- Many Medicare Advantage plans have a $0 monthly premium.
- However, zero monthly premium plans may not be totally “free.”
- You’ll typically still have to pay some other costs like copays, deductibles, and coinsurance, as well as your Part B premium.
If you’re shopping around for a Medicare plan, chances are you’ve seen the phrase “zero dollar premium” attached to some Medicare Advantage plans.
Let’s take a closer look at zero premium Medicare Advantage plans and whether this might be a good option for your healthcare needs.
Although Medicare Advantage plans can have a $0 premium, there are other things you may have to pay for out of pocket. These costs can include:
- Copays. A copayment (copay) is an amount that you pay for a service after you have met your deductible. These may be higher with plans that have a lower monthly premium, while plans with a higher monthly premium may have lower copays.
- Coinsurance. Coinsurance is the amount that you are responsible for paying for a covered service, even after you’ve paid your deductible. For example, if your coinsurance is 20 percent, you will pay the first 20 percent of the amount due, and your health plan will cover the rest.
- Deductible. A deductible is the amount that you are responsible for paying before your insurance plan begins to pay its share. Deductibles are often higher with plans that have lower premiums, meaning you’ll pay less each month in premiums but more out of pocket for individual healthcare services. After you pay your full deductible, your health plan will pay most of the cost for medical services, but you may still have to pay a copay or coinsurance.
- Other Medicare premiums. Even with a Medicare Advantage plan, you are responsible for paying the premiums for all other parts of Medicare (parts A, B, and D) that you may have. Most people do not pay a premium for Part A, but Part B does have a monthly premium.
Most health plans have a maximum amount that a person has to pay out of pocket. Once that amount is met, the health plan will cover 100 percent of the cost for the healthcare services for the rest of the year.
Medicare Advantage plans are offered to you through a private insurance company. These plans replace traditional Medicare coverage: Part A being hospital insurance, Part B is medical insurance, and Part D, which provides prescription drug coverage.
Here’s how a zero premium plan is created. To keep costs low, the federal government contracts with private insurance companies to provide your plan. Through this contract, the government pays a flat fee to the insurance company. The insurance company then creates agreements with a network of hospitals or providers, which keeps your costs lower as long as you stay in network.
Many Medicare Advantage plans are offered to you with $0 monthly premium for a few reasons:
- Costs are lower because Medicare agrees upon rates with a network of healthcare providers.
- Medicare Advantage plans cover a range of preventive care and wellness programs, which keep participants healthier. The healthier the participant, the lower the cost of their healthcare.
- If you don’t use all of the flat fee that Medicare pays the private insurance company, that money can be passed on as savings to you, making your premium $0 per month.
You qualify for a zero premium Medicare Advantage plan if you meet the general Medicare program eligibility requirements. You must:
- be age 65 or over
- be enrolled in Medicare parts A and B
- live in the area of coverage for whatever plan you choose
To sign up for a Medicare Advantage plan, head over to the Medicare.gov website and use the plan finder tool. Part C plan offerings vary by state, but this tool allows you to search for available plans in your area by entering your ZIP code.
tips for enrolling in Medicare
There are certain enrollment periods for different Medicare plans:
- Initial enrollment period. You can initially enroll in Medicare parts A and B 3 months before you turn age 65 and up to 3 months after your 65th birthday.
- Open enrollment. If you are looking to make changes to your existing Medicare part A or B enrollment, or are over age 65 but still need to enroll, the open enrollment period is October 15 through December 7 every year.
- Medicare Advantage open enrollment. This takes place each year from January 1 through March 31 and allows you to switch from one Part C plan to another.
If you are helping your loved one enroll in Medicare, remember to:
- gather important documents, such as a social security card and any other insurance plan documents
- compare plans online through Medicare.gov’s plan finder tool or through your preferred insurance company’s website
Zero premium Medicare Advantage plans can be a great option for people who are looking to either bundle or supplement their existing Medicare coverage. Be sure to research plans thoroughly before choosing one to make sure it covers everything you need.
This article was updated on November 20, 2020, to reflect 2021 Medicare information.