Medicare Advantage plan (also known as an “MA Plan”) premiums can change for a number of reasons. For the most part Medicare Advantage premiums change, or adjust, annually. Common reasons for Medicare Advantage plan premium changes are: 

• Changes in Medicare                                                          

• Competition Among Medicare Advantage Plans

• Medicare Advantage Plan Type (like HMO or PPO)

• Plan Benefits in the Medicare Advantage Plan


Changes in Medicare Can Effect Medicare Advantage Plan Premiums

Under the current Medicare program, beneficiaries may elect coverage through private insurance companies that have been approved by the Federal Government to offer this type of coverage. Medicare pays a fixed amount for your care each month to the companies offering Medicare Advantage Plans. These companies must follow rules set by Medicare. If there is a change in Medicare regarding the amount paid to an insurance company, or Medicare changes a rule regarding Medicare Advantage premiums or covered medical services, then the Medicare Advantage Health Plan may decide to change the premium.

Competition Among Medicare Advantage Plans Can Effect the Premiums

A contributing factor for a Medicare Advantage plan’s premium amount is competition among the multiple plans for enrollment of Medicare beneficiaries in same demographic area. A plan that offers a lower premium may seem more appealing for someone who wants to save money on their monthly premium or anyone that may be on a fixed income. However, quality of service is a significant factor that should be considered when choosing a plan. A Five Star Scoring System has been implemented to rate a plan based on quality of service. This Five Star Scoring System allows plans to earn stars based on review of the plan and the services offered, with a five star plan having demonstrated superior quality of service

Medicare Advantage Plan Type Can Effect the Premiums (like HMO or PPO)

Each Medicare Advantage Plan can have different rules for how you get services (like whether you need a referral to see a specialist or if you have to go to only doctors, facilities, or suppliers that belong to the plan for non-emergency or non-urgent care). Typically the more network and referral restrictions plans have the lower the premium. These may seem like restrictions but it allows the health plan to coordinate your care better. This reduces the plans cost and they can in turn offer a lower premium to the consumer.

Medicare Advantage Plan Benefits Can Effect the Premiums

Cost sharing is defined by the amount the beneficiary is responsible for paying in the form of copays, co-insurances, and/or deductibles. The Center for Medicare Services (also known as “CMS”) has set forth rules requiring Medicare Advantage plans limit beneficiaries’ out-of-pocket expenses to no more than $6700.00 annually for approved services. The out-of-pocket maximum is the total amount the beneficiary will pay towards their approved medical care in a year (January 1, through December 31) before the plan is required to pay 100% of the beneficiary’s medical care expenses. The out-of-pocket limit applies only to the expenses paid for medical services by the beneficiary through copays, co-insurances, and deductibles. The premium amounts paid monthly by the beneficiary are not taken into consideration, or added to the beneficiary’s out-of-pocket limit. Plans can change their cost sharing amounts can each year. Thus, a change in with regard to out-of-pocket costs such as co-pays and deductibles may trigger a change in premium amounts. However, keep in mind a Medicare Advantage plan’s coverage must always be the same, or better, than original Medicare Parts A and B.