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Medicare Advantage Costs

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Under the Medicare Advantage program, you can choose to receive your Medicare benefits through a private health plan, such as a HMO and a PPO, as an alternative to traditional Medicare. If you enroll in a Medicare Advantage plan, you must accept its terms, conditions, and specific costs.

Premiums

Most plans require a monthly premium, always in addition to the one you pay to the government for Part B services. Plan premiums range from zero to over $200 a month. Yes, that’s right, from zero — $0 a month. Low premiums don’t mean that these plans are inferior; usually it’s because they’re offered in dense urban areas where competition is fierce and they want your business.

Deductible

Most Medicare Advantage plans don’t charge annual deductibles of their own for medical services, apart from the standard Part B deductible. However, a few do; annual health deductibles of $1,000 aren’t unknown among these plans.

Plans that include prescription drug coverage in their package of benefits may charge an annual Part D drug deductible up to a certain limit ($325 in 2013; $310 in 2014), but some charge less and some charge none. Most Medicare Advantage plans don’t charge a deductible for hospital stays.

Co-payments

In Medicare Advantage plans, co-pays are very different from those in traditional Medicare:

  • You usually pay a flat dollar co-pay for each medical service rather than a percentage of the cost. For example, a plan may charge $25 to see a primary care doctor and $35 to see a specialist instead of charging traditional Medicare’s 20 percent.

  • Co-pays vary enormously from plan to plan and, within a plan, can change from year to year, but the amount you’re charged in January for any specific service can’t be increased for the rest of the year.

  • Some types of plans, especially PPOs, charge higher co-pays if you go to doctors and other providers outside of their contracted networks.

  • Most plans don’t charge a fixed deductible for a hospital stay as traditional Medicare does but instead charge daily co-pays that vary greatly from plan to plan. This arrangement may or may not work out less expensively than a fixed deductible.

  • Plans that offer routine vision, hearing, and/or dental care as extra benefits either charge co-pays for these services or offer them as optional packages that you can get only by paying a separate premium.

  • Medicare Advantage plans can’t charge you more than traditional Medicare for some services, such as chemotherapy treatment for cancer, dialysis for kidney failure, and medical equipment.

Out-of-pocket limits

Medicare Advantage plans, unlike traditional Medicare, are required to set annual limits on the expenses (deductibles and co-pays) of people enrolled in them. All plans must set a ceiling of $6,500 a year on out-of-pocket costs in-network, although they’re allowed to set it higher for costs incurred out of network.

Plans are also allowed to set much lower limits, such as $3,000 a year or less, and some of them do so. Contact your plan for details.

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