Costs and Benefits of Medicare Advantage plans
Medicare Advantage plans contract with Medicare on an annual basis. Medicare pays a plan a fixed monthly amount for each member. This amount is readjusted each year based on a formula created by Medicare and it varies from county to county. In turn, the plan must provide, as a minimum, all Medicare covered services. It may also choose to provide additional services not covered by Medicare, such as preventive care, hearing, dental, and eye exams. These additional services can vary by specific geographic areas.
The MA plan takes the financial risk of being able to provide all required services and still make a profit. It receives the fixed, monthly payment from Medicare regardless of how many or how few people use its services, or how often services are provided.
MA plans can charge a premium, which varies from region to region and can range from no premium to more than $100 a month. Additionally, most MA plans require a co-payment for services, such as doctor visits. You also continue to pay the Medicare Part B monthly premium.
Many Medicare Advantage (MA) plans offer prescription drug coverage. These plans are often referred to as MA-PDs. If you enroll in an MA-PD, you do not need to enroll in a stand-alone Prescription Drug Plan (PDP).
Page updated October 6, 2008
