UnitedHealth study: Medicare Advantage members spend 40% less per year than fee-for-service beneficiaries

Medicare Advantage beneficiaries spend 40% less per year than people enrolled in fee-for-service Medicare, according to new data from UnitedHealth Group.

The average annual spending, including premiums and out-of-pocket costs, for people enrolled in traditional Medicare with a prescription drug plan was $5,361, the study found. For those who add Medigap coverage, that annual spending increases to $5,992 on average per year.

For those on Medicare Advantage, however, annual spending was $3,558 per person, the study found.

"A beneficiary’s estimated health care spending is a key factor in the choice between MA and FFS coverage, especially since half of Medicare beneficiaries live on fixed annual incomes below $29,650," UnitedHealth's researchers wrote in the report.

RELATED: Medicare Advantage beneficiaries save more money on out-of-pocket costs than Medicare fee-for-service, BMA finds

The study also breaks down what a beneficiary would typically pay for premiums versus out-of-pocket costs in each type of coverage. For people enrolled in traditional Medicare with a drug plan, they spent, on average, $2,186 per year on premiums and $3,174 out of pocket.

For those with additional Medigap coverage, premiums cost $4,392 per year on average while $1,599 was spent out of pocket.

Medicare Advantage beneficiaries, by comparison, spent on average $2,013 on premiums per year and $1,545 out of pocket, according to the study.

The study also found that Medicare beneficiaries across all age categories spent between $1,541 and $2,234 less on average than 65-year-olds in traditional Medicare and between $2,259 and $2,701 less on average than 85-year-olds in fee for service.