Are Medicare Advantages plans really $0?
Medicare Advantage zero premium plan sound too good to be true??
Medicare Advantage plans can have a monthly premium of $0? Usually when something sounds too good to be true it is.
But this might be the exception to the rule.
Here’s why.
Insurance companies that offer Medicare advantage plans get paid from the federal government for every person they have on a Medicare advantage plan. And they get paid A LOT of money each month.
On average, it’s about $1,000 a month per person. That’s $12,000 a year!
So even though you may be paying $0 for that plan, it doesn’t mean the insurance company isn’t getting paid.
So now that we know it’s not too good to be true, how does it actually work?
We already said that these insurance companies receive money each month for every person they have enrolled in a plan with them.
And in order for the insurance companies to be able to offer these plans, they must complete a process each year with Medicare. Part of this process is making sure the plans they offer are AT LEAST as good as Original Medicare.
I say at least, because they can be considered better than Original Medicare. But at a minimum they have to be at least as good as Original Medicare.
There is a very detailed process on how they are calculated to be at least as good. And this is done each and every year.
You still have to pay your Medicare Part B premium
Most people starting Medicare in 2020 will have a Medicare Part B premium of $144.60 per month. This is income based, so it could be higher or lower depending on your income. If you are receiving your social security benefits, then this will be taken directly from your social security each month.
So you may be paying $0 for a Medicare Advantage premium. But you are not paying $0 in total for Medicare because you are still paying for your Medicare Part B coverage.
At least as good as Original Medicare
A big key here is at least as good as Original Medicare.
Original Medicare is Medicare A and B which we all know has some gaps in coverage. That does not mean it’s at least as good as Original Medicare plus a Medicare supplement. Because the Medicare supplement helps fill in the gaps of Original Medicare. That supplement makes it more comprehensive coverage than Original Medicare by itself.
But Medicare supplements have monthly premiums of more than $100 per month. Plus you would typically be paying for a prescription drug plan which is another premium you pay each month.
Many people are paying $2,000 per year or more in premium beyond Original Medicare. So obviously that is going to be more comprehensive coverage compared with just a base model of Original Medicare. Clearly a Medicare Advantage plan is lower premium but is it actually cheaper?
In exchange for that premium, those people pay very little, if any out of pocket costs when they need to use their health coverage.
May include extra benefits
Original Medicare does not have any routine coverage for dental or vision. But many Medicare Advantage plans do have some extra coverage for this. Even some of the plans for $0/month.
Since the medical coverage is at least as good as Original Medicare, plus adding dental and vision for $0 can be a nice extra bonus for you.
Not every plan offers this coverage and even the plans that do may not be 100% comprehensive. So it’s important to review all of your plan details before enrolling.
Often includes prescription drug coverage
Original Medicare does not cover prescription medications. So you need to get a separate prescription drug plan which costs about an average of $33 per month nationally.
But Medicare Advantage plans often include prescription drug coverage. Yes, even the $0 per month plans.
This makes it easier for you since you will use 1 card for everything. Doctor visits and prescriptions all use 1 ID card. And only 1 premium to make sure gets paid each month.
Potential Drawbacks
There are some gaps to know about before enrolling in a plan. As with any option, there are some drawbacks that you need to consider.
- Network restrictions
- Unpredictable expenses
- Additional hoops to jump through
Network Restrictions
All Medicare Advantage plans use a network of providers where you can get your coverage from. Some plans have coverage outside of that network while others don’t at all.
This means that you need to make sure the doctors and hospitals you want to see are in network in that plan. Otherwise the insurance company may not pay any medical bills leaving you to pay the entire bill on your own.
Unpredictable Expenses
Medicare Advantage is considered to be more of a pay as you go plan. The premium you pay is lower compared with a Medicare supplement. But each time you use the coverage, you will have additional out of pocket expenses like copays. Or a percentage of the total bill.
So if you are having a major incident such as a cancer diagnosis, you can end up with large and immediate medical bills.
These plans do have maximum out of pocket limits for each calendar year. This means there is a certain amount that is the most you will have to pay each year on the plan. If you happen to reach that amount then the insurance company will pay 100% of the covered medical bills for the rest of the year.
So your maximum exposure is capped. But with major incidents you can reach this amount quickly so you need to be prepared for the worst case scenario.
Additional Hoops to Jump Through
These plans may have some additional hoops to jump through that you may not be used to. One of these hoops is something called referrals.
A referral means that in order for you to see a specialist, your primary care doctor may need to refer you to them. If referrals are required by your plan and you don’t get one before seeing the specialist then they don’t have to cover that visit. Which leaves you having to pay the whole bill yourself.
Another potential hoop is called prior authorization. This requires you to get the insurance company to approve the procedure BEFORE you get it completed. Otherwise they don’t have to cover the procedure at all. Which again, leaves you having to pay the whole bill yourself.
RECAP
Medicare Advantage plans may have $0 premiums. But the amount you pay is rarely $0 since you still have to pay your Medicare Part B premium in order to get a Medicare Advantage plan. Also, you will have out of pocket expenses like copays when you use the plan which increases your costs.
They often do include extra benefits like prescription drug coverage or dental and vision that Original Medicare does not have on its own.
They do have some downsides with additional hoops to jump through to make sure your treatment is covered.
As long as you know the whole picture of how these plans work, they can be a great option for your Medicare coverage. But you need to know the positives along with the potential drawbacks BEFORE you choose your plan.
Call me directly at 608-571-4461 to see what options are available in your county. No obligation and no cost for the call.
We can review what’s available and see if there is a good fit that you would be interested in. If not, we can part ways with you knowing you at least compared other options to know you made the right decision for you.
Mike Lovell
608-571-4461