Zero-Dollar Premium Medicare Advantage Plans
A “zero dollar” premium Medicare Advantage plan may seem too good to be true, but they do exist.
Medicare Advantage plans cover what Medicare Part A and B cover, and also may include extra benefits as well. Note that Medicare Advantage plans are provided by private insurance companies while Medicare Part A and Part B are provided by the government. This means that Medicare Advantage plans are able to set their own costs, including premiums, copayments/coinsurance and deductibles.
If you are looking into zero-dollar Medicare Advantage plans, be aware that just because a plan has a zero premium doesn’t mean you will have no health care costs with that plan.
What is a zero premium Medicare Advantage plan?
A premium is an amount you pay monthly to have insurance, whether you use the covered services or not. A premium is just one way that you could pay for health insurance coverage. Other ways you pay for health care coverage include copayments/coinsurance and deductibles.
A zero premium Medicare Advantage plan charges $0 monthly to have that plan. This may look attractive compared to other plans that charge $55 a month or $90 a month, for example. However, you will be responsible for other costs with a zero premium Medicare Advantage plan.
Are zero premium Medicare Advantage plans free?
Zero premium Medicare Advantage plans are not free. Costs you may be responsible for include:
- Your Medicare Part B premium: even with a zero premium Medicare Advantage plan you must pay your monthly Part B premium to the federal government.
- Copayments: this is a dollar amount you pay when you receive a service. For example, you may have a $10 copayment for an office visit to a primary care doctor or a $35 copayment for an office visit to a specialist like a dermatologist or a cardiologist. Many other medical services often come with copayments, including emergency room visits, ambulance services, outpatient surgery, and diagnostic radiological services for example. Copayments amounts may vary from plan to plan.
- Coinsurance: this is a percentage you pay when you receive medical services or prescription drugs. Some categories of prescription drugs may have a copayment, for example $40, and other categories of prescription drugs might have coinsurance, for example 33%. Coinsurance amounts may vary from plan to plan.
- Deductible: This is an amount you pay for medical services before your zero premium Medicare Advantage plan begins to pay. For example, if you have a $1,000 deductible, you must pay $1,000 out of pocket before your medical expenses are covered by your plan. Some Medicare Advantage plans have both $0 premiums and $0 medical deductibles. Deductible amounts may vary from plan to plan.
Another factor that may affect your health care spending is your Medicare Advantage plans’ maximum out-of-pocket amount. Every Medicare Advantage plan, including $0-premium plans, has an out-of-pocket maximum that can vary among plans and might change year to year. This amount is about the total cost you have to pay for Medicare-covered services. Once you have spent a certain amount on these services in one calendar year, you won’t have to pay any more for covered medical services that year. The out-of-pocket maximum doesn’t include what you spend monthly on premiums.
Is a zero premium Medicare Advantage plan the cheapest plan I can get?
Perhaps counterintuitively, you may spend more with a zero premium Medicare Advantage plan than for a Medicare Advantage plan with a higher monthly premium, depending on your medical needs. For example, if you had a $49,000 knee surgery and no other medical expenses in a year, here is what you might pay with two different Medicare Advantage plans:
|Premium||Out of Pocket Maximum||Total you pay:|
|Medicare Advantage Plan 1||$0/yearly||$6,700||$6,700|
|Medicare Advantage Plan 2||$600/yearly||$3,000||$3,600|
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