There are two parts to how Medicare Advantage plans get paid.

The first is the premium members pay; how the premium depends on the benefits of the plan you purchase. It can be as low as $0, or it can be higher in other cases.

Secondly, since Medicare Advantage Plans completely replace Original Medicare, Medicare pays the Medicare Advantage insurance company an amount per member based on location, health, and many other factors. The Medicare Advantage insurance company’s responsibility is to pay for all the health care needed by that Medicare Advantage member. The payment from Medicare makes up the majority of the money the insurance company gets for each member. They then manage their members’ healthcare which allows them to provide additional benefits and lower the premiums they can charge, even to the point of having $0 premium plans.