What Are Premium-Free Medicare Advantage Plans?

It may come as a surprise to you that there are Medicare Advantage plans with $0 monthly premiums, but they exist. To make an informed choice, if you're considering enrolling in one, you should know how they work. There are also special considerations for when you can enroll in them or change plans.

Why Do Premium-Free Plans Exist?

Medicare Advantage plans offer the same coverage as Original Medicare (Medicare Part A and B) does. Most Medicare Advantage plans also cover prescription drugs (Medicare Part D). And many also offer extra benefits, such as dental care, hearing care, and vision care, that Original Medicare does not. Medicare Advantage is also known as Medicare Part C.

Unlike Original Medicare, Medicare Advantage is not run by the federal government. Instead, Medicare advantage plans are offered and operated by private insurance companies approved by Medicare. 

Medicare Advantage was set up by the government to give beneficiaries more plan options. It also aimed to reduce healthcare expenditure by importing effective cost savings mechanisms observed in the private sector.

The private insurers offering these Medicare Advantage plans receive fixed monthly payments for each Medicare beneficiary enrolled in a Medicare Advantage plan.

These private companies devise strategies to lower healthcare costs. They sometimes let beneficiaries enjoy these cost savings by offering premium-free plans.

For instance, one of the major ways they lower costs is by establishing network agreements with doctors. This is why you need to use in-network doctors with most Medicare Advantage plans.

Are Premium-Free Plans Available Everywhere?

No. Premium-free Medicare Advantage plans are not available in all areas. Private insurers offering Medicare Advantage plans have the discretion to charge different out-of-pocket costs (including plan premiums) in the service areas they provide plans in.

Consequently, access to these kinds of plans depends on the specific insurers and plans available ln the service area you live in.

What Are Your Other Costs?

Enrolling in a premium-free Medicare Advantage plan does not mean your healthcare coverage is entirely free. Here are some other out of pocket costs that may be associated with these plans.

Deductible

Depending on the plan you choose, you may need to pay an annual deductible. A deductible is an amount you have to pay out of pocket for medical services received before your plan starts to cover your medical costs.

Some plans have two separate deductibles: one for medical services and the other for prescription drugs. However, not all Medicare Advantage plans have deductibles. You can find Medicare Advantage plans with zero premiums and zero deductibles.

Copayments and Coinsurance

These are the amounts you have to pay as your share of the cost of some medical services, supplies, and prescription drugs. For instance, your plan may charge you $20 each time you visit the doctor.

Copayments are usually a fixed amount, while coinsurance is generally expressed as a percentage. You only start making these payments after your deductible has been met.

Medicare Part B premium

Even when you're enrolled in a Medicare Advantage plan, you're still expected to pay your Medicare Part B monthly premium. Some Medicare Advantage plans, however, help to pay part or all of this premium.

This means that a Medicare Advantage plan could charge $0 as its premium in one year, and change it the next. Your Medicare Advantage plan should send you an Annual Notice of Change (ANOC) whenever any changes are made to coverage or costs.

Is a Premium-Free Plan Right For You?

Just because a Medicare Advantage plan has zero premium does not mean it's automatically the best one for your health needs and budget. Ensure that you review all the benefits, rules, and exceptions that are plans you might be considering. Some plans are premium free but have high deductibles or copayments. 

When Can You Enroll?

Like all other kinds of Medicare Advantage plans, you can enroll only at particular times in a year:

• Your initial enrollment period: This is when you are newly eligible for Medicare. It is a seven-month period that includes the three months before you turn 65, the month you turn 65, and the three months after that.
• Medicare enrollment period: This is a period between October 15 to December 7 when you can enroll in a Medicare Advantage plan for the next year. You can also switch between Medicare Advantage plans or switch back to original Medicare. 
• Medicare Advantage enrollment period: During this time—from January 1 to March 31—you can switch between Medicare Advantage plans or switch back to original Medicare. But you can't switch from Original Medicare to a Medicare Advantage plan. So if you're thinking of enrolling in a premium-free Medicare Advantage plan, you can switch from another Medicare Advantage plan. However, you can not enroll in a premium-free Medicare Advantage plan if you're still enrolled in Original Medicare during this period.
• Special enrollment periods: Certain circumstances make you eligible to change your Medicare Advantage plans. These opportunities are known as special enrolment periods. If you go through particular life changes such as relocating to a different area or losing your current health insurance, you may be able to make certain changes to your Medicare Advantage plans during those periods.

A Word From Verywell

Your health needs and financial budgets will ultimately determine whether a zero-premium Medicare Advantage plan is right for you. So if low upfront costs are a priority, then Medicare Advantage plans may be a good choice, as they tend to have lower out-of-pocket costs than Original Medicare.