If you are like most people who are about to or already qualify for Medicare benefits your mailbox is overflowing with plan options, many of which include $0 monthly plan premiums. How is this even possible? And are these plans too good to be true? Read on for the real deal on $0 monthly premium Medicare Advantage plans.

How can insurance companies afford to offer $0 monthly plan premium Medicare Advantage plans?

While you may be able to obtain a $0 monthly premium Medicare Advantage plan, these plans are far from free. The taxes you and/or your spouse paid into the Medicare fund during your working years pay for the majority of the premium, as much as $452 for Part A benefits. Some people who did not sufficiently contribute to the Medicare fund may be required to pay this amount in order to receive their Original Medicare Part A benefits. Your Part B premiums typically pay the rest of the premium. The standard monthly premium for Part B services in 2020 is $144.60. If you combine these amounts, your “$0 monthly plan premium”  Medicare Advantage plan is being funded by almost $600 monthly. When you choose to sign up for a Medicare Advantage plan, the government takes the funds you have paid in, plus the Part B premiums you are paying and reassigns some of that amount to your Medicare Advantage carriers.

What are Medicare Advantage Plans?

Medicare Advantage Plans—also sometimes called Medicare Part C or MA plans—offer an alternative to Original Medicare. These plans are offered by Medicare approved private insurance companies and are required to provide at least the same benefits as Original Medicare Parts A and B. Most plans also offer additional benefits that Original Medicare doesn’t cover like prescription drug benefits, vision and dental. 
Private insurance companies are able to offer these plans starting from a $0 monthly plan premium because the government reimburses them for each Medicare beneficiary they cover. Keep in mind that although these plans may have $0 monthly plan premiums, that does not mean they are without cost. Medicare Advantage plans may charge copays, deductibles and other fees associated with the care you receive. These plans also vary in their annual out-of pocket-spending limits with amounts ranging from $3,000 up to a maximum of $6,700 in 2020.

What are the limitations of $0 monthly premium plans?

Most $0 monthly premium Medicare Advantage plans are HMO-type plans which means that in order to receive full coverage you will likely be required to use in-network doctors, care providers and hospitals and need to get a referral to see a specialist. When shopping Medicare Advantage plans—especially those offering $0 monthly plan premiums—it is important to consider other potential expenses such as copays, deductibles and other out of pocket costs. Reviewing the network of available doctors as well as the ratings of the plan can also help you make an informed decision. 

If I sign up for Medicare Advantage do I still need to have Medicare Part B?

Yes, to qualify for a Medicare Advantage plan you are required to be currently enrolled in Medicare Part B, which means that even if you qualify for a $0 premium monthly plan you will likely still be paying a monthly premium to maintain your Part B benefits (Part A benefits are generally premium-free for those who qualify). In 2020, the standard monthly premium amount of $144.60 is usually taken directly from your social security or Railroad Retirement Board benefits distribution. If you are trying to keep your monthly payments very low you can look for a Medicare Advantage Plan that pays some or all of your Medicare Part B premiums.

Why do some Medicare Advantage plans have small monthly premiums?

You may be wondering what the difference is between Medicare Advantage plans with $0 monthly premiums and those with small monthly premiums, generally ranging between $30 and $70 per month. Why pay extra when you can get something at no additional cost to you? Advantage plans with monthly premiums are “premium” plans that offer additional benefits that the more basic, $0 monthly plan premium options don’t. Many premium plans are PPO’s that offer you more choices in doctors and can make scheduling specialist appointments easier. They may also have lower out-of-pocket expenses such as copays and deductibles and more robust additional benefits on vision, dental and prescription drug coverage.

$0 monthly  premium Medicare Advantage plans are another way to receive your Medicare benefits and to limit large out of pocket medical bills that Original Medicare won’t cover. Depending on your healthcare needs and preferences this type of plan could be a good option for you. Talk to a friendly, licensed insurance agent at Health IQ today to find out what Medicare option can meet your needs and save you money.