How do zero dollar no-premium Medicare Advantage plans work?
Medicare advantage plans have a big selling point, offering a low or even no premium for benefits which are usually better than your original Medicare Part A and B coverage. You will even find many insurance carriers advertising ‘$0 no-premium Medicare advantage plans’. How is that possible? Is that a scam?
$0, also called zero dollar or no-premium Medicare advantage plans are legitimate and not a scam. Here is how they work:
Each Medicare advantage plan must be approved by CMS.gov, the Centers for Medicare & Medicaid Services, and the government is actually subsidizing them, so the private companies are able to offer seniors affordable healthcare insurance. “No premium” means actually “no premium over what you already have to pay for your original Medicare Part B premium”. So No-Premium Medicare Advantage plans may be a good choice, as some plans come with extra benefits over original Medicare. This may for example include fitness center memberships or even prescription drug coverage or other. Actually, $0 premium plans may be right for many seniors with health issues but limited financial means. Almost anybody on Medicare can enroll, even with pre-existing conditions.
However, when you think about enrolling in a $0 no-premium plan, keep in mind that there just is not such a thing as a ‘free lunch’. You must compare zero premium advantage plans very carefully to make sure the medical care you need will actually be covered. Depending on how comprehensive your Medicare plan is, you will most likely still have co-pays and deductibles, and they might be higher than if you had selected a plan that comes with a monthly premium. Be aware that you may have to pay co-payments every time you see a doctor, and in case you get really sick, you might very well be responsible to pay a large amount out of pocket for your share of your medical costs.
Make sure to check any co-insurance, co-payments, deductibles and – most importantly – the out-of-pocket spending limit of the plan. Avoid plans that have no out of pocket maximum! While no premium might be a great solution if you are currently in good health, such a plan may cost you more than other Medicare advantage plans that come with a monthly premium, in case of an unforeseen illness, or if you develop a serious health condition.
Good news is however, that you can switch your Medicare advantage plan each year during the Open Enrollment period in fall. So in case your current plan does not work for you any more, you may cancel and switch it at the end of the year. If you have a 5 star advantage plan you may even switch at any time during the year. With a Medicare advantage plan, you also never give up your rights to switch back to original Medicare. More information on changing plans can be found here.
As long as you agree to use the plan’s network of healthcare providers and realize that you will have to pay co-payment for specific services, zero premium Medicare advantage plans may be an affordable alternative to add coverage to your original Medicare.
