Updated Nov. 16, 2021
10,000 American seniors turn 65 every day, and all living Baby Boomers will be at least 65 by the year 2030.
Today, 63.5 million Americans – mostly age 65 and older – are enrolled in Medicare. These tens of millions of people, however, don’t have access to the same Medicare insurance options.
Over 26 million Medicare beneficiaries (over 40% of all Medicare enrollees) are enrolled in a type of private Medicare plan called a Medicare Advantage plan. Another 24 million are enrolled in a stand-alone Medicare prescription drug plan (PDP).
- Medicare Advantage Prescription Drug Plans (MAPDs)
Also known as Medicare Part C, Medicare Advantage plans are sold by private insurance companies and replace a beneficiary’s government-provided Original Medicare coverage.
Medicare Advantage plans offer all the same benefits of Original Medicare, and many plans may offer additional benefits that Original Medicare doesn’t cover, such as prescription drugs. In 2022, 89% of all Medicare Advantage plans include prescription drug coverage.
- Medicare Part D Prescription Drug Plans (PDPs)
Also known as Medicare Part D, these plans provide coverage exclusively for retail prescription drugs, which aren’t typically covered by federally-provided Original Medicare (Medicare Parts A and B).
Beneficiaries can have either a Medicare Advantage Prescription Drug (MAPD) plan, a standalone Part D plan (PDP) or neither, but they cannot have both.
Private Medicare insurance can vary greatly from one state — or even one county or zip code — to the next. Some seniors may live in a utopia of numerous affordable and high-quality plan options, while others may be left in a Medicare desert of high cost plans and scarce selection.
Best States for Medicare: Overview
In this report, we determine where Medicare beneficiaries have access to the widest range of quality private Medicare plans at the most affordable prices. To do this, we compared plan data from the Centers for Medicare & Medicaid Services (CMS) for the 50 states, using two primary factors:
We factored the average premium, average annual drug deductible and average in-network max out-of-pocket spending limit.
We highlighted the percentage of plans that are ranked four stars or higher based on the Medicare Star Rating system.1 All Medicare Advantage plans and Medicare Part D drug plans are assigned an annual star rating by the Centers for Medicare & Medicaid Services (CMS). One-star plans are determined to be lowest quality, and plans rated four stars or higher are considered “top-rated” plans.
Read on for our findings and for expert insight on the future of Medicare in America.
2022 National Average Medicare Premiums, Deductibles and Quality
|Type of Plan||Average Premium||Average Drug Coverage Deductible||Average In-Network Out-of-Pocket Spending Limit||Average % of Plans Rated 4 Stars or Higher|
|Medicare Advantage (Part C)||$62.66||$292.98||$5,703.71||55.4% of plans per state|
MAPD plans and Prescription Drug Plans are both reasonably affordable in 2022.
- The average 2022 MAPD premium is $62.66 per month, though many areas may offer plans that feature $0 monthly premiums. The average deductible for the drug coverage offered by MAPD plans is $292.98 for the year.
- The average PDP premium is $47.59 per month in 2022, with an average drug plan deductible of $367.80 per year. The highest Part D plan deductible that allowed by Medicare in 2022 is $480.
Best States for Medicare: 2022 Average Medicare Costs by State
|State||Average Monthly Medicare Advantage Premium||Average In-Network Out-of-Pocket Spending Limit||Average MA-PD Drug Deductible||Percent of Plans Rated 4 Stars or Higher||Average Part D Plan Deductible||Average Part D Deductible|
Factors in Medicare Advantage Premiums
The national average cost of a Medicare Advantage Prescription Drug plan in 2022 is $62.66 per month. But as you can see from the table above, the cost of an MA-PD plan can vary quite dramatically by location.
- In Massachusetts, Michigan, Rhode Island and the Dakotas, average Medicare Advantage premium rates are north of $100 per month plan in 2022.
- In Maine, New Mexico and South Carolina, the average premium is less than $40 per month.
Some of the factors that can influence a state’s average premium is the local cost of living, competition among insurance carriers, supplemental benefits that are offered by the plan and the quality of the plan’s coverage.
The average annual deductible for an MA-PD plan is $292.98. North and South Dakota were again on the high end at more than $430, while the other states with high premiums (Massachusetts, Michigan and Rhode Island) were able to stay closer to the national average. On the low end, Ohio and Utah each checked in with average deductibles of under $200 per year.
The average annual out-of-pocket limit for a Medicare Advantage plan in 2022 is $5,703.71. This represents the amount of money a member will have to pay out of their own pocket for covered care before the plan pays 100% of all covered care for the remainder of the year.
Federal law mandates that no Medicare Advantage out-of-pocket limit can exceed $7,550 in 2022, and New Jersey is the only state to top $7,000 on average. Seven states have kept their average out-of-pocket limit under $5,000 for 2022.
Medicare Advantage Plan Quality by State
Every year, the Centers for Medicare & Medicaid Services rates all Medicare Advantage plans according to a five-star scale based on various quality metrics. Three stars represents a plan of average quality, while four stars is considered above average and five stars is excellent.
The metrics used in scoring a plan include:
- Preventive care and improvements in member health
- Chronic condition management
- Member satisfaction
- Member complaints and turnover
- Customer service
Nationally, 55% of Medicare Advantage plans have earned either a 4-star or 5-star rating for 2022, meaning they are top-rated Medicare plans.
North and South Dakota’s high plan costs can be partly justified by their high plan quality. Both states average at least 86% of plans carrying a 4-star or 5-star rating. Other states with high quality plans include Iowa, Minnesota, Maryland, Montana and Utah.
Plan quality is lowest in Wyoming, Georgia and Arkansas, with all three states having just a quarter of their Medicare Advantage plans rated 4 stars or higher.
As of October 15, millions of American seniors have the opportunity to purchase a private Medicare insurance plan for the first time or switch to a new coverage option during the Medicare Annual Enrollment Period (AEP). This period, also called the fall Medicare Open Enrollment period, lasts until December 7.
We asked a panel of experts for their insight on what Medicare beneficiaries should keep in mind when they consider changing their Medicare plan or enrolling in a new one for the first time. Here's what they had to say.
What are the most important steps Medicare beneficiaries can take to minimize out-of-pocket health care costs and find good coverage options for their needs?
Rebeka Etheredge, licensed insurance producer in California: First, it’s important to compare several plan options to find the right plan for your needs and your budget. While comparing plans, make sure to check if the plan accepts your current doctor and prescriptions. Second, visiting in-network doctors and pharmacies may help keep your medical and drug costs down. Finally, if you’re unsure if your Medicare plan covers a service, simply ask! It’s so important to understand each service and the cost, before you receive the treatment, so you aren’t stuck with a surprise Medicare bill.
What are some common mistakes that people make when shopping for Medicare coverage, and how can you avoid doing the same?
Christian Worstell, licensed insurance agent in North Carolina: It's not uncommon for people to settle for the first attractive plan they see without making the extra effort to continue shopping. Many people may have access to dozens of plans, but don't take the time to review them all.
I always advise consumers to make a short list of the plans that suit them the best and carefully narrow their choices as they go. You're signing up for a year's worth of coverage, so it's worth the extra time to get it right.
Etheredge: One common mistake Medicare beneficiaries make is remaining in the same plan, year after year, without checking out other plan options. Medicare Advantage and Medicare prescription drug plans might change from year to year. It’s important to know if your current plan is changing or if there’s another option out there that’s a better fit for your needs and budget.
What should Medicare beneficiaries do to prepare for the coming new year?
Worstell: Review your previous year. What type of health care did you utilize? Where did you spend the most money? What types of health conditions do you have or have been warned about by your doctor? It's nearly impossible to predict our health. But the more you can anticipate your future health care needs, the better you can align those needs with your upcoming benefits.
Etheredge: If you are enrolled in a Medicare plan, you should review your Plan Annual Notice of Change (ANOC) every year. Your insurance provider will mail this to you each fall. This document explains any plan changes, such as changes to the benefits, costs or service areas.
How does the coronavirus pandemic and COVID-19 affect Medicare enrollment in 2021-2022?
Worstell: The COVID-19 pandemic is a great reason to review your coverage and identify any gaps that need filling. If we’ve learned anything from 2020 and 2021, it’s that our health can turn at the drop of a hat, and seniors especially must be proactive about the health coverage benefits they maintain.
This project used data provided by the Centers for Medicare & Medicaid Services (CMS). The 2022 MA Landscape Source Files and 2022 PDP Landscape Source Files were used for analysis.
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1 Every year, Medicare evaluates plans based on a 5-star rating system.