One of the best reasons to switch to Medicare Advantage (MA) is to take advantage of the lower premiums. Even with more comprehensive coverage, most MA plans cost less per month than Original Medicare.
But because MA plans are offered by private insurance companies, they have the option of setting their monthly premiums as low as $0. But just because you’re paying $0 per month doesn’t make it totally free.
Here’s some information to help understand $0 premium Medicare Advantage.
How do $0 Premium Medicare Advantage Plans Make Money?
Medicare Advantage Plans are run by private insurance companies. When you sign up for Medicare Advantage, the Medicare program is agreeing to pay that private company a certain amount per-month for them to cover you (so Medicare doesn’t have to).
This is advantageous on the government’s side because it reduces their financial risk. Meanwhile, the insurance company is getting a regular monthly payment for your coverage. So even if they charge $0 per month, they’re still making money.
In addition, MA plans come with more out-of-pocket risk, which is another reason they can charge $0.
What are the Other Costs of a $0 Premium Medicare Advantage Plan?
As mentioned above, just because you’re paying $0 per month doesn’t mean that it’s totally free.
For one, you’ll need to cover copays and coinsurance towards covered medical costs. With many Medicare Advantage plans, that means paying up to 20% of the medical bill out-of-pocket. Your deductible is what you have to pay before Medicare begins to cover your costs.
You will also still have to pay the Part B premium, which is $134 per month and is usually just deducted from your Social Security check.
Copays, coinsurance, and deductible amounts vary depending on the specific plan you choose. Generally speaking, the Medicare Advantage plans with low or $0 premiums will have higher deductibles and out-of-pocket costs.
Should I Switch to No-Premium Medicare Advantage?
A $0 premium Medicare Advantage plan is a good idea if:
- You are generally healthy and don’t use your coverage much.
- You’re willing to take on the risk of a higher deductible
- You have enough money saved up to cover unexpected health emergencies
- You’re dual eligible for both Medicaid and Medicare
A $0 premium Medicare Advantage plan might be a bad idea if:
- You have ongoing or pre-existing health conditions
- You are at high risk of developing new conditions
- You tend to visit the doctor a lot
- You either travel a lot or live in multiple states
Remember: The Best “Free” Medicare Plans Aren’t for Everybody
There’s no feeling quite like lowering your monthly bills. But free Medicare advantage plans really aren’t free, and the higher out-of-pocket risk makes them a bad idea for some enrollees.
If you have a pre-existing condition or any significant health risks, then choosing an MA plan with a higher premium might be a good idea.
Thinking About Switching to $0 Premium Medicare Advantage?
The only time to switch to a no-premium Medicare plan is during Annual Enrollment (AEP). AEP happens every year from October 15th to December 7th.
If you need to enroll in or switch to a low or $0 plan, schedule a consultation right away. This is a busy season for our whole team, so it’s a good idea to get on the calendar as soon as possible.
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Mike Montes is a Personal Benefits Manager at MediGap Advisors. Mike has a passion for bringing clarity to those confused about Medicare. He is an authority on Medicare, Medicare supplement plans, Medicare Advantage plans, and Part D prescription drug plans. Read more about Mike on his Bio page.