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Have you wondered how can a Medicare Advantage plan be free or cost zero?
In this video, we’ll explore why Medicare Advantage plans may cost less than Medigap plans, how some of them can have zero premiums, who pays for the plan then and what some of the costs are that YOU will pay if you enroll in an Advantage plan.
You will discover that while some plans have a zero premium, they are certainly NOT free.
The Medicare Advantage program was designed to give beneficiaries an alternative to Original Medicare that you pair with a Medigap plan. Not everyone can afford Medigap insurance, and Medicare Advantage offers a lower premiums alternative if you are willing to abide by the plan’s conditions and use the plan’s network of providers.
When you join a Medicare Advantage plan, your providers no longer bill Medicare for your healthcare services. Instead they bill the plan.
This transfers all of the medical risk away from Medicare and Medicare is willing to pay for that. Medicare pays the Medicare Advantage company somewhere around $1000/month to take on your medical risk.
This means the Medicare Advantage company makes their money from Medicare. That is why they charge you such low premiums.
In some urban areas, you can find plans where is a zero premium. This means that when you join the plan, you don’t pay anything for the plan at all. But as I’ve just shared, this doesn’t mean the plan is free. It simply means that Medicare is paying the plan to take you on as a member.
So, what are your costs then?
Your costs can be broken down into two main things:
ONE: You still pay your Part B premium to Social Security each month because Medicare is still paying for your care, its just now paying it in an indirect route through the Medicare Advantage plan.
TWO: You are responsible to pay for the plan premium, if there is one. As I mentioned, some plans charge zero.
THREE: You pay for your copays, deductibles and coinsurance as you use the plan. Your agent will provide you with a Summary of Benefits that details everything that you will pay as you go along.
It could be that you pay $50 each time you visit a specialist or if you go in the hospital, you pay $200 night. The part that is probably most concerning to many people is that many Advantage plans will have you pay a 20% coinsurance for chemotherapy, radiation and dialysis.
You will pay that out of pocket until you hit the plan’s cap, which is called your out of-of-pocket maximum. This is an annual limit on how much you will spend on Part A and B services during any calendar year.
For many plans, this limit is $6700, so that’s the most you could spend in a calendar year, but that’s a lot for many people who are living on fixed incomes.
AND Part D expenses are separate and additional.
Keep in mind also that the Summary of Benefits is only good for one year. Advantage plans can and do get to change their plan’s premiums, copays, and coinsurance from year to year.
You’ll want to review your annual notice of change each fall so you can see what’s coming and have the opportunity to switch Advantage plans if you don’t like the coming changes.
So, are ZERO PREMIUM Medicare Advantage plans ever really free?
Definitely not. You will pay for Part B, you will pay for the plan’s premium, and you will pay some cost-sharing as you go along and use various medical services.
Keep in mind that if the plan is offering to let you join and pay absolutely nothing, you might find that the copays and coinsurance you pay for medical services on THAT plan are higher than if you joined a plan that DID charge you a monthly premium.
Morale of the story:
When it comes to Medicare, folks, there’s no free lunch for most people.
All of this doesn’t mean that a zero premium Medicare Advantage plan is bad. It’s just not free, and around here, we like to be very honest with our prospective client about the plans they are considering. We find that if someone knows and accepts these risks up front, they are far happier with their plan in the long run because there are no surprises.
Boomer Benefits provides free claims support for life for all of our Medigap and Medicare Advantage policyholders so that you are never alone in dealing with Medicare.
We are licensed in 47 states and we are a top-producing, award winning agency with over 2500 5-star reviews from Medicare beneficiaries just like you.
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