Medicare Advantage 2024 Premiums & Related Costs

People with Medicare have the option of receiving their Medicare benefits through the traditional Medicare program administered by the federal government or through a private Medicare Advantage plan, such as an HMO or PPO. In Medicare Advantage, the federal government contracts with private insurers to provide Medicare benefits to enrollees. Medicare pays insurers a set amount per enrollee per month, which varies depending on the county in which the plan is located, the health status of the plan’s enrollees, and the plan’s estimated costs of covering Medicare Part A and Part B services.

The plans use these payments to pay for Medicare-covered services, and in most cases, also pay for supplemental benefits, reduced cost sharing and lower out-of-pocket limits, which are attractive to enrollees. Plans are able to offer these additional benefits, often without charging an additional premium for Part D prescription drugs or supplemental benefits, because they receive an additional $2,329 per enrollee above their estimated costs of providing Medicare-covered services. This portion of plan payments, also called the rebate, has increased substantially in the last several years, more than doubling since 2018. At the same time, Medicare Advantage plans can use cost management tools, such as prior authorization requirements, which can impose barriers to receiving care, and limited networks of providers, which can restrict beneficiary choice of physicians and hospitals. More than half (56%) of Medicare Advantage beneficiaries are enrolled in HMO plans that typically do not cover out-of-network services.  Click here to learn more. 

Medicare Advantage in 2024: Updates & Key Trends

Medicare Advantage enrollment has been on a steady climb for the past two decades following changes in policy designed to encourage a robust role for private plan options in Medicare. After a period of some instability in terms of plan participation and enrollment, The Medicare Modernization Act of 2003 created stronger financial incentives for plans to participate in the program throughout the country and renamed private Medicare plans Medicare Advantage. In 2024, 32.8 million people are enrolled in a Medicare Advantage plan, accounting for more than half, or 54 percent, of the eligible Medicare population, and $462 billion (or 54%) of total federal Medicare spending (net of offsetting receipts, such as premiums). Medicare Advantage enrolls a disproportionate share of people of color in Medicare as well as an increasing number of dual eligible beneficiaries. The average Medicare beneficiary in 2024 has access to 43 Medicare Advantage plans, the same as in 2023, but more than double the number of plans offered in 2018.

The growth in Medicare Advantage enrollment is due to a number of factors, including the availability of plans that charge no premium (other than the Part B premium), and extra benefits offered by most Medicare Advantage plans. Nearly all Medicare Advantage plans offer some benefits not included in traditional Medicare, such as coverage of dental, vision, or hearing services, often for no additional premium. Medicare beneficiaries are also drawn to the financial protection that comes with an out-of-pocket limit, which Medicare Advantage plans are required to provide, while traditional Medicare has no out-of-pocket cap on spending. On the other hand, Medicare Advantage plans have limited provider networks and apply cost management tools such as prior authorization, which traditional Medicare does not.  Click here to learn more.