Medicare Advantage Plans are offered by private insurers as an alternative way to get your Medicare benefits. If you enroll in Medicare Advantage, you’ll still pay a premium for Medicare Part B coverage. You may also owe an additional monthly premium to the Medicare Advantage Plan for the extra benefits they provide. Understanding who is responsible for paying these different premiums is key to evaluating the costs of Medicare Advantage.
Medicare Part B Monthly Premiums
All Medicare beneficiaries still have to pay their Part B premiums to remain enrolled in Medicare. The standard Part B premium amount is $164.90 per month in 2023 for most enrollees. Higher income beneficiaries pay more under an income-adjusted model.
Your Part B premium is collected in one of two ways if you join a Medicare Advantage Plan:
- Automatic deduction from Social Security checks: For Social Security recipients, Medicare Part B premiums are deducted directly from monthly checks. You don’t have to take any action for this automatic payment method.
- Direct billing from Medicare: If you don’t get Social Security benefits, Medicare will send you a bill for your Part B premiums each month. You are responsible for paying these bills on time to avoid any lapse in coverage.
So essentially, the federal Medicare program collects your Part B premiums whether you are in Original Medicare or Medicare Advantage. You must continue paying these premiums without interruption to remain enrolled.
Medicare Advantage Plan Premiums
In addition to your Part B premium, you may owe a monthly premium to your Medicare Advantage Plan for the extra coverage they provide beyond Original Medicare. The amount can range significantly:
- Some plans charge $0 premiums beyond your Part B costs.
- On average, plans receive or charge $21 per month.
- Premiums vary for plans offering enhanced benefits can range from $50 up to over $200 per month.
- The highest premiums are typically for Medicare Advantage PPO Plans, which allow you to see out-of-network providers.
Your Medicare Advantage premium is collected by the private insurance company offering the plan, not Medicare. Payment options include:
- Automatic deduction from your Social Security check
- Automatic bank account withdrawal
- Mailing in a payment coupon each month
The plan will outline the payment methods available and due dates for your monthly premiums. Paying on time is essential to avoiding termination of your Medicare Advantage coverage.
Who Pays for Low Income Enrollees?
People with limited incomes and resources may qualify for state Medicaid programs that help pay Medicare costs. These Medicare Savings Programs can cover all or part of your Part B premiums and may also help with Medicare Advantage Plan premiums:
- Qualified Medicare Beneficiary (QMB): Covers Part A & B premiums, deductibles, coinsurance.
- Specified Low-Income Medicare Beneficiary (SLMB): Helps pay Part B services premiums only.
- Qualified Individual (QI): Pays full Part B premiums.
- Qualified Disabled and Working Individual (QDWI): Pays Part A premiums only.
If you qualify for one of these programs, Medicaid as healthcare providers will pay the Part B costs on your behalf. You’ll need Medicare enrollment with the Medicaid agency in your state. Some states may also cover portions of Medicare Advantage premiums through these programs.
People with very limited incomes may also get Extra Help from Medicare to pay prescription drug costs. If you qualify for Extra Help, Medicare will cover some or all of your Medicare Advantage Plan premiums.
How Insurers Set Premium Rates
Private insurers offering Medicare Advantage Plans have some flexibility in setting their premium rates each year. However, there are limits thanks to Affordable Care Act reforms:
- Plans can’t charge higher premiums for sicker members. Rates are based on community rating instead of health status.
- Yearly increases are tied to Medicare spending growth rates.
- The federal government caps profits and sets parameters for quality standards plans must meet.
- Total out-of-pocket spending is capped each year, which limits costs for members.
- Only five factors can be used to set premiums: location, plan type, number of providers, benefits added, and utilization assumptions.
These rules help ensure premiums remain relatively affordable and stable from year to year. The average Medicare Advantage premium has stayed around $30/month in recent years.
The Bottom Line
Medicare collects your Part B premiums whether you choose Original Medicare or Medicare Advantage. You may owe additional premiums directly to a Medicare Advantage insurer for the extra coverage they provide. This varies between plans based on the benefits offered.
People with limited incomes can get assistance with premium costs through Medicaid and the Extra Help program. Understanding who pays Medicare Advantage premiums will help you evaluate the overall costs when considering Medicare Advantage vs. Original Medicare.
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Who pays Medicare Advantage premiums: Original Medicare vs Medicare Part C?
Medicare Advantage Plans, also known as Medicare Part C, are offered by private insurers that contract with Medicare. These plans may charge a premium on top of the monthly premium you pay for Part B. In some cases, Medicare Advantage Plans may have $0 premiums, but this can vary depending on the type of plan you choose.
What is Original Medicare?
Original Medicare refers to Medicare Part A and Part B. Part A provides hospital insurance, while Part B provides medical insurance. With Original Medicare, you generally pay a monthly premium for Part B benefits.
What are the supplemental benefits offered by Medicare Advantage Plans?
Medicare Advantage Plans may offer supplemental benefits that are not covered by traditional Medicare, such as dental, vision, and hearing coverage. These additional benefits can vary depending on the specific plan you choose.
Does Medicare pay for prescription drug coverage in Medicare Advantage Plans?
Many Medicare Advantage Plans offer prescription drug coverage, also known as Medicare Part D prescription drug. However, not all plans include this coverage, so it’s important to review the details of each plan to determine if prescription Medicare drugs are covered.
Can I still have Medicare if I enroll in a Medicare Advantage Plan?
Yes, when you enroll in a Medicare Advantage Plan, you are still enrolled in Medicare. Medicare Advantage Plans are an alternative way to receive your Medicare benefits, but they are still part of the Medicare insurance plan program.
Do Medicare Advantage Plans charge a premium?
Medicare Advantage Plans may charge a premium on top of the monthly premium you pay for Part B. However, there are also Medicare Advantage Plans that have $0 premiums. The premium amount can vary depending on the specific plan you choose.
What services are covered by Traditional Medicare?
Traditional Medicare Part A and B, covers a wide range of services, including hospital stays, doctor visits, preventive care, and certain medical equipment and supplies. However, there may still be out-of-pocket costs and deductibles associated with these services.
Are all Medicare Advantage Plans the same?
No, Medicare Advantage Plans can vary in terms of coverage, costs, and network providers. Each plan available in your area may offer different benefits and have different rules and restrictions.
Are there any limitations or restrictions with Medicare Advantage Plans?
Yes, some Medicare Advantage Plans may have limitations or restrictions, such as requiring prior authorization for certain services or medications. It’s important to review the details of each plan to understand any limitations or restrictions that may apply.
How are Medicare Advantage Plans funded?
Medicare Advantage Plans are funded through a combination of Medicare payments, premiums paid by enrollees, and additional funding from the federal government. The Centers for Medicare and Medicaid Services (CMS) oversees the payment and regulation of these plans.