It may sound unbelievable to hear that $0 premium Medicare Advantage plans exist, but they do. However, they are not entirely free. Even if you pay nothing in premiums, you would still need to pay your Original Medicare Part B premium ($174.70 per month in 2024) in addition to your Medicare Advantage plan deductible and coinsurance (usually a couple of hundred dollars depending on the plan).

Do free Medicare Advantage plans really exist?

The advertising for many Medicare Advantage plans often features celebrities, and they are sold as low or no-cost options. These ads can be enticing, but they are often misleading.

While some Medicare Advantage plans do offer low or $0 monthly premiums and may provide savings in certain situations, all plans come with associated costs, including coinsurance and deductibles.

Unadvertised costs of $0 premium Medicare Advantage plans

While there are low or no-cost Medicare Advantage plans, people joining a Medicaid Advantage Plan not only have Part A and Part B coverage but also need to continue paying their monthly Medicare premiums independent of the MA premiums.

First, to join a Medicare Advantage Plan, you must be enrolled in Medicare Part A, and Part B (hospital and medical insurance, respectively). Therefore, you will have to continue to pay these monthly premiums.

Medicare Part A premium

People 65 and older usually don’t pay monthly premiums for Part A coverage because you or your current or former spouse paid Medicare taxes while working for at least ten years. If you or your spouse worked for a railroad and are unsure if you qualify for no-cost monthly Part A coverage, you can call the Railroad Retirement Board at 1-877-772-5772.

If you do not qualify for no-cost premium Part A coverage, you may be able to purchase it, and it costs either $278 or $505 per month for Part A (the amount is dependent on the amount of time you or your spouse worked and paid Medicaid taxes).

Medicare Part B premium

Although most enrollees above the age of 65 qualify for premium-free Part A, Part B has a separate premium cost that you need to pay even if you sign up for a Medicare Advantage plan. In 2024 the cost is $174.70 per month.

If you delay enrolling for Part B when first eligible when you turn 65, you may be forced to pay a monthly penalty. You will pay the penalty for the life of the plan, and the penalty amount increases based on the length of time you wait to sign up.

Medicare Advantage deductibles

Deductibles are like a threshold. It’s the money you have to pay out-of-pocket for services before your insurance starts chipping in. So, if you have a $500 deductible, you’ll need to pay the first $500 of your medical bills before your insurance starts covering the rest.

Some MA plans have annual deductibles, and other MA plans that include Part D (prescription drug) coverage may charge a separate deductible for prescription drug coverage.

It’s important to remember that an MA plan may be advertised as having zero premium but could have a higher deductible.

Copayments and coinsurance

Copayments (copays) are the portion of the cost of services you must pay for medical services or prescription drugs. They are usually flat fees. Coinsurance, on the other hand, is usually a percentage of the medical service you, the beneficiary, must pay.

All MA plans have a network, which refers to the group of healthcare providers that have agreements with the insurance plan to offer services at negotiated rates.

It’s important to consider the network of your MA plan, especially in the area you live in, because “in-network” providers can save you money. MA plans often charge high co-payments and co-insurance amounts for out-of-network providers and typically require you to use in-network providers to get the best rates.

Yearly out-of-pocket limit

With Medicare Advantage plans, there is a yearly limit on the out-of-pocket costs you pay for all services covered under your plan.

For example, if your Medicare Advantage plan has a yearly out-of-pocket limit of $5,000 for covered costs, once you’ve spent $5,000 on those services in a year, your MA plan will completely cover the services for the rest of that year.

In 2024, the maximums for this out-of-pocket limit is $8,850 if you use in-network providers and $13,300 if you opt for out-of-network doctors and hospitals. But every plan can set its own limits and plenty of plans do have lower maximums. The out-of-pocket maximums change every year though.

How can hospitals and providers afford to accept Medicare Advantage, even with $0 premiums?

• Provider networks. Private insurers who offer Medicare Advantage plans directly negotiate payment rates with healthcare providers and have contracts with doctors and hospitals. If MA plan beneficiaries decide to go to providers that have no contact with a plan (so-called “out-of-network provider”), they pay higher rates. It helps manage the costs better and subsidizes things like $0 premiums.
• Referrals and prior authorization. With Medicare Advantage plans, you generally need a referral to see a specialist and prior authorization to receive treatment. Because of this, in many cases patients are not incentivized to go to more expensive specialists, thus saving money for a plan.
• Government funding. The government (namely CMS) pays MA providers to provide health benefits as an alternative to Original Medicare. Often they end up spending less thanks to beneficiaries who are generally more healthy and do not require lots of care. So they can redistribute costs and afford premium-free plans, as well as additional benefits like vision, hearing, dental, and others.
• Preventative care. Many Medicare Advantage plans offer numerous preventative programs to make sure their beneficiaries stay healthy as long as possible thus requiring less medical care (which means less spending for the plan). Some providers offer flex cards that offer rewards for preventative screenings, while others offer annual physicals, depression screenings, and gym memberships.
• Star rating bonuses. The Affordable Care Act (ACA) created a five-star rating system that gives a bonus incentive to Medicare Advantage plans based on quality. Bonus payments are paid to Medicare Advantage plans with four or five-star ratings. According to the Kaiser Family Foundation, in 2022, 21.3 million people were enrolled in Medicare Advantage plans who received bonuses, and the average bonus payment per enrollee was $396 in 2022. This means additional money available for $0 premium plans.

How to enroll in a premium-free Medicare Advantage plan?

Signing up for a premium-free Medicare Advantage plan involves several steps:

1. Begin with medicare.gov Plan Compare tool. After logging in or entering your region’s details, pick the “Medicare Advantage Plan” option.
2. Confirm if you have any external financial aid for health costs.
3. Opt to view potential drug-related expenses while assessing plans for a comprehensive cost understanding.
4. Input your routine medications, specifying details like dosage and how often you refill them.
5. Pick up to five pharmacies to gauge potential expenses, keeping in mind some might offer cost benefits.
6. Browse the Medicare Advantage plans offered in your locality. Tailor your search based on desired coverages and narrow down premium-free options.
7. Dive deeper into the plans to understand other costs and services. Ensure your preferred medical professionals are included in their list.
8. To finalize your choice, follow the online enrollment process, or explore alternatives like calling the helpline, contacting the insurer directly, or seeking guidance from insurance experts.

You can alternatively use another more detailed online plan finder and follow very similar steps as the ones listed above. But you can get a much more detailed view of the plans that work better for you.

For instance, if you enter your doctors, you will be able to see for which plans your favorite doctors are in-network and therefore be able to save money. If you enter which extra-benefits are most important to you such as vision and dental care, plus fitness, then you will be able to see which plans have such benefits. You can also sort based on plan premium and therefore find the MA plans with a $0 premium very efficiently.

Key takeaways

When you see ads for plans, it is important to read through the fine print and to make sure you consider all the costs. Remember that even if a plan says you do not pay anything for the premium, there are still other costs you will likely need to pay, such as the premium you will pay for Medicare Part B, co-insurance, co-payments, and deductibles.

Also, remember to check to ensure that:

• The coverage you need is included in the plan;
• You live in an area that is covered in the plan;
• The providers and services you need are covered as in-network providers and services;
• Review what other costs you may be required to pay if you need out-of-network providers or services.

It can be overwhelming to review all your options, but it is worth the time and hassle. If you need help selecting a plan or have questions, Hella Health has many resources available to help remove the guesswork.

Contact  Hella Health for additional help and assistance navigating Medicare and Medicare Advantage plans.

For help:

• Call (855) 694-3552
• Schedule a one-on-one video session 
• Email support@hellahealth.com

Article updated on November 2, 2023