$0 Medicare Advantage Plan Cost Explained
It’s a common misconception that Medicare Advantage plans (Medicare Part C) are completely free. While it is true that many of these plans offer $0 plan premiums, there are many hidden costs that are less commonly known.
Thanks to government subsidies, private health insurance companies are reimbursed by the federal government when they provide coverage through Medicare Advantage. This allows them to offer plans with low or no monthly premium cost. However, just because their premium is low or nonexistent doesn’t mean you’re free of expenses.
What Costs Am I Responsible for With a $0 Premium Medicare Advantage Plan?
1. You must pay copayments and coinsurance. Medicare Advantage plans work differently than Original Medicare regarding cost sharing. Instead of paying 20% of the Medicare-approved amount for most services, you’ll pay a copayment, coinsurance, or deductible set by the plan.
For example, a plan might charge you $10 for a primary care visit, $50 for a specialist visit, or a percentage of the cost of hospitalization.
These amounts add up, especially if you need medical care. Be aware of what the plan charges for various services and how it compares to your everyday medical needs and expenses.
2. There is often a high out-of-pocket maximum. The typical maximum amount you would have to pay for a Medicare Advantage plan is $5,404, but it can be as high as Medicare allows, which is $8,850 for 2024. This includes the money you spend on the plan’s deductible, copayments, and coinsurance.
With a Medicare Supplement plan, that amount could be no more than your annual premium. Every plan is different, as each sets its cap on the amount you would have to spend on medical services covered by the plan.
3. Not all companies offer a $0 premium plan. While some Medicare Advantage plans have a $0 premium, others don’t. The premium is the monthly fee you must pay to continue enrollment in the plan in addition to your Medicare Part B premium. The amount varies by plan and county, and it can range from a few dollars to hundreds of dollars per month.
So, before signing up for a plan, ensure you understand the premium costs and how they fit into your budget.
$0 Premium Medicare Advantage Plans Have Additional Limitations
1. Some benefits have limitations or exclusions. Medicare Advantage plans can offer benefits that Original Medicare doesn’t cover, such as hearing aids, gym memberships, and transportation services.
However, these benefits often come with restrictions or limitations. For example, a plan might pay for one pair of hearing aids but limit you to certain providers or cover gym memberships but only at specific fitness centers.
Some benefits might be subject to prior authorization, which means the plan must approve them before you can use them. Read the plan’s Summary of Benefits carefully and ask about limitations or restrictions.
2. The plan’s network providers might be limited. Unlike Original Medicare, which allows you to see any doctor or hospital that accepts Medicare, Medicare Advantage plans typically have a network of providers. If you see a provider outside the network, you might have to pay more for the service’s total cost.
3. Plan types affect cost and benefits. Health Maintenance Organization (HMO) plans tend to have lower premiums and cost-sharing than PPO plans. However, they also require members to use only in-network providers for all their healthcare needs except emergency services.
Preferred Provider Organization (PPO) plans provide more flexible coverage than HMOs but usually come with higher premiums and cost-sharing. With a PPO plan, members can receive care from in or out-of-network providers without a referral. It is typically more expensive to use an out-of-network provider.
When Can I Enroll in a $0 Premium Medicare Advantage Plan?
The initial enrollment period for a Medicare Advantage plan is the same as traditional Medicare.
During your Initial Enrollment Period, you can enroll in a Medicare Advantage plan for seven months: three months before you turn 65, your 65th birthday month, and three months after your birthday month. You must be enrolled in Original Medicare Part A and Part B to enroll in an Advantage plan.
You also have other opportunities throughout the year to switch from Original Medicare to a Medicare Advantage plan.
These include:
• The Annual Election Period (AEP) runs from October 15th through December 7th each year. During this time, you may change your coverage or join a new plan for the following year.
• Special Enrollment Periods (SEP): If certain events happen in your life, you may be eligible for a SEP. These events include moving, leaving an employer or union health coverage, or if your Medicare Advantage plan stops providing coverage in your area.
• Open Enrollment Period (OEP): The OEP runs from January 1st through March 31st each year. During this time, you can switch back to traditional Medicare and join a stand-alone Part D prescription drug plan for the upcoming year.
Bottom Line
Medicare Advantage plans might seem free, but they’re not always as low-cost or comprehensive as they appear.
When considering a Medicare Advantage plan, it’s essential to read the fine print, ask questions, and compare the costs, coverage, and network with other options, such as Original Medicare or a Medigap policy.
Remember that while a plan might offer extra benefits, you might have to pay a premium, copayments, and coinsurance or comply with limitations and exclusions. By being informed, you can make the best decision for your unique healthcare needs and budget.
Resources: Free Monthly Plan Premium Explained – Understanding Medicare Advantage Plans – Joining a Medicare Advantage Plan
FAQs
- Who pays the premium for a $0 premium Medicare Advantage plan?
- How many people choose Medicare Advantage?
