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How To Predict Out of Pocket Costs On Medicare Advantage

By Zawn Villines
Your annual Medicare Advantage costs depend on the terms of your plan and the specific types of care you seek.

Medicare Advantage, or private health insurance available through Medicare, is significantly more affordable than traditional health insurance plans, but it is not free. You'll pay monthly premiums and medical co-pays, and you'll have to pay for any medical services that are not covered by your plan. Because Medicare Advantage plans cap annual out-of-pocket expenses, however, it's possible to get a fairly accurate estimate of your total costs.

Average Annual Medicare Advantage Costs

A 2019 study published by the Kaiser Family Foundation found that, in 2016, people enrolled in original Medicare spent an annual average of $3,166 in medical services and $2,294 in premiums—for a total out-of-pocket cost of $5,460. This study excluded Medicare Advantage enrollees, however, because the terms of each Advantage plan are different.

A 2016 Journal of the American Medical Association Oncology study found that the average annual out-of-pocket cost for Medicare Advantage health maintenance organization (HMO) beneficiaries with cancer was $5,976. Your individual costs can vary greatly depending on the terms of your plan, the cost of premiums, costs associated with providers, and your plan's total out-of-pocket maximum.

Predicting Out-of-Pocket Expenses

Medicare Advantage plans, like most other private insurance plans, come with an annual out-of-pocket maximum. This is the maxium amount you will spend in a year on covered services. Once you hit this figure, the plan will fully fund any additional covered services. You may still have some added expenses, especially if:

  • You seek services the plan does not cover.
  • You have an HMO plan and seek services out of the plan's network.
  • You need medication and the plan does not cover prescription drugs.
  • You see a provider who does not accept your plan.

If you choose a plan that covers all of the services you need and follow your plan's rules about which providers you can see, your out-of-pocket maximum is the most you will pay. To make an annual healthcare budget, add your out-of-pocket maximum to the total annual cost of your premiums. This sum is the most you can expect to pay.