$0 Medicare Advantage Plan Cost Explained

It’s a common misconception that Medicare Advantage plans (Medicare Part C) are completely free. While it is true that many of these plans offer $0 plan premiums, there are still other costs associated with them.

So, while you may not be paying a monthly plan premium, you need to know what else you might have to pay for.

We must examine who covers Medicare Advantage plan costs to understand how this works.

Thanks to Government subsidies, private health insurance companies are reimbursed by the federal government when they provide coverage through Medicare Advantage. This allows them to offer plans with low or no monthly premium cost.

However, just because you’re not paying a premium doesn’t mean you’re free and clear.

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What Costs Am I Responsible For With A $0 Premium Medicare Advantage Plan?

1. You must pay copayments and coinsurance: Medicare Advantage plans work differently than Original Medicare regarding cost sharing. Instead of paying 20% of the Medicare-approved amount for most services, you’ll pay a copayment, coinsurance, or deductible set by the plan.

For example, a plan might charge you $10 for a primary care visit, $50 for a specialist visit, or a percentage of the cost of hospitalization.

These amounts add up, especially if you need a lot of medical care. Be aware of what the plan charges for various services and how it compares to your everyday medical needs and expenses.

2. Not all companies offer a $0 premium plan: While some Medicare Advantage plans have a $0 premium, others don’t. The premium is the monthly fee you must pay to enroll in the plan in addition to your Medicare Part B premium. The amount varies by plan and county, and it can range from a few dollars to hundreds of dollars per month.

So, before signing up for a plan, ensure you understand the premium costs and how they fit into your budget.

3. High out-of-pocket maximum: The typical maximum amount you would have to pay for a Medicare Advantage plan is $5,404, but it can be as high as Medicare allows, which is $8,300 for 2023.

Whereas with a Medicare Supplement plan, that amount could be no more than your annual premium. This amount may differ depending on the specific plan, as each plan sets its cap on the amount you would have to spend on medical services covered by the plan.

This includes the money you spend on the plan’s deductible, copayments, and coinsurance.

Free Medicare Advantage Plans Have Additional Limitations

1. Some benefits have limitations or exclusions: Medicare Advantage plans can offer benefits that Original Medicare doesn’t cover, such as hearing aids, gym memberships, and transportation services.

However, these benefits often come with restrictions or limitations. For example, a plan might pay for one pair of hearing aids per year or only at certain providers. Or, a plan might cover gym memberships but only at specific fitness centers.

Moreover, some benefits might be subject to prior authorization, which means the plan must approve them before you can use them. Read the plan’s Summary of Benefits carefully and ask questions about benefit limitations or restrictions.

2. The plan’s network providers might be limited: Unlike Original Medicare, which allows you to see any doctor or hospital that accepts Medicare, Medicare Advantage plans typically have a network of providers. If you see a provider outside the network, you might have to pay more for the service’s total cost.

3. Plan types affect cost: Health Maintenance Organization (HMO) plans tend to have lower premiums and cost-sharing than PPOs. However, they also require members to use only in-network providers for all their healthcare needs except emergency services.

Preferred Provider Organization (PPO) plans to provide more flexible coverage than HMOs but usually come with higher premiums and cost-sharing. With a PPO plan, members can receive care from in or out-of-network providers without a referral. However, it is typically more expensive to use an out-of-network provider.

Finally, Special Needs Plans (SNPs) are designed for individuals with specific chronic conditions or disabilities who qualify for both Medicare and Medicaid benefits.

When Can I Enroll In A $0 Premium Medicare Advantage Plan?

The initial enrollment period for a Medicare Advantage plan is the same as traditional Medicare.

During your Initial Enrollment Period, you can enroll in a Medicare Advantage plan during the seven months that starts three months before you turn 65, includes your birthday month, and ends three months after your birthday month. You must also be enrolled in Original Medicare Part A and Part B.

You also have other opportunities throughout the year to switch from Original Medicare to a Medicare Advantage plan.

These include:

The Annual Election Period (AEP) runs from October 15th through December 7th each year. During this time, you may change your coverage or join a new plan for the following year.

Special Enrollment Periods (SEP): If certain events happen in your life, you may be eligible for a SEP. These events include moving, leaving an employer or union health coverage, or if your Medicare Advantage plan stops providing coverage in your area.

Open Enrollment Period (OEP): The OEP runs from January 1st through March 31st each year. You can switch back to traditional Medicare and join a stand-alone Part D Prescription drug plan for the upcoming year.

Bottom Line

Medicare Advantage plans might seem like a no-brainer, but they’re not always as free or comprehensive as they appear.

When considering a Medicare Advantage plan, it’s essential to read the fine print, ask questions, and compare the costs, coverage, and network with other options, such as Original Medicare or a Medigap policy.

Remember that while a plan might offer extra benefits, you might have to pay a premium, copayments, and coinsurance or comply with limitations and exclusions. You can make the best decision for your unique healthcare needs and budget by being informed.

Resources: Free Monthly Plan Premium ExplainedUnderstanding Medicare Advantage PlansJoining a Medicare Advantage Plan


  • Who pays the premium for a Medicare Advantage Plan?

    If you are enrolled in Original Medicare, the government is responsible for covering the costs of your Medicare benefits when you receive them. However, if you opt for a Medicare Advantage Plan (also known as “Part C” or “MA Plans”), you will receive coverage from private companies approved by Medicare. Medicare pays these companies to provide coverage for your Medicare benefits.

  • How many people choose Medicare Advantage?

    By 2023, almost half of the people who benefit from Medicare are expected to be enrolled in Medicare Advantage plans. This percentage is projected to increase to over 50% by 2025.

Mark Prip

Since 2003, Mark Prip has been leading  Policy Guide, Inc., providing knowledgeable information about Medicare, life insurance, and dental coverage to clients in over forty states. With his unparalleled hands-on experience aiding countless Medicare beneficiaries in selecting an appropriate health plan, he is a prime example amongst other competitors for expertise and assistance. Mark has held his Florida Health & Life Insurance License (E051889) since 2003. View his license profile on the Florida Department of Insurance website.