Summary: Medicare Advantage (Medicare Part C) is a way to get Medicare Part A and Part B benefits through a private, Medicare-approved insurance company, instead of directly through the government.
While Medicare Advantage premiums and coverage choices vary, zero-premium Medicare Advantage plans still have associated costs to consider.
What are Medicare Advantage plans?
Medicare Advantage plans are offered by private insurance companies approved by Medicare, and must follow the Medicare program’s regulations.
Medicare pays a fixed monthly amount for each Medicare beneficiary’s health care to all insurance companies offering Medicare Advantage plans. These plans have some flexibility in setting their costs.
Some Medicare Advantage plans may include additional coverage, such as:
- Routine vision benefits
- Dental coverage
- Wellness programs
Many (but not all) Medicare Advantage plans include prescription drug coverage. These are known as Medicare Advantage prescription drug plans.
Overview of Medicare Advantage premiums
Medicare Advantage premiums vary by plan. Some Medicare Advantage premiums are as low as $0, but they may not be available in all areas.
If there is a $0-premium plan in your service area, there are typically other costs associated with the plan, including copayments, deductibles, and your Medicare Part B premium.
Depending on plan availability where you live, you may be able to enroll in a Medicare Advantage plan that has low to no monthly premiums.
Plans with no premiums are also referred to as Medicare Advantage $0-premium plans.
Costs associated with $0-premium Medicare Advantage plans
Although it may seem like there are no costs to a Medicare Advantage plan with no premium, there are several expense categories to keep in mind for any Medicare Part C plan:
- Deductibles: Any Medicare Advantage plan may have a deductible that you need to pay before the plan begins covering your health-care services. The deductible may vary among plans.
- Copayments: These are amounts that you pay as your share of the health-care costs, while the insurance company pays for the remaining covered costs. $0-premium Medicare Advantage plans charge copayments, just as plans with monthly premiums do.
- Prescription drug costs: Every Medicare Advantage prescription drug plan has a specific list of prescription drugs it will cover (called a formulary) and copayment or coinsurance amounts. The formulary may change at any time. You will receive notice from your plan when necessary.
- Please note that some Medicare beneficiaries may qualify for the Extra Help (also known as Low-Income Subsidy) program for help with their prescription drug costs.
- Out-of-pocket maximum: Each Medicare Advantage plan must set an annual out-of-pocket maximum amount; some plans have lower out-of-pocket maximums than others. Once you pay this amount in a given year, the plan pays all your covered costs for the rest of that year.
- You may want to ask your plan what counts toward the out-of-pocket maximum amount. This amount may change from year to year.
As you can see, a Medicare Advantage plan that has a $0 premium may still have other costs for you to consider – and you still need to continue paying your Medicare Part B premium.
In some cases, a Medicare Advantage plan may charge a monthly premium, yet offer a lower deductible, lower copayment amounts, and more comprehensive drug coverage than a $0-premium plan.
Overall, you may want to keep this information about Medicare Advantage premiums in mind as you compare and research plans in your area.
Learn more about Medicare Advantage premiums: