How to read a Medicare Advantage plan summary

Every Medicare Advantage plan has a one-page summary that lists the same basic items: premium, deductibles, copays, a maximum out-of-pocket amount and drug coverage. The numbers look simple, but each line has details that can change what you actually pay. Here’s what each one means and what to ask before you choose a plan.

1. Plan type: HMO or PPO

The plan type tells you how the network works.

• HMO: you generally must use doctors and hospitals in the plan’s network, except for emergencies and urgent care. Many HMOs ask you to choose a primary care doctor and get referrals to see specialists.
• PPO: you can usually see doctors outside the network too, but you’ll typically pay more when you do.

Ask: Are my doctors, specialists and hospital in the network for next year?

2. Monthly plan premium

This is what you pay the plan each month. Many plans have a $0 monthly plan premium, but you still pay your Medicare Part B premium. Some plans also reduce part of your Part B premium.

Ask: What will I pay each month in total, including Part B?

3. Medical deductible

The amount you pay for certain covered services before the plan starts sharing the cost. Many plans don’t apply the deductible to every service, such as doctor visits, so read which services it applies to.

4. Copays and coinsurance

A copay is a set amount, like a fixed charge for a doctor visit. Coinsurance is a percentage of the cost. The summary lists these for primary care, specialists, hospital stays, emergency care, imaging, outpatient surgery and more.

Ask: What do I pay per day for a hospital stay, and for how many days? What do I pay for the services I use most?

5. Maximum out-of-pocket

The most you’d pay in a year for covered medical services in the network. Once you reach it, the plan pays 100% of covered medical services for the rest of the year. Original Medicare doesn’t have this limit, which is one reason people compare it carefully.

• PPOs may list two amounts: one for in-network care and a higher combined amount for in- and out-of-network care.
• The maximum doesn’t include your monthly premium or your prescription drug costs.

6. Prescription drug coverage

Most Medicare Advantage plans include Part D drug coverage. This section often decides which plan really costs less.

• Drug deductible: what you pay for drugs before the plan starts sharing the cost. A line like “deductible applies to Tiers 2 to 5” means drugs on Tier 1 aren’t subject to the deductible.
• Tiers: plans group drugs into tiers. Lower tiers, usually generic drugs, cost less. The same drug can be on different tiers in different plans.
• Drug list (formulary): check that every drug you take is covered, at your dose.
• Rules: some drugs need prior authorization, step therapy (trying another drug first) or have quantity limits.
• Pharmacy: many plans have preferred pharmacies where you pay less. Check that yours is one of them.
• Yearly cap: Medicare now limits how much you can pay out of pocket for covered Part D drugs each year, and covered insulin costs no more than $35 for a month’s supply.

Ask: What will my specific drugs cost over the whole year with this plan, at my pharmacy?

7. Extra benefits

Many plans include dental, vision, hearing or an allowance for over-the-counter items. These can be helpful, but look past the headline.

Ask: Is there a yearly limit? Do I have to use certain dentists or providers? Are there waiting periods for major dental work?

8. Star rating

Every year, Medicare evaluates plans based on a 5-star rating system. The rating reflects things like quality of care, customer service and drug plan performance. Star Ratings are calculated each year and may change from one year to the next, so look at the rating for the year you’re enrolling in.

Put it together

A plan with a $0 premium isn’t always the lowest-cost plan for you. The plan that fits is the one that covers your doctors, covers your medications at a reasonable yearly cost, and has a maximum out-of-pocket you’d be comfortable with in a bad health year. When we compare plans, I check those three things for each plan I represent and explain the trade-offs plainly.