The Centers for Medicare and Medicaid Services just released information around Medicare Advantage, also known as Part C, and Medicare’s prescription drug plan, Part D.

Medicare Advantage (Part C)

The average premium for Medicare Advantage plans is now $17.00 per month, which is a decrease of $1.23 compared to last year's $18.23.¹

Keep in mind that this is only a fraction of the total costs, so make sure to include additional expenses like copays and deductibles.

It’s projected that Medicare Advantage enrollment will increase to 35.7 million people this year, compared to last year’s 33.8 million. In addition, Medicare Advantage plans will continue to offer a variety of supplemental benefits including access to meals (for a limited duration), fitness benefits and worldwide emergency/urgent coverage. About 28% of Medicare Advantage plans will offer special supplemental benefits for chronically ill individuals. 

As a reminder, Medicare Advantage is an all-in-one plan that provides the same coverage as Original Medicare (Parts A and B). However, Medicare Advantage also includes additional benefits such as vision, dental, hearing, prescription drugs, and lower out-of-pocket costs. Medicare Advantage does have a lot of perks compared to Original Medicare but there is one caveat; it’s far more restrictive than Original Medicare when it comes to which providers you can see. Therefore, you should see if your doctor takes the Medicare Advantage plan you’re planning to choose. Also, if your Medicare Advantage does not include a prescription drug plan, you may be eligible for Medicare Part D. 

Medicare Part D (Prescription Drug Plan)

The expected average premium for Medicare Part D coverage in 2025 is $46.50 per month, which is 13.8% lower compared to last year’s at $53.95.² 

Medicare Part D is specifically designed to help you pay for prescription drugs. It’s a supplemental plan to Original Medicare, meaning you can choose to add Part D a la carte. Don’t be fooled that your Medicare Part D premium will cover 100% of your total prescription drug costs. You may still be responsible for other costs like annual deductibles, monthly premiums, copayment and out-of-pocket costs. In 2024, 80.4%³ of Medicare enrollees had Part D coverage.

Key Takeaways

This modest reduction in Medicare Advantage premiums might sound like good news to retirees. But keep in mind that premiums are only a part of your total annual costs. By understanding all the real costs of Medicare, it will help you budget for your retirement and navigate your new coverage. 

Here are some key financial takeaways to remember:

• The average 65-year-old couple will spend $330,000 on healthcare over their retirement.⁴

• Where you live impacts your total Medicare costs.

• When building health care costs into your plan, consider not just the monthly premium but also factor in out-of-pocket expenses, deductibles and coinsurance.

• The average total costs for a Medicare Advantage plan in 2024 which includes out-of-pocket costs, premiums and deductibles was $7,273 a year ($606.08 per month).⁵

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SOURCES

• “Medicare Advantage and Medicare Prescription Drug Programs to Remain Stable as CMS Implements Improvements to the Programs in 2025.” CMS.gov, 27 September 2024, https://www.cms.gov/newsroom/fact-sheets/medicare-advantage-and-medicare-prescription-drug-programs-remain-stable-cms-implements-improvements. Accessed 30 September 2024.

• “Medicare Advantage in 2024: Premiums, Out-of-Pocket Limits, Supplemental Benefits, and Prior Authorization.” kff.org, 8 August 2024, https://www.kff.org/medicare/issue-brief/medicare-advantage-in-2024-premiums-out-of-pocket-limits-supplemental-benefits-and-prior-authorization/. Accessed 30 September 2024.

• “Medicare Monthly Enrollment.” CMS.gov, May 2024, https://data.cms.gov/summary-statistics-on-beneficiary-enrollment/medicare-and-medicaid-reports/medicare-monthly-enrollment. Accessed 30 September 2024.

• Fidelity Investments® Releases 2024 Retiree Health Care Cost Estimate as Americans Seek Clarity Around Medicare Selection.” Fidelity Investments, 8 August 2024, https://newsroom.fidelity.com/pressreleases/fidelity-investments--releases-2024-retiree-health-care-cost-estimate-as-americans-seek-clarity-arou/s/7322cc17-0b90-46c4-ba49-38d6e91c3961. Accessed 30 September 2024.

• Silvur Services LLC. (2024) Cost Of Living Calculator. Unpublished internal company document.