How Can a Medicare Advantage Plan Have a Zero Dollar ($0) Premium?

Last Updated : 10/31/20193 min read

If you’re doing some research about Medicare Advantage plans, you might have discovered some $0-premium Medicare Advantage plans. But just because a Medicare Advantage plan has a zero premium doesn’t mean the plan covers all your health-care costs.

What are $0-premium Medicare Advantage plans?

No matter whether they have a $0 premium or not, Medicare Advantage plans give you an opportunity to receive your Medicare benefits through a private insurance company contracted with Medicare.

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Under the Medicare Advantage (also called Medicare Part C) program, plans must offer the same benefits as Original Medicare, Part A and Part B, but if you need hospice benefits, they’d come directly through Medicare Part A instead of through the plan.

What out-of-pocket costs might $0-premium Medicare Advantage plans have?

Medicare Advantage plans (whether $0-premium or not) typically come with certain out-of-pocket costs, just as most health insurance does. These expenses may include copayments, coinsurance, and deductibles.

  • A deductible is the amount you have to pay before your Medicare Advantage plan pays its share of covered services. Not every plan might have a deductible amount, and they may vary among plans.
  • A copayment is generally a set dollar amount you may have to pay for a covered service (for example, $15).
  • A coinsurance amount is a percentage of the total cost that you may have to pay for a covered service (for example, 20%).

Insurance companies offering Medicare Advantage plans have some flexibility in setting their rates. Plan premiums, deductibles, coinsurance amounts, and copayments may vary among plans.

Another cost-related item to consider is the plan’s 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 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 services that year.

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So, before you decide to enroll in a $0-premium Medicare Advantage plan, you might want to look at these other costs. It may be a good idea to compare all costs among plans when you’re looking at Medicare Advantage plans.

What else do I need to know about $0-premium Medicare Advantage plans?

Average Medicare Advantage premiums dropped 33 percent year over year in 2019, according to eHealth research. The popularity of $0-premium plans contributed to the low average premiums.

Medicare Part D plans are not available with $0-premiums.

Average Monthly Premium by Product

Source: Medicare 2019 Open Enrollment: Costs and Sentiments

Whether or not it’s a $0-premium Medicare Advantage plan that you sign up for, you still need to continue paying your Medicare Part B premium, in addition to any premium your plan may charge. You’re still in the Medicare program even when you receive your benefits through a Medicare Advantage plan.

As you can see, the cost of a Medicare Advantage plan’s premium isn’t all there is to choosing which Medicare Advantage plan may be right for you. It could be a $0-premium Medicare Advantage plan, or a different plan that might suit your needs. Would you like help comparing $0-premium Medicare Advantage plans and other Medicare health plans? Just enter your ZIP code on this page.

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