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Do Some Medicare Advantage Plans Offer Zero Premiums?

If you’re spending time reviewing your options with Medicare Advantage (Part C) but you’re confused by zero-premium plans, you’re not alone. How can some Part C plans offer coverage with no premium, and why wouldn’t everyone sign up for one? At first glance, premium-free Medicare Advantage sounds great. But you need to be careful. Here’s why some Medicare Advantage plans have a zero premium, and why this may not be the least expensive way to go.

How Private Insurance Companies Can Afford to Offer Zero Premiums

Private insurance companies often sell Medicare Advantage plans with low or zero monthly premiums. How can they afford to do it? Insurance companies selling Part C agree to provide plan recipients with all of their Part A and Part B Medicare benefits. That’s why when you sign up for Part C, you receive your Part A and Part B benefits through your Part C plan, not through Original Medicare.

In exchange for providing these benefits, the federal government agrees to make monthly payments to the insurance company to cover the cost. Some companies make deals with hospitals and doctors for reduced rates—savings they often pass on to their members. This is how Medicare Advantage plans can offer additional benefits above and beyond Original Medicare, like dental, vision, and eye care, as well as senior fitness programs.

Your Monthly Premium Is Only Part of Your Cost

A Part C plan with no monthly premium may be right for you, but it’s often not the most cost-effective solution. Why? It has to do with other expenses—deductibles, copays, and even out-of-pocket maximums. The monthly premium is only part of your costs and you should look carefully at the specifics of each plan to determine what you will be expected to pay.

Other Factors That Impact How Much You Pay for Medicare Advantage

Despite zero-premium plans, most people with Medicare Advantage do pay a monthly premium. Here are some other factors to consider, in addition to the premium, that impact how much you pay for Medicare Advantage.

  • Whether or not your plan pays your Part B premium.
  • The amount of your deductible.
  • How much you pay for each visit or service (copayment, coinsurance).
  • The type of plan you have and if you use in-network providers or go out of network for care.
  • The plan’s out-of-pocket maximum.

Of course, the type of health care you need and how frequently you receive it also plays a role in how much you ultimately spend for health care with a Medicare Advantage plan.

 

References:

Medicare Advantage Costs https://www.medicare.gov/your-medicare-costs/medicare-health-plan-costs/costs-for-medicare-advantage-plans.html

CMS.gov https://www.cms.gov/Research-Statistics-Data-and-Systems/Statistics-Trends-and-Reports/CMS-Fast-Facts/index.html

Medicare Advantage Costs and Facts https://www.medicareinteractive.org/get-answers/overview-of-medicare-health-coverage-options/medicare-advantage-plan-overview/what-is-a-medicare-advantage-plan

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