2025 Medicare Cost Comparison ¦ Advantage vs Supplement

We finally have the numbers for 2025 Medicare costs. And the big question that we want to try and answer in this video is, will your costs be higher if you get a Medicare supplement plan or a Medicare Advantage plan? I'm going to just jump straight into the numbers, but there are a few assumptions that went into this that are outlined after we get through all of the numbers. If you don't make it to the disclaimers and then throw in a comment that's addressed in the disclaimers, I don't really know what to tell you. I do have a secret code word hidden in here that will help me manage the comments. And here we go. We have to start with original Medicare, which is Part A and Part B. These costs are the same, regardless of whether you choose a supplement plan or an Advantage plan. Sort of. Part A is your hospital coverage. And according to the Centers for Medicare and Medicaid Services, or CMS, 99% of Americans have zero dollar premiums for Part A. This is because you or your spouse have contributed to the Medicare system for at least 40 quarters, which is 10 years throughout your life. So you do not have a premium. Part B does have a monthly premium in 2025. The base Part B premium is one hundred and eighty five dollars per person per month or two thousand two hundred and twenty dollars per year. I say the base premium because Part B premiums are based on your income from two years prior. So if you had a higher income, meaning higher than one hundred and six thousand dollars, if you file your taxes as a single filer or two hundred and twelve thousand dollars, if you file your taxes jointly, you will pay more per month for your Part B. It is called your Medicare income related monthly adjustment amount or Irma. I'll have a link to where you can see the Irma chart for 2025 and the income cutoffs in the description of this video. If you're above those income amounts. All right. Those are your costs for original Medicare. But original Medicare leaves substantial gaps that most people cover with one of the two plans that we mentioned, a supplement plan or an Advantage plan. Just to have the coverage of a supplement plan, you need to pay a monthly premium. The actual amount is highly dependent on where you live. If you're new to this channel, I visited every state in our country to give the average cost for supplement plans in each state. Make sure you look up your state to get a general average of what that could look like. Now, supplement plan costs do go up each year. So they did get a little bit of a bump and will be slightly higher in 2025. The average for a 65 year old looking for a plan G nationally is around one hundred and sixty five dollars per person per month or one thousand nine hundred and eighty dollars per year. There are areas where it is much less than this. There are areas where it is much more. But if you get a supplement plan, you will need to pay this premium regardless of whether or not you have medical costs or an Advantage plan. It is a much different story. According to the Kaiser Family Foundation, in 2024, 75 percent of Americans with an Advantage plan that includes drug coverage have zero dollar premiums, meaning they do not pay any monthly premiums. That was for 2024. We don't have the same data for 2025 yet. But with the changes that are hitting in 2025, the assumption is that that number will drop a little bit. But by far, the vast majority of Advantage plans have no monthly premiums for those that do have premiums. The average is about 17 dollars and 50 cents per month in 2025. But again, the vast majority of those on an Advantage plan are paying zero dollars per month. And that is what we'll use for this analysis to try and compare as close to apples to apples as possible. We are going to look at drug coverage, dental and vision, because many people want and need these coverages. Just know that none of these are required, but we do need to look at them to give a fair look at costs for most people. We'll look at prescription drug coverage first, which is part D. If you go the supplement plan route, supplement plans do not cover prescription drug costs, so you would need to purchase a drug plan separately. This has been an absolute nightmare for 2025. So we'll just use the numbers that CMS is giving us, stating that the average premium in 2025 will be 46 dollars and 50 cents per month. For easier math, I'm going to round that to 47 dollars per month or five hundred and sixty five dollars per person per year. This is an average. Again, there is zero dollar plans and there are one hundred and twenty dollar per month plans. As I alluded to earlier, Advantage plans typically have part D drug coverage included in your already zero dollar premium plan, meaning you would not have to pay any additional amount to have drug coverage on an Advantage plan. In fact, that 75% figure that I mentioned earlier was specifically around plans that include prescription drug coverage. Similar story with dental. If you want dental coverage, supplement plans do not cover what you and I would normally think of as dental coverage. So your cleanings and cavities and things like that. You would need to buy a dental plan separately from your supplement plan. In our area, separate dental plans are about forty five dollars per person per month or another five hundred and forty dollars per year. Again, most Advantage plans have at least basic dental included at no extra charge. The amount of dental coverage varies a lot by area and by plan. Some are quite basic. Others are quite rich. It'll just depend on where you are and what plan you look at. Finally, vision matches this same narrative here where you would need to purchase a separate vision plan if you wanted one with a supplement plan route. We're looking at about twenty dollars per person per month or two hundred and forty dollars per year. Basic vision is typically included with Advantage plans at no additional cost. So now we can look at our total fixed costs for Medicare, depending on which plan route that we choose. Fixed costs, meaning that you will need to come up with these dollars every month and every year, even if you never get sick in a given year and you never use any form of health care. Remember that with the exception of people on Medicaid, which is those with low or no incomes, everyone has the Part B premium. So don't forget to add that in with a supplement plan. After rounding, you're looking at about four hundred and sixty dollars per person per month or five thousand five hundred and twenty dollars in premiums per year. With an Advantage plan, you're most likely just looking at the Part B premium Again, there are Advantage plans with small monthly premiums. There are also Advantage plans. They offer a Part B give back that lowers your Part B costs. But both of these ends of the spectrum are exceptions, not the rule. And we're going to stick with the rule for this video. Now, if we were to stop this conversation right here, there is a dramatic difference in the fixed costs between these two plans. And if we were to stop right here, everyone would be choosing an Advantage plan. And for a large number of people across the country, this is enough. They are choosing Advantage plans based solely on the fixed cost savings and not having to pay for something that they don't use and the extra perks that come included with the plan. But we are not stopping this video right here. And this is not the end of the conversation. We have to talk about your variable costs. What are the costs that you would see if you do need to use the health care system? This is your risk that you need to consider. The first variable cost to go over would be the deductibles. A deductible is a dollar amount that you need to pay first before your insurance plan starts to cover anything. With a Supplement Plan G in 2025, you have the Part B deductible of $257. That is an annual deductible. Once you pay that, your Supplement Plan G will start to kick in. Most Advantage plans do not have a medical deductible, and coverage starts immediately. Some do have deductibles. But again, we're going with the more common plans available, not the exception. After your deductible is met, you may run into co-pays and co-insurance. Well, with a Supplement Plan G, you don't have co-pays or co-insurance, which is why Plan G is the most popular Supplement Plan choice nationwide right now. 72% of everyone on a Supplement Plan right now is on Plan G. The next closest is Plan N at 9%. So this is the reason that we focus on Plan G in most videos. If you're interested in Plan N or High Deductible G, we do have several videos around that. But we just don't have the time here. With an Advantage Plan, you do have co-pays and co-insurance responsibilities for most services that you would need. These actual dollar amounts will vary drastically by plan, but we'll show the more important number here in a minute. Excess charges would be the money that you are responsible to pay if you visit any out-of-network providers or hospitals. With a Supplement Plan G, those are covered and you don't have excess charges. With other Supplement Plans, like Plan N, they are not covered. With an Advantage Plan, you are confined to a network of doctors and hospitals. If you go outside of that network, you are responsible for either a higher dollar amount or 100% of the costs of using that doctor facility. You will want to stay in network here or see higher costs. When we talk about a maximum out-of-pocket, it does not apply to Supplement Plan G. You pay your Part B deductible, and then Plan G takes care of the rest for Medicare-approved procedures and services that you receive at any facility or provider that hasn't completely opted out of Medicare. So I guess you could say that your max out-of-pocket is $257 on a Supplement Plan G. Maximum out-of-pockets do not include monthly premiums. With an Advantage Plan, you will pay those copays and coinsurance amounts up until you hit your maximum out-of-pocket. The national maximum out-of-pocket for 2025 is $4,973 in in-network services. I'm going to round that to $5,000 for us. There are areas of the country that are lower than this. There are areas of the country that are higher. Again, search this YouTube channel for your state, and you will see what your state's average numbers are. Even that isn't 100% precise because Advantage Plans are zip code specific and vary quite a bit, even within the same state. A quick note here, if you are on an Advantage Plan and you have an emergency, any emergency care is required to be covered as in-network. So if you are out of state and you have an emergency, you aren't left without any coverage, and you're not looking at the out-of-network maximum out-of-pocket, again, for emergency care. The maximum out-of-pocket is much harder to hit than what you might be used to on a high-deductible health plan. A deductible and a maximum out-of-pocket are not the same thing. Each year, about 3% to 5% of people actually hit their maximum out-of-pocket on Advantage Plans. Okay, when we pull down the total cost-sharing numbers, we see a considerable discrepancy. $257 per year for a Supplement Plan G, $5,000 per year for Advantage Plans. And if this was the only part of the conversation that we focused on, the discrepancy between the two is so large that everybody would choose a Supplement Plan, but you are a great learner and you are looking at both sides of this conversation, not focusing on just one. There are two asterisks that we need to talk about. We touched on them before, but they need a little bit more clarification, and that would be drug coverage and dental and vision. None of those potential costs count towards your maximum out-of-pocket numbers or your copay and coinsurance numbers. Drugs, dental, and vision costs are all handled separately from the Supplement Plan or the Advantage Plan with their own deductibles, copays, and coinsurance amounts. Part D prescription drug coverage is handled more or less the same between these two options. Not exactly the same, but Part D coverage is standardized. Drug coverage has its own deductible. The maximum for 2025 is $590. It has its own copays and coinsurance. And then for the first time in 2025, there is a legitimate maximum out-of-pocket for prescription drug coverage, which is $2,000 for the year. And this dollar figure is the same whether you go with a Supplement Plan in a standalone Part D drug plan or an Advantage Plan with drug coverage included, the difference being in that monthly premium that you would need to pay with the Supplement Plan in the standalone drug plan versus the no cost inclusion in an Advantage Plan, as well as each plan has its own deductibles and copay and coinsurance structures, so we have a few videos on drug coverage in 2025 on our channel that will break this down into even more detail, including the drug coverage with a standalone Part D plan versus an Advantage Plan Part D plan. I can't speak too much on dental and vision because the variability is just way too much nationwide. Just know that they can have their own deductibles, their own copays, their own coinsurance amounts that are separate from the maximum out-of-pocket or cost sharing that we've talked about with Supplement Plans and Advantage Plans. Okay, let's look at the total risk with the Supplement Plan G together with the other plans versus an Advantage Plan with drug coverage. The total annual risk with a Supplement Plan G in a good year where nothing goes wrong is the number that we had before $5,520. However, if you have a bad year where everything goes wrong and you need two, three, 100 surgeries and very high cost medications, your annual cost is around $7,777. We'll call that $7,780 because that is a lot of seven. With an Advantage Plan, if you have a good year where nothing goes wrong, you're looking at the $2,220 per year, which is just your Part B premium. However, if you have a bad year where a lot goes wrong and you reach your maximum out-of-pocket for both medical and drug coverage, you're looking at $9,220 in that year. If your illness is very expensive and it covers multiple years, for example, it starts in September and then it carries into the next year, you're looking at your maximum out-of-pocket for 2025, and then it resets in January of 2026 as well, so just something to consider if you have high cost, expensive things happening that also span multiple years. So in a good year, you could save about $3,300 in this scenario by going with an Advantage Plan. You could take that money and set it aside in an account for a potential bad year, but in a bad year, you could have saved as much as $1,440 on a Supplement Plan G. And if you're thinking, well, hey, I'm healthy, I'm just going to get an Advantage Plan and if something bad comes along, I'll just switch to a Supplement Plan. Unfortunately, in most states, it's not that simple. I have a video that looks a lot like this if you want the details on what switching to a Supplement Plan entails. Now, I've had this exact same conversation with tens of thousands of people at this point. It's interesting to see how the comments from people that come in who watch the exact same thing come to very different conclusions. Some say, why wouldn't everybody get an Advantage Plan? And others say, why wouldn't everybody get a Supplement Plan? And the reality is, is that as I've said before, Medicare is not a one-size-fits-all approach. Some people are comfortable with the risk of a bad year in exchange for the savings of the good years. Others are not. Neither is right, neither is wrong. It's what you feel works best for you. Supplement Plans and Advantage Plans are like comparing a Ford pickup truck with a Corvette. Both get you from one place to another, but they do it in very different ways. And that one place to another would be the holes that original Medicare just doesn't cover. Okay, here are the disclaimers that I hope you're able to get to before throwing in a comment. This video was strictly dollars and cents. If you're looking at just dollars and cents, it is very hard for an Advantage Plan to lose. Again, 3 to 5% of people will hit that maximum out of pocket. Advantage Plans will lose only if you have very high costs with something like cancer or multiple long-term stays in the hospital. This was looking at just one year. My advice to you would be to look at your Medicare options and how they would perform over many years. I have a video that looks like this, and it goes over the costs of these plans, including Plan G and Plan N, High Deductible Plan G, and an Advantage Plan over 20 years. And there's a spreadsheet that you can download for free to put in your own numbers and play around with it. There are several other important differences between Advantage Plans and Supplement Plans that you'll want to know before you make this decision. We've dedicated an entire video to that topic that you can find, and it looks like this, because Advantage Plans come with less freedom around your healthcare decisions. Now, there are a lot of incorrect myths about this, but the reality is, is that you have much more freedom and flexibility from a care and a provider standpoint with original Medicare and a Supplement Plan. And if you want this freedom and flexibility, you're going to pay for it. Which is why for many people, it's not about the cost differences between the two plans, they are willing to pay more to get more freedom and flexibility around their care. So if you made it here, I want you to know that I do not recommend one plan over the other for everybody. If I can be a little bit too open here, I hate the videos that say that they never recommend Advantage Plans, or they never recommend Supplement Plans, because I know that for most of these, it's just an outright lie to get clicks. They offer both, and they put people on both. A more appropriate title would be here is when I wouldn't recommend an Advantage Plan or a Supplement Plan. But that's not as shocking. It's not as scary, and it doesn't get the same attention. I am making a video all about the sneaky Medicare marketing tactics that are out there, so be sure to subscribe to the channel if you haven't already, to stay in the loop of what's going on in the Medicare world. There are a lot of changes coming. We have several videos that we are going to be releasing over the next few days addressing the 2025 cost changes, and the other videos that I've referenced are linked in the description of this video. And if you've made it all the way to this point, you have now unlocked the secret message that you can leave in the comments. If you include the blushing smiley face emoji in your comment, I'll know that you've watched the full video before making your comment. I have a pinned comment in this video with that emoji, so if you want to copy and paste that, and you don't want to go through the trouble of searching that through your phone or your tablet or your computer, you can just copy and paste it off the pinned comment of this video. If you do want help with your Medicare decisions, you can get to me through theretirementnerds.com or my email address is in the description of this video as well. Great job making it to the end. And this video right here is one that I think you will enjoy. I will see you over there.