- Medicare cost plans are sold by private companies and work with your original Medicare coverage to offer additional benefits.
- While they’re similar to Medicare Advantage plans, Medicare cost plans allow more flexibility in choosing a Part D plan and using out-of-network healthcare providers.
- Medicare cost plans are only available in specific areas of the country.
- To enroll in a Medicare cost plan, you must have Part B and have a cost plan available in your area that’s accepting new members.
You may know that Medicare is made up of several different parts, which include:
- Medicare Part A (hospital insurance)
- Medicare Part B (medical insurance)
- Medicare Part C (Medicare Advantage)
- Medicare Part D (prescription drug coverage)
Some of these parts, such as Medicare Advantage and Part D plans, are available through private insurance companies. However, there are also additional types of plans that you can purchase. One of these is a Medicare cost plan.
A Medicare cost plan is a type of plan that blends parts of both original Medicare and Medicare Advantage. These plans work together with your original Medicare coverage while providing additional benefits and flexibility.
Medicare cost plans are very similar to Medicare Advantage plans. However, there are some key differences between the two. Continue reading to learn more.
Medicare cost plans are offered through private insurance companies that are approved by Medicare. These plans work along with original Medicare (parts A and B) but also include some additional benefits.
Medicare cost plans appeal to many people because they provide a blend of benefits from both original Medicare and Medicare Advantage.
Medicare cost plans are only available in certain areas of the country. Additionally, changes in federal laws have led to the discontinuation of Medicare cost plans in many areas.
A Medicare cost plan works in tandem with original Medicare. That means that some services are covered by your plan while others are covered by original Medicare.
When you enroll in a Medicare cost plan, you gain access to the plan’s network of healthcare providers. You can either choose a provider within this network or an out-of-network provider. When you go out-of-network, it’s covered by original Medicare.
Additionally, some Medicare cost plans come bundled with Part D prescription drug coverage. If your plan doesn’t include Part D, you can enroll in a separate Part D plan that best suits your needs.
There’s also additional flexibility in switching plans. If you’re not happy with your Medicare cost plan, you can switch back to original Medicare at any time without waiting for the open enrollment period.
Medicare Advantage plans are offered by private companies and include at least the same level of coverage as original Medicare.
Like Medicare Advantage plans, Medicare cost plans are offered by private companies and may also include additional benefits.
However, unlike Medicare Advantage plans, a Medicare cost plan doesn’t replace your original Medicare coverage. Instead, it offers other benefits in addition to those of original Medicare.
Medicare cost plans also give increased flexibility to use out-of-network healthcare providers. Many Medicare Advantage plans require you to see in-network providers or allow the use of out-of-network providers at a higher cost.
The table below summarizes the differences between the two types of plans:
|Medicare Advantage||Medicare cost plan|
|How it works||used instead of original Medicare||works together with original Medicare|
|Monthly premium||sometimes, although ||yes, although it’s often low|
|Out-of-network providers allowed||depends on the plan type, but usually comes at a higher cost||yes, covered under original Medicare if you have Medicare Part A and Part B|
To enroll in a Medicare cost plan, you must meet the following eligibility requirements:
- be enrolled in Medicare Part B
- live in an area where Medicare cost plans are offered
- find a Medicare cost plan that’s accepting new members
- complete an application during the plan’s enrollment period
- agree to all cost plan rules that are disclosed during the enrollment process
It’s possible that you could be denied enrollment in a Medicare cost plan. This can happen if:
- you don’t meet the requirements listed above
- you have end-stage renal disease (ESRD), although there are specific exceptions to this
- the Centers for Medicare & Medicaid Services (CMS) has issued a waiver or limitation for a plan’s open enrollment period, restricting who can enroll
Are Medicare cost plans going away?
Beginning in 2019, a change in federal laws led to Medicare cost plans being discontinued in some counties. This change restricts the offering of Medicare cost plans in areas with at least two or more competing Medicare Advantage plans.
If a Medicare cost plan isn’t available in your area, you still have several options for coverage, including:
- using original Medicare
- enrolling in a Medicare Advantage plan
- buying a Medicare supplemental insurance (Medigap) plan
Below, we’ll break down the steps to enroll in a Medicare cost plan.
Medicare Part B eligibility and enrollment
To enroll in a Medicare cost plan, you must first be enrolled in Medicare Part B. To be eligible for Part B, you must meet one of the following criteria:
- be age 65 or older
- have a disability and receive Social Security Disability Insurance
- have ESRD or amyotrophic lateral sclerosis (ALS)
People who receive retirement or disability benefits from the Social Security Administration (SSA) or the Railroad Retirement Board are automatically enrolled in original Medicare when they’re first eligible. Others will have to apply through the SSA.
Medicare cost plan enrollment
Once you’re enrolled in Part B, you can enroll in a Medicare cost plan. Remember that you can only enroll in a Medicare cost plan in your area that’s accepting new members.
Companies that offer Medicare cost plans must provide Medicare beneficiaries with an open enrollment period of at least 30 days. During this time, you’ll submit an application to the plan’s provider to enroll.
Enrollment details may be different depending on the company that’s offering the cost plan. Be sure to check with the plan’s provider for specific details on enrollment periods and application materials.
Medicare Part D enrollment
Some Medicare cost plans include prescription drug coverage under Medicare Part D. However, others offer medical benefits only.
If your plan doesn’t include prescription drug coverage, you can enroll in a Part D plan separately. You can enroll in a separate Part D plan during specific periods:
- Initial enrollment. This is the 7-month period made up of the month you turn age 65, as well as the 3 months before and after.
- General enrollment. This happens every year from April 1 through June 30. If you pay a premium for Part A and enrolled in Part B for the first time during this period, you can also add a Part D plan during this time.
- Open enrollment. This occurs every year from October 15 through December 7. You can add, remove, or switch Part D plans during this time.
- Special enrollment. If you move or lose your prescription drug coverage, you may qualify for a special enrollment period outside of the traditional enrollment periods.
Medicare cost plans work alongside your original Medicare coverage to provide further benefits and flexibility. They can be purchased through private insurance companies.
Medicare cost plans offer many of the extra benefits that come with Medicare Advantage plans, such as dental, vision, and hearing care.
However, unlike Medicare Advantage plans, people with Medicare cost plans have more flexibility to use out-of-network providers and to choose a separate Part D plan.
To enroll in a Medicare cost plan, you need to be enrolled in Part B and have a plan in your area that’s accepting new members. To find a plan in your location, search for available plans or contact your local SHIP.