Is Medicare Advantage Really Free?
They say there’s no such thing as a free lunch. But what about a free Medicare Advantage Plan? While a whopping 65% of Medicare Advantage enrollees pay $0 in premiums for their plan, you might be surprised to learn these plans aren’t really free.i Read on to learn why.
What you’ll learn:
|What is Medicare Advantage?||Jump to|
|What are Medicare Advantage Covered Services?||Jump to|
|What are the Medicare Advantage Costs?||Jump to|
|What is the Medicare Part B Premium Reduction?||Jump to|
What is Medicare Advantage?
Also known as Medicare Part C, Medicare Advantage Plans are privately sold by companies that are mandated to follow Medicare-set rules. These plans typically (though not always) include prescription drug coverage, also known as Medicare Part D. Additionally, most Medicare Advantage Plans maintain a provider network. While you can sometimes go outside this network for non-emergency coverage, this will usually incur higher costs.
The different types of Medicare Advantage plans are:
- Health Maintenance Organization (HMO) plans
- Preferred Provider Organization (PPO) plans
- Private Fee-for-Service (PFFS) plans
- Special Needs Plans (SNPs)
- HMO Point of Service (HMOPOS) plans
- Medicare Medical Savings Account (MSA) plans
Each of these plans may cover different services at different costs, but they all work relatively the same.
What Are Medicare Advantage Covered Services?
- Vision services
- Dental services
- Hearing services
- Fitness programs such as gym memberships or discounts
Some plans go further, covering additional benefits such as:
- Health and wellness services
- Transportation to medical visits
- Over-the-counter medications
When considering the costs of a Medicare Advantage Plan, it’s important to know what services are covered. Make sure to check with your specific health plan to see which benefits it provides.
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What Are the Medicare Advantage Costs?
How much you’ll pay out-of-pocket depends on the type of plan you select. Many providers offer $0 premium Medicare Advantage plans, while others charge a premium. In 2022, it’s estimated that nearly 60% of all Medicare Advantage Plans offer $0 premiums.i
So how can providers afford to offer $0 premium plans? Reasons include:
- Given that many Medicare Advantage plans offer preventive care, healthier patients translate to lower costs.
- Since Medicare Advantage has provider networks for health care, costs are more easily managed – but beware that you may pay more out of pocket if you go outside of network.
- Should a Medicare Advantage plan spend less than the federal lump sum they receive, they can pass the savings along to members.
Are the $0 premium Medicare Advantage Plans free? In a word: no. You’ll pay:
- Copays and coinsurance
- The Part B premium ($170.10 in 2022)ii
What is the Medicare Part B Premium Reduction?
Even with a $0 Medicare Advantage Plan, you are still required to pay your Part B monthly premium. That said, some plans will assist you with paying all or part of the cost. This benefit is also known as a Medicare Part B premium reduction or the Medicare Part B giveback. It’s designed to assist Medicare Advantage enrollees with lowering their health care costs.
You’ll need to be enrolled in Medicare Advantage to take advantage of the Part B premium reduction, as Original Medicare does not offer it.
You’re eligible for the Part B premium reduction if you:
- Are enrolled in Original Medicare (Part A and Part B)
- Pay your own premiums
- Live within the service area of a plan offering the benefit – 48 states currently offer this benefit
The amount that you will get back varies from $0.10 to the entire amount which is $170.10 a month in 2022. Learn more about how the Part B giveback benefit works here.
If you need help paying for your Medicare premiums, there are options outside of this Part B giveback benefit that you may qualify for. Learn more here.
The Bottom Line
There is no such thing as a free Medicare Advantage Plan. While $0 premium Medicare Advantage Plans do exist, you will likely encounter additional costs including copays, coinsurance, and deductibles as well as the Part B premium.
If you have questions, we have answers! Call a licensed Ensurem agent at the number on this page.
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i KFF.org. “Medicare Advantage 2022 Spotlight: First Look.” Accessed May 4, 2022.
ii Medicare.gov. “Your Medicare Costs.” Accessed April 28, 2022.
Denise Austin, 65, Ensurem Ambassador
Best-Selling Author, Creator of Fit Over 50 Magazine
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