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How Do 0 Premium Medicare Plans Work

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Is Medicare Advantage Really $0 $0 Monthly Plan Premium Explained

Do Zero Dollar Premium Medicare Advantage Plans Exist?

You may be surprised to learn that some Medicare Advantage plans have a monthly plan premium of $0. Thats rightzero dollars per month. And that usually includes coverage for services that arent covered under Original Medicare.

For most of us, costs and coverage are the 2 main factors when it comes time to choose a Medicare Advantage plan. Learn more about the $0 monthly premium Medicare Advantage plans, including how they work and how to enroll.

What Is A Zero Premium Medicare Advantage Plan

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.

Depending on the plan you choose, a Medicare Advantage plan may also cover extra services like hearing, vision, dental, and other wellness programs that traditional Medicare does not.

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.

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.

A Quick Rundown On Medicare Advantage Plans

Medicare Part C, the Medicare Advantage program, lets Medicare-approved private insurance companies offer plans that provide your Medicare Part A and Part B benefits. A $0 premium Medicare Advantage plan, like other Medicare Advantage plans with no copay, might include prescription drug coverage. Plans may include other benefits too â routine dental services, for example.

Medicare pays insurance companies a fixed amount of money to provide your Medicare Part A and Part B coverage. Medicare Advantage no premium plans have to follow Medicare rules, but have some flexibility in setting their premiums and cost sharing amounts. The same is true for all Medicare Advantage plans.

Learn more about what you need to know about Zero-Premium Medicare Advantage Plans.

Recommended Reading: Are Hospital Beds Covered By Medicare

Medical Savings Accounts Another Type Of Medicare Advantage

When we talk about Medicare Advantage, we often refer to these plans as a single entity, but in reality, there are actually 6 different types of MA plans.

  • Health Maintenance Organization plans: In most HMOs, you can only go to doctors in your network .
  • Preferred Provider Organization plans: In a PPO, you pay less if you use doctors in your network. You usually pay more if you go outside of your network.
  • Private Fee-for-Service plans: PFFS plans are similar to Original Medicare in that you can generally go to any doctor as long as they accept the planâs payment terms. The plan determines how much it will pay and how much you must pay when you get care.
  • Special Needs Plans : SNPs provide specialized health care for specific groups of people, like those who have both Medicare and Medicaid, live in a nursing home, or have certain chronic medical conditions.
  • HMO Point-of-Service plans: HMO plans may allow you to get some services out-of-network for a higher copayment or coinsurance.
  • Medical Savings Account plans: These plans combine a high-deductible health plan with a bank account. Medicare deposits money into the account . You can use the money to pay for your health care services during the year. MSA plans donât offer Medicare drug coverage. If you want drug coverage, you have to join a Medicare Prescription Drug Plan.
  • The last one â Medical Savings Accounts â are another type of Medicare Advantage plan with no monthly premium.

    Why Might I Not Buy A Zero

    How Do Insurance Companies Make Money On Medicare Advantage Plans

    So why would people opt to pay premiums for Medicare Advantage coverage when they could have a free option instead? There are a variety of reasons, including provider networks, drug formularies , and total costs. In some cases, the provider networks for the zero-premium plans might not include an enrollees current doctors. Or they might have drug formularies that dont include the medications a person is taking.

    But out-of-pocket costs is another big consideration. The zero-premium plan available in your area might have a higher deductible, copays, and/or total out-of-pocket exposure than the plans that have premiums. A healthy enrollee might feel like thats an acceptable gamble, but an enrollee with ongoing medical conditions might decide that its worth paying premiums every month in order to have more robust coverage. As with most things related to health coverage, theres no one-size-fits-all solution.

    Recommended Reading: What Is The Age Of Medicare

    Why Should I Choose Medicare Advantage

    A Medicare Advantage plan covers some of the gaps of Original Medicare and usually offers a $0 premium through a private company. It can be an affordable option for patients who are not currently sick or in need of intense medical care. If a patient’s situation worsens, it might be difficult or expensive to switch plans.

    Faqs About Medicare And Open Enrollment

    Medicare is the largest health insurance program in the United States, covering more than 60 million Americans.

    Its also one of the most confusing and complex programs.

    Contrary to popular belief, Medicare isnt free and it doesnt cover all your health care costs either.

    Heres what you need to know to get the most out of your Medicare coverage.

    Also Check: Does Medicare Part D Cover Repatha

    The Average Price Of A Medicare Advantage Plan

    Some Medicare Advantage plans may have lower out-of-pocket costs than Original Medicare, and some have a $0 monthly premium. Here are a few questions to consider before purchasing a plan.

    • Does the plan have a monthly premium?
    • Many have a $0 premium.
    • Some pay your Part B premium.
    • If you choose a plan with a premium, it will be paid separately from your Part B premium of $148.50 .
  • Does the plan have an annual or additional deductible?
  • How much is the copayment for each visit or service?
  • What type of health care services do you need, and how often do you get them?
  • Does your service provider accept Medicare?
  • What is the plans annual limit on out-of-pocket expenses?
  • Once youre enrolled in a Medicare Advantage plan, it becomes your primary insurance. The company handles paying all your claims. And every year, the cost of your plan will probably change. The plan provider sets the amounts charged for premiums, deductibles and services. An Annual Notice of Change is mailed to you each September to be effective Jan. 1.

    Factors like location play a major role in determining the cost of a Medicare Advantage plan. Costs are typically lower when you use providers in your plans network and service area. To find the specific cost of a Medicare Advantage plan in your zip code, visit

    How Is Medicare Funded

    Medicare Advantage Plans with $0 and Low Monthly Premiums

    Medicare is funded via payroll taxes, also known as FICA taxes, which are automatically withheld by your employer.

    FICA includes a 6.2% Social Security tax and a 1.45% Medicare tax on your earnings or 7.65% total.

    Self-employed people face a double whammy from the federal government because they pay both the employers and the employees share of FICA taxes a total of 15.3%.

    No matter how much you make, 1.45% of your paycheck will be withheld for Medicare.

    An additional 0.9% Medicare tax may apply to earnings over $200,000 for single filers, or $250,000 for married couples filing jointly.

    Read Also: How To Get A Scooter With Medicare

    What Are The Costs Of Zero

    Zero-premium plans may be appealing, but premiums are not necessarily your only expenses. Other forms of cost-sharing include copayments, coinsurance, and deductibles though your financial exposure is capped by an out-of-pocket maximum, these costs can add up.

    Depending on the plan, you may actually pay more if you need more services than you expect. For example, on a zero-premium plan, the copays may be higher than copays on a plan with a premium. Additionally, the annual out-of-pocket limit in a zero-premium plan may be higher than the limit in a plan with a premium, meaning you could pay more.

    Part B Premium

    Most Medicare enrollees pay a Part B premium. In 2020, the standard Part B premium is $144.60 per month, though it is higher if your income is above a certain amount.7 Some Medicare Advantage plans pay all or part of this premium,8 but zero-premium plans may be less likely to pick up this cost.


    Deductibles are the healthcare costs you pay before insurance kicks in. Medicare Advantage plans can have annual deductibles and/or deductibles specifically for medications.9 The average deductible for MA plans with prescription coverage was $121 in 2019 it was $415 in Medicare Part D.10 Some plans have much higher deductibles, so research the options where you live.



    Out-of-network costs

    Out-of-pocket maximum

    Your Original Medicare Costs May Include:

    • Deductible – The amount you pay before Florida Blue Medicare begins to pay its share of the cost. Some MA plans have a separate drug deductible before they start to pay for your prescriptions.
    • Copay – A flat dollar amount you pay each time you receive care or fill a drug.
    • Coinsurance – A percentage you pay for your care or drugs after you meet your deductible.
    • Premium – A fixed, monthly amount you pay for your MA plan coverage. Many Florida Blue Part C plans have a $0 premium.
    • Out-of-pocket maximum – The most you pay for covered health care services during your plans calendar year. All of your Medicare-covered expenses go toward this maximum.

    Recommended Reading: How Much Is Medicare Part A Premium For 2020

    How Do $0 Monthly Premium Medicare Advantage Plans Work

    First, a quick refresher on Medicare Advantage plans.

    Medicare Advantage, also known as Medicare Part C, combines the coverage of Original Medicare with additional coverage. Depending on the plan, Medicare Advantage could include benefits like:

    • Dental
    • Prescription drugs
    • Vision

    Private insurance companies, like Highmark, offer Medicare Advantage plans. You are eligible for Medicare Advantage if you are enrolled in Medicare Parts A and B, reside in a service area, and do not have end-stage renal disease.

    Heres a quick run-down on how these plans work to offer you a $0 monthly premium:

    • You paid into Part A while you were working.
    • You now pay a monthly Part B premium.
    • The government uses those dollars to pay the health insurance company.
    • The health insurance company in turn manages the Medicare Advantage plan.
    • You pay the health insurance company for your Medicare Advantage plan.
    • The health insurance company passes savings on to you in the form of $0 monthly premiums and benefits.

    What Else Should You Know About Free Medicare Advantage Plans

    How Can Medicare Advantage Plans Have Zero

    When signing up for a Medicare Advantage plan thats free , its important to calculate your out-of-pocket costs.

    You should consider the following:

    • The type of medical services you think youll need and how often you will need them.
    • Whether the doctors or medical suppliers you use will accept Assignment. Assignment requires that they accept the Medicare-approved amount as full payment for covered services.
    • Whether or not the Medicare Advantage plan provides additional benefits that may require you to pay an extra premium.
    • Whether you are eligible for or getting Medicaid or assistance from your state for health care costs.

    Read Also: Does Medicare Cover Gastric Balloon

    Covered Services In Medicare Advantage Plans

    With a Medicare Advantage Plan, you may have coverage for things Original Medicare doesn’t cover, like fitness programs and some vision, hearing, and dental services . Plans can also choose to cover even more benefits. For example, some plans may offer coverage for services like transportation to doctor visits, over-the-counter drugs, and services that promote your health and wellness. Plans can also tailor their benefit packages to offer these benefits to certain chronically-ill enrollees. These packages will provide benefits customized to treat specific conditions. Check with the plan before you enroll to see what benefits it offers, if you might qualify, and if there are any limitations. Learn more about what Medicare Advantage Plans cover.

    Florida Blue Medicare Ppo Plans

    Do you want the savings of a provider network and the flexibility to see doctors and specialists outside the network? If you do not like to wait for a primary care doctor referral to go to a specialist, one of our Medicare Advantage PPO plans may be a better fit for your needs.

    • Our PPO plans give you the opportunity to save with low out-of-pocket costs when you use in-network providers.

    • With these plans, you have the option to use healthcare providers out-of-network.
    • You dont need a referral for specialist visits.
    • Taking care of your health can help earn you rewards.

    Recommended Reading: What Is Taken Out Of Social Security For Medicare

    What Does A Medicare Advantage Plan Cost

    Like Original Medicare, Medicare Advantage plans share the cost of care through deductibles, co-payments and co-insurance. These costs vary by plan. Our HMO plans offer $0 premiums, low out-of-pocket costs, and low prescription drug costs. While our PPO plans cost a bit more for the opportunity to go out-of-network and see specialists without a referral, they still offer low out-of-pocket costs for in-network visits.

    Medicare Advantage plans also have an out-of-pocket-maximum. Once you reach the maximum, your Medicare Advantage plan pays 100% toward Medicare covered services and you dont pay anything.

    How Does Medicare Work

    2021 How to use Medicare Plan Finder, step-by-step

    Generally, you only need to sign up for Part A and Part B once. Each year, you can choose which way you get your health coverage .

    Medicare is different from private insurance it doesnt offer plans for couples or families. You dont have to make the same choice as your spouse.

    2 steps to set up your Medicare coverage:

  • You can sign up at certain times. Check when and how to sign up.
  • Choose which way you want to get your Medicare health coverage You can choose either Original Medicare or Medicare Advantage for your health coverage. If you choose Original Medicare, youll also decide if you want drug coverage and supplemental coverage, like Medigap.
  • Youll have Original Medicare unless you join a Medicare Advantage Plan.

    Read Also: How Can You Get A New Medicare Card

    Free Can Be Good But Watch Costs

    Zero-premium plans can provide good coverage for consumers, but make sure you look at all of the out-of-pocket costs, experts said.

    Unlike the old adage of you get what you pay for, there are many zero-premium Medicare Advantage plans with good coverage because Medicare pays plans to participate and subsidizes some costs, Reeg said.

    The federal government contracts with private insurance companies to provide drug and/or medical coverage to Medicare recipients who sign up for the plans. Everyone but the poorest enrollees pays a portion of the monthly premium the government picks up the rest.

    Consumers have to choose a plan based on their current health needs for the next year, as well as potential costs if you have the worst health year ever, she said.

    Health insurance is based on the if. You want to know whats going to happen if you are in that situation and knowing what your copay should you be admitted to the hospital, Reeg said.

    But make sure you know all of your costs as a $0 premium plan will still have other costs for copays and medications, she said.

    Many Medicare Advantage plans offer extra benefits for dental, vision and hearing and other extras such as home and bath safety devices or emergency response devices.

    I would suggest not choosing your health insurance based on the added benefits. Choose based on your health care benefits and look at the added benefits just as they are extra goodies or icing on the case, said Reeg.

    When Can You Enroll In Zero

    You can sign up for an MA plan once youre eligible for Medicare Parts A and B. Youre eligible for Medicare if youre 65 or older.15 Some younger people with disabilities also qualify.

    You can sign up for Medicare starting three months before you turn 65 until three months after. You have to enroll in Medicare before you can sign up for a Medicare Advantage plan.

    After you enroll in a Medicare Advantage plan, you can switch for any reason between October 15 and December 7 or during the Medicare Advantage Open Enrollment Period every year from January 1 through March 31.

    Outside those two periods, you can join or switch plans under special circumstances, for example, if you move, you lose your current coverage, or your current plan changes.16

    After your initial sign-up, open enrollment or a special enrollment period is your chance to switch MA plans. If zero-premium plans are offered in your area, you might choose one during open enrollment.

    Recommended Reading: How To Change Primary Doctor On Medicare

    Face The Other Factors

    We know thereâs a lot more to a plan than its premium, but how can an agent determine what plans are valuable to what clients? You must know your client and your clientâs needs.

    The first thing an agent should do is find out what doctors their clients will use. Ask them, âIf there were something really wrong, what hospital would you go to?â If their hospital of choice isnât in a planâs network, that plan shouldnât be considered an option.

    In the case of most senior clients, they want to stay with their doctors. Put simply, their relationship with a doctor means more to them than saving a few bucks.

    Additionally, agents should clearly present all benefits of a plan. Some plans may offer specific values to your client that make a higher premium completely worth it. Rather than shell out a copay each month, it might be cheaper for your clients to pay the premium of a plan that covers a particular cost.

    Finally, are you ready for the super combo that could benefit both you and your client? Consider pairing a $0-premium MA with a hospital indemnity plan to ease the burden of expensive hospital copays.

    A low-premium plan will yield a high MOOP, but clients can spend a part of those savings on an affordable hospital indemnity plan that helps them cover pricey copays on hospital stays.

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