If you are turning 65 or older, you may want to compare Medicare Advantage Plans, and if you have, you have probably seen TV ads or have received mailers advertising something like:
“Enroll in Medicare Advantage 0 Premium Plans Now!”
“No Premium Medicare Advantage Plans Available!”
So, is there a catch? Do you need to beware?
If you are turning 65 or older, you are probably enrolled, or will enroll, in Medicare Parts A and B (Original Medicare).
Medicare does not fully cover all your approved health care costs. You must pay out-of-pocket for certain deductibles, copays and coinsurance. Also, Original Medicare does not cover most prescription drugs.
If you wish to get help with these costs you generally have two options:
- Enroll in a Medicare supplement plan
- Enroll in a Medicare Advantage Plan and a stand-alone Medicare Prescription Drug Plan
Medicare Advantage Definition
A Medicare Advantage Plan (also known as Medicare Part C) is a government program offered by a private company that contracts with Medicare to provide you with all your Part A and Part B benefits.
- About one third of Medicare Beneficiaries are enrolled in an advantage plan.
- Medicare services are covered through the plan and aren’t paid for under Original Medicare. They are paid by the private insurance company that offers the plan.
- Most Medicare Advantage Plans have Prescription Drug Coverage ( Medicare Part D) included
- Many Medicare Advantage Plans offer extra coverage such as vision, hearing, dental and /or health and wellness programs.
- The plan will usually pay for a large portion of your out-of-pocket costs.
Medicare Advantage Costs
Medicare contracts with private companies to offer an advantage plan. When you enroll in a plan, you actually “leave” Original Medicare and “move” to Medicare Part C (the official name for all advantage plans)
Medicare then pays the company with which you enrolled a monthly fee to cover your health care costs. A large portion of the profit that the company earns comes from this fee as well.
The company, for the most part, is free to charge you a monthly Premium.
However, in many cases, the company may decide not to charge a premium at all, either to attract more enrollees, or for some other marketing reason.
Since their profit comes mainly from the Medicare fee paid to them, charging no premium for the plan can be a win-win for you and the company.
Medicare Advantage Benefits
So, should you “beware” of zero premium plans when you compare Medicare Advantage Plans?
A full benefits comparison of all companies offering plans in a given area can shed some light on this question. It is impossible here, of course, to go through such a comparison for all areas of the country.
But we have some findings based on the comparisons we have done:
- Premiums can vary widely with a given area
- A large percentage of companies offer both a zero premium plan and premium plan(s) in the same area.
- Plans that charge a premium generally have a lower out-of -pocket cost (excluding premium) than plans with a zero premium.
- Your actual out-of-pocket costs can vary significantly even between two zero premium plans.
- Some zero premium plans can have better benefits than some premium plans in the same area.
- If you are healthy and don’t have much health care related costs, your cost savings can be substantial with a zero premium plan.
A Medicare Advantage 0 Premium Plan can be an excellent choice,
…but you must “beware” by doing your homework and comparing the benefits and out-of pocket costs of all the plans in your area.
To get a step by step process for so that you can compare Medicare Advantage Plans in your area and shop like an expert, call us at 415-999-5071.