Many seniors hoping to cut costs choose a Medicare Advantage health insurance plan over traditional Medicare. But neither of these two main types of Medicare is free — and Medicare Advantage costs may be higher if you live in some places than if you live elsewhere.
In fact, average total annual cost of Medicare Advantage in 2019 by state will range from around $4,700 to more than $7,000, according to a recent analysis of federal data by HealthMarkets Insurance Agency Inc.
Medicare Advantage plans are offered by private insurers, so different plans are available in different areas, and costs can vary widely by location and plan type.
The highest average Medicare Advantage costs for 2019
In six states and the nation’s capital, the average total cost of Medicare Advantage for 2019 exceeds $7,000, according to HealthMarkets. The locations and averages are:
- Mississippi — $7,451.04
- Washington, D.C. — $7,350.33
- Maryland — $7,292.23
- West Virginia — $7,230.34
- New Jersey — $7,210.30
- New York — $7,149.53
- Wyoming — $7,139.67
These numbers reflect monthly premiums, deductibles for drugs and maximum out-of-pocket (MOOP) costs.
In Mississippi, for example, the average total cost of nearly $7,500 breaks down like this:
- Average cost of monthly premiums — $39.72
- Average cost of drug deductibles — $332.96
- Average MOOP — $6,641.43
At the other end of this spectrum is Nevada, where the average total cost of a Medicare Advantage plan for 2019 is $4,678.74. The breakdown for this figure is:
Average cost of monthly premiums — $45.14
Average cost of drug deductibles — $102.73
Average MOOP — $4,034.38
Medicare Advantage versus traditional Medicare
Traditional Medicare, also referred to as Original Medicare, is the traditional health care insurance program offered directly by the federal government, primarily for individuals age 65 and older.
Medicare Advantage is an alternative to traditional Medicare. Medicare Advantage plans are offered by private insurance companies that contract with the federal Medicare program. Common types of Medicare Advantage plans include HMOs and PPOs, according to data from the nonprofit Kaiser Family Foundation (KFF).
Medicare Advantage plans often cover more types of expenses than traditional Medicare, such as prescription drugs. They also have a maximum out-of-pocket cost, whereas traditional Medicare does not, according to the nonprofit Center for Medicare Advocacy.
At the same time, Medicare Advantage plans often have limitations that do not apply to traditional Medicare. The center explains:
“Medicare Advantage plans are private plans that may cost less and be easier to enroll in than traditional Medicare, but MA plans also limit enrollee’s choices of health care providers and the geographic area where care will be covered.”
All of this underscores the importance of doing your homework before initially signing up for Medicare and then each year during Medicare open enrollment — which is going on now, running through Dec. 7.
To learn more about Medicare Advantage and traditional Medicare, check out “7 Facts You Need to Know About Medicare.”
What’s your take on the cost of Medicare? Sound off below or over on our Facebook page.
Learn everything you need to plan your dream retirement
The Only Retirement Guide You'll Ever Need gives you the knowledge you need to retire on your own terms. Sure, you can pay a financial adviser, but this online course gives you total control to create a custom retirement plan around the things that make you happy.
You're going to get expert, personalized advice. You'll have access to the latest tools. And when it's complete, you'll be able to approach your retirement confidently and with peace of mind.
It's time to plan the best years of your life. Let's get started.