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?
All Medicare Advantage Plans must provide equal coverage to Original Medicare Part A and Part B. You’ll find that most plans provide extended coverage beyond that. This can include:
- 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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