Understanding Medicare Advantage Premiums

Many Medicare Advantage or Part C plans charge premiums or monthly payments for beneficiaries to receive their medical benefits. As these plans are created and offered by Medicare-approved private medical insurance companies, the cost of each plan will differ based on the company offering the plan, the services they offer and the state they are available.

How do Premiums Work?

For a person to enroll in a Medicare Advantage Plan, they must already have Medicare Parts A and B. While some people may not need to pay a premium for Medicare Part A which covers hospital insurance, others may have to pay this if they do not qualify for free premiums. Medicare Part B, on the other hand, usually charges a premium for coverage of a range of medical healthcare needs.

If the Medicare Advantage plan a person has chosen comes with a monthly premium, they would need to pay this for medical coverage, along with Part B premiums. Medicare Advantage plans usually offer additional services which the premium would cover like prescription drug coverage, dental and vision coverage, and more. Depending on the kind of services offered by a particular Medicare Advantage plan, premiums can be high or low. However, even if you don’t use these services, you would still have to pay the premium.

What do Medicare Advantage Plans cost?

Every Medicare Advantage plan is different, and your costs will depend on the kind of services your plan offers you and the state you reside in. Some plans can charge lower premiums but have other costs that a beneficiary would have to cover. These include copayments, coinsurance, and annual deductibles. Generally, all plans set a limit on out-of-pocket expenses by a beneficiary.

Be aware though that a plan with a low premium may not offer as many services as one with a higher premium. For example, if you have a plan with a zero premium and zero coverage for routine vision services, you may have to pay a considerable sum of money if you suddenly have trouble with your vision. Eye tests, treatment, and surgical intervention, if needed, can run up large bills. On the other hand, if you pay a higher premium for your plan with more coverage for vision-related services, your out-of-pocket costs for treatment may come down.

Are there Medicare Advantage Plans with a Zero Premium?

Not all Medicare Advantage or Part C plans charge a premium every month. Certain plans charge a zero premium. There is a reason for this. Medicare screens companies and only after approving them does it decide that they can offer Original Medicare benefits to their enrollees. This means that the enrollee’s claims need to be paid by the insurance company. To enable companies to settle claims, Medicare offers them a fixed fee which they use to create a plan to offer their enrollees medical coverage.

Now insurance companies also enter into contracts with a network of healthcare providers to offer them medical services at a lower cost. This difference in costs results in savings which enables them to offer their enrollees a plan that doesn’t charge a premium for the services received. However, this system doesn’t mean that enrollee pays nothing for the services. They would still be required to pay Part B premiums and other costs such as a yearly deductible, copayments, and coinsurance as per individual plan rules.

What is a Medicare Advantage MSA?

Known as the Medical Savings Account (MSA) plan, this is another kind of plan that usually doesn’t charge a premium, although there could be exceptions. This works a little differently when compared to other zero-premium plans. While an enrollee is required to pay Part B premiums, the plan fixes a high deductible. This refers to an amount an enrollee pays the plan which goes to cover medical costs before the plan begins to cover any costs.

How do you Pay your Premiums?

Typically, with a Medicare Advantage plan, you pay your Part B premiums to Medicare and your Part C premiums to the company where you have your plan.

Medicare premiums – If you are a recipient of benefits from Social Security, the Office of Personnel Management or the Railway Retirement Board, your Part B premiums will be automatically taken from your benefits check. In case you are not eligible for any of these, a notice stating that the premium is due is sent to you. You can either post a check, transfer the money through your bank via online billing or set up an automatic Medicare bill pay option where the amount due is deducted from your bank account every month.

Part C premiums – In the same way as above, the amount due for this can be deducted from any benefits you receive by putting in a request for the same to Social Security. Once you get an approval, you can set this up. Alternatively, you can post a check or do a bank transfer.

A few important things to note when paying your premiums:

  • Do not delay payments due to Part B and Part C as you could lose medical coverage when you need it the most. Automatic deductions can help in this regard.
  • Always keep your address updated with Medicare and your private insurance company so that you receive bills on time.
  • In a situation where you miss paying your Part B premiums for over 3 months, be aware that you could lose coverage the following month.
  • If you are unable to pay your Part C premium on time, let your private insurer know as they could have specific rules on cancellation of plans if the premium is not received by the due date.

Is There Extra Help to Pay your Premiums?

Medicare Savings Programs (MSP) offered by the Center for Medicare and Medicaid Services can help with payments for Medicare Part C. There are certain criteria like having a disability, earning below a certain level and suffering from a severe illness that can qualify you to apply for an MSP. Once you qualify, MSPs may share the costs of your healthcare which could include paying premiums as well.

Another way of receiving help is if you are eligible to qualify for a Medicare Advantage Special Needs Plan and have Medicaid. You can generally qualify for a Special Needs Plan if you are suffering from a chronic disease or disorder; receive nursing care or are dual-eligible and have Medicaid and Medicare. If this is the case, Medicaid can help with payments towards premiums, copayments, and coinsurance.

Every year, Medicare Advantage plans decide how much they should charge a beneficiary for the services they offer. This includes the cost of premiums, deductibles, and additional costs like copayments. If there are additional services like prescription drug coverage, the premiums can be higher. However, these costs are usually only changed once every year. If you are looking for a suitable Medicare Advantage plan, compare plans from different insurance companies to find one with medical services that address your healthcare needs with a premium that fits your budget.

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