless of the health services you use.

Your out-of-pocket costs – deductibles, co-pays and co-insurance – can be trickier to calculate. These costs are how Medicare shares costs with you, and the total amount you pay is influenced by what health care services and items you use each year.

Quick reminder of each Medicare out-of-pocket cost:

  • A deductible is an amount that the insured person must pay for their own care before the plan starts to pitch in.
  • A copay 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%.

Estimating your Medicare out-of-pocket costs

Deductibles, copays and coinsurance can each be compared from one plan to another. For example, the copay for a doctor visit may be $15 with one plan and $20 with another. But that’s only part of the story.

What you need to do with out-of-pocket costs is also estimate how many times you think you’ll have to pay each. Again, 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. And these costs can add up if you need a lot of medical care. What copay amount you think will work best for you will really depend on how often you expect to pay it. For example, a low copay amount might be important for someone 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.

TIP 1: Make a list of all the health care items and services you used in the last year. Include how many times you used them (ex. how many times did you visit your doctor or get your prescriptions refilled). Then, take the copay of each plan and multiply it by each health care service or item on your list. It’s not perfect, but doing this may help you get an idea of what you could pay for the year in copays.

TIP 2: 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.

Look for the plans' out-of-pocket maximum limit

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 each year. Ask the plan provider what their maximum out-of-pocket limit is. Deductibles, co-payments and co-insurance for medical services count toward this. Plan premiums and prescription drug costs do not.

Final tips and notes for comparing Medicare Advantage plan costs

In summary, be sure to compare the below Medicare costs when choosing a Medicare Advantage plan.

  • Medicare Advantage plan premiums
  • The out-of-pocket costs for each plan you’re interested in as well as no-cost and other plan benefits.
  • Estimate total cost for plans you might be interested in based on your health care needs. Add in your monthly Part B (and Part A) premium amounts – you will continue to pay the Part B premium to Medicare (and the Part A premium, if you have one.)

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.

About Medicare Made Clear

Medicare Made Clear brought to you by UnitedHealthcare provides Medicare education so you can make informed decisions about your health and Medicare coverage.

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