Medicare Advantage Is Cheapest for New Medicare Enrollees

MedicareAdvantageUsing government data on healthcare and medication use among Medicare-aged individuals, HealthPocket compared the premium and out-of-pocket expenses for each of the three Medicare insurance options. Medicare Advantage proved to be the lowest cost option. Its annualized cost estimate was 19% less than Original Medicare Parts A & B combined with a Medicare drug plan and it was 45% less than Medigap Plan F combined with Medicare Parts A & B and a Medicare drug plan. While the Plan F option left the Medicare enrollee with no medical out-of-pocket costs, this option still had out-of-pocket costs associated with drug coverage. Additionally, the Plan F option’s lower out-of-pocket costs did not compensate for its higher overall premium expenses.

Many Medicare Advantage plans do not charge a monthly premium. These plans also include an annual limit on out-of-pocket costs. Original Medicare has no such limit on out-of-pocket costs. Changes in government funding could affect premiums and out-of-pocket costs for Medicare Advantage plans, but these changes are difficult to predict. Medicare Advantage plans have been at the center of highly politicized debates over the program since the government often spends more for medical services delivered by Medicare Advantage plans compared to the same services received in Original Medicare. To get the full report, visit HealthPocket.com.

Last Updated 10/21/2020

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