Average Cost of Medicare Advantage Plans

The average monthly premium for Medicare Advantage will be $17 in 2025, down from $18.23 in 2024. However, the average yearly drug deductible for Medicare Advantage is more than doubling to $306.10 in 2025. The maximum out-of-pocket cost (MOOP) is also going up, from $13,300 in 2024 to $14,000 in 2025.

Medicare Advantage, also called Medicare Part C, is health insurance offered by Medicare-approved private insurers. It includes Part A (hospital insurance), Part B (medical services), and usually Part D (prescription drugs). Medicare Advantage (MA) plans often have lower out-of-pocket costs than original Medicare and may offer extra benefits like dental and vision. Some plans require members to use in-network doctors and get referrals to see specialists.

Average Cost of Medicare Advantage

Although average Medicare Advantage premiums are going down in 2025, average drug deductibles and maximum out-of-pocket costs are increasing. For example, the average annual drug deductible for a drug plan with Medicare Advantage is rising 109%, from $146.37 in 2024 to $306.10 in 2025.

According to a CMS fact sheet, about 60% of Medicare Advantage enrollees in their current plan will see a $0 premium in 2025. However, that $0 premium might be offset by high out-of-pocket costs. Meanwhile, 83% of enrollees will see the same or lower premiums in 2025 if they stay in the same plan.

Average Medicare Advantage premiums differ from one state to another. For example, the average 2025 premium in Florida will be $4.33, compared with $42.90 in New York.

Medicare Advantage premiums vary from state to state. Reasons include:

• Health care costs may be higher in one state but lower in another.
• Some states provide premium reductions or subsidies based on such factors as years of employment and household income.
• An insurer might offer multiple plans in an area, each with different benefits and costs.

Types of Medicare Costs

Several costs are associated with Medicare Advantage, such as premiums and out-of-pocket expenses. Here’s an overview.

Premium

A premium is the amount you pay for Medicare Advantage every month. For 2025, the average Medicare Advantage premium is $17.

Deductible

A deductible is the amount you must pay before your Medicare Advantage coverage for health care services kicks in. Deductibles vary widely among individual plans and insurers.

Drug Deductible

A drug deductible is the amount you must pay before your Medicare Advantage prescription coverage kicks in. The 2025 deductible for a Medicare Advantage drug plan is $590.

Copay

A copay is the amount you must pay for a service after you’ve paid your deductible. A copayment is a set amount, such as $30.

Coinsurance

Coinsurance is the percentage you pay for a service after you’ve paid your deductible. For example, if your coinsurance is 20%, you would pay 20% of the cost, and your insurance would cover the rest.

Max Out-of-Pocket Cost

Medicare Advantage plans set an annual limit on how much you pay out of pocket for services covered by Medicare Part A, Part B, and Part D. Once you reach your plan’s limit, you’ll pay nothing for covered Part A, B, and D services for the remainder of the year.

What Factors Influence Medicare Advantage Costs?

A number of factors influence Medicare Advantage costs. They include:

• Type of plan: The type of Medicare Advantage plan you pick helps determine how much you’ll pay for coverage. Most Medicare Advantage plans are health management organizations (HMOs) or preferred provider organizations (PPOs). HMOs typically cover care provided by doctors, hospitals, and other health care providers within a certain network. PPOs give access to health care providers outside your network. Care from out-of-network providers costs more than care from in-network providers.
• Geographic location: Geographic location plays a big role in Medicare Advantage costs. For example, a study published in 2022 by University of Michigan researchers found costs for inpatient and outpatient procedures for Medicare Advantage enrollees could differ widely from county to county. This gap reflects geographic factors such as labor costs and market competition, the researchers said.
• Insurance company: Health insurance companies set their own premiums, deductibles, and out-of-pocket maximums for Medicare Advantage plans. For example, the average monthly premium at Aetna/CVS is $22.66, compared with $44.61 at Blue Cross Blue Shield.

Tip

With costs varying greatly, you can find the best value if you compare Medicare Advantage quotes from multiple providers before choosing a plan.

Is Medicare Advantage More Expensive than Original Medicare?

When you compare Medicare Advantage with Original Medicare, you’ll often notice a difference in various costs. Here’s an overview of four of these cost differences.

• Premiums: The average premium in 2025 for Medicare Advantage will be $17. You would still have to pay the Original Medicare premiums in most plans. The Part B premium was $174.70 in 2024 for people not considered high earners. In 2025, that premium will increase to $185. You can also add Part D (prescriptions) to traditional Medicare for an additional charge that varies by plan. Most people pay enough Medicare taxes over their lifetime to qualify for no-cost Part A, but those who do not pay an additional premium each month. In 2024, these monthly premiums ranged from $278 to $505. In 2025, premiums will range from $285 to $518.
• Deductibles: Under original Medicare, you generally pay a deductible for Part A and Part B services. However, not all Medicare Advantage plans come with a deductible.
• Copays and coinsurance: With Medicare Advantage, you may pay more copays than you would with original Medicare. When it comes to coinsurance for original Medicare, you typically pay 20% of the Medicare-approved amount after you reach your deductible. Coinsurance varies under Medicare Advantage.
• Out-of-pocket limits: For original Medicare, there’s no annual limit on out-of-pocket costs unless you carry supplemental coverage, also known as Medigap. Medicare Advantage caps out-of-pocket costs for Part A and Part B services covered. In 2025, this cap is $9,350 for in-network services and $14,000 overall.

Other costs include prescription drugs and extra benefits such as vision, dental, and hearing aids.

How To Find an Affordable Medicare Advantage Plan

Options for finding Medicare Advantage coverage that might be affordable include:

• Joining a Medicare-Medicaid plan. You can sign up for this plan if you have Medicare, receive full Medicaid benefits, and meet your state’s criteria.
• Joining a Special Needs Plan. You are eligible to sign up for this type of Medicare Advantage plan if you receive Medicare and Medicaid benefits, need long-term care, or have a chronic or disabling condition
• Joining a Program of All-inclusive Care for the Elderly (PACE) plan. You can qualify for this plan if you have Medicare, Medicaid, or both; are at least 55 years old; need nursing home-level care; and can live safely in the community.
• Signing up for Medicare’s Extra Help program. This program helps people with limited income and resources pay for Medicare drug coverage. Some people automatically qualify for Extra Help.
• Seeking help from a pharmaceutical drug assistance program. Some drug manufacturers offer financial assistance to help pay for medication or even supply free drugs.

What Is the Medicare Donut Hole?

The Medicare donut hole was a coverage gap that put a temporary limit on what a drug plan covers for prescription medication. The Inflation Reduction Act replaces the donut hole with a $2,000 annual cap on out-of-pocket prescription costs starting in 2025.

When Can I Enroll in a Medicare Advantage Plan?

Medicare Advantage offers two enrollment periods: Oct. 15-Dec. 7 (open enrollment for original Medicare and Medicare Advantage) and Jan. 1-March 31 (open enrollment for Medicare Advantage). During these Medicare Advantage enrollment periods, you can change your plan or switch to Original Medicare. Special enrollment periods are also available in certain situations, such as losing coverage.

Does Medicare Advantage Include Part D?

It depends. Medicare Advantage Plan providers can decide whether or not their plans will include Part D drug coverage. While most plans do include Part D, you may be able to buy a standalone Part D plan if your plan doesn’t.

Can You Get Medicare Advantage Without Part B?

No, you cannot get Medicare Advantage without Part B. Under Medicare Advantage, you must couple Part B medical insurance with Part A hospital insurance.

What Is the Downside of Medicare Advantage?

Among the disadvantages of Medicare Advantage are prior authorization for some services and equipment, payment of your copay before being treated, restricted access to health care providers, and potential incompatibility with other types of retiree coverage.

Bottom Line

The average monthly premium for Medicare Advantage is going down slightly in 2024, while the average annual drug deductible and the average maximum out-of-pocket cost are going up. As a result, it’s important to review your Medicare options, compare costs, and seek ways to lower your Medicare expenses.