How Can My Medicare Advantage Plan Be Free?

MAPD Medicare Cost

$0 MAPD Plans

It has often been said that “the best things in life are free.” But when referencing health insurance options, free is not a word that is typically associated with quality – unless you are referring to some Medicare Advantage plans.  Plus, insurance companies aren’t even allowed to use that word, “free” instead, insisting it be called “zero-dollar plan premium.”  So there IS a premium.  It’s just $0.

Yes, there are in fact some Medicare Advantage plans that you can obtain for $0 in premium. But this does not mean that all of your services will be “free.” So, before you commit to one of these types of plans, it is imperative that you know where the insurance company that is offering that plan may try to make up, or compensate for, this seemingly “free” coverage.

Are Some MAPD Plans Really Free?

So, how does this work?  Pretty simple.  If you sign up for a Medicare Advantage plan, The Centers for Medicare and Medicaid (CMS) essentially turns all care over to the insurance company.  In return, the insurance company gets a payment from CMS every month.  This is called a CAP rate, and these payments can run anywhere between $600 and $1,500 per month, depending upon your health status.  The payment amount is based upon an actuarial estimation of what people like you would have cost Medicare had you been on Original Medicare.

So essentially, if you’re in a $0 MAPD plan, what that insurance company is saying is, “we can take on your care and prescription drug needs with what we’re getting from the feds, and not have to charge you any additional premium to make ends meet.”

If you’ve been shopping for a new (or different) Medicare Advantage Prescription Drug plan, then it is likely that you have come across these $0 premium options before.  To be clear, with regard to the actual premium, there won’t be any out-of-pocket costs.

However, this does not mean that your coverage will be absent of any charges. Just like with other types of health insurance policies, Medicare Advantage plans can also have various deductibles, coinsurance, and / or copayment costs that you are responsible for – and in some instances, your overall responsibility may even be more with a $0 premium plan than with an MAPD plan that charges a monthly premium.

In addition, all Medicare Advantage plans – including those that charge nothing for the plan’s premium – will have an out-of-pocket maximum. This means that once you have spent a certain amount of money each year on your Medicare health care services, you will not need to spend any more for your covered services that year. But, also similar to other health insurance plans, the amount of this annual out-of-pocket maximum can vary a great deal from one Medicare Advantage plan to another.

There is also another area that Medicare Advantage enrollees need to be aware of in terms of out-of-pocket costs. This is the fact that, even if you are enrolled in a Medicare Advantage plan, you will still be responsible for paying your Medicare Part B premium amount.

With that in mind, even if you choose to go with a $0 premium Medicare Advantage plan, you will still need to pay your Medicare Part B monthly premium charge. For most Medicare enrollees, the standard monthly Part B premium is $134 (in 2018).

However, if you are considered a “high income earner,” the amount that you pay for this coverage could be more. For example, if your modified adjusted gross income as reported on your tax return from two years prior is above a certain amount, then your Medicare Part B premium may be more than the standard monthly charge.

Given the many Medicare coverage options that are available today, it is essential that you shop and compare all of your potential costs before you move forward with any Medicare Advantage plan. By now, you know I’m a fan of finding a good, reputable independent insurance agent who specializes in Medicare coverage.  It’ll take some digging to find a good one, but they’re out there.  Ask friends and family.

This includes having a good understanding of exactly what the plan does and does not cover. For instance, while some Medicare Advantage plans will include prescription medication benefits, other Medicare Advantage plans will not.

Is Medicare Advantage and Medicare Advantage MAPD the Same?

Although their names are very similar, a Medicare Advantage (MA) and a Medicare Advantage MAPD plan are not exactly the same. For instance, a Medicare Advantage plan is a type of policy that is offered by a private insurance carrier and that is required to provide the same benefits that you could receive through Medicare Parts A and B.
These plans may also offer some added benefits that are not provided through Medicare Part A or Part B, such as dental and / or vision coverage. Medicare Advantage plans are also commonly referred to as Medicare Part C.

A Medicare Advantage plan that also includes Medicare prescription drug coverage (Medicare Part D) is referred to as an MAPD plan (as versus just an MA plan that does not provide coverage for prescription medications).
It is important to note that, if you enroll in a regular MA plan, you may not be able to add a stand-alone Medicare Part D prescription medication plan, too. Given that, if prescription drug benefits are a coverage option that you want or need, then going with an MAPD plan will likely be your better alternative.

The Takeaway:

There are many different benefits and coverage combinations when it comes to receiving your Medicare health care services – and because of that, it can be extremely helpful to discuss all of your possible alternatives with someone who is an unbiased expert in this area.

That way, you will know what you can anticipate in terms of your coverage, as well as your potential out-of-pocket cost responsibilities each year – even if you end up going with a $0 premium Medicare Advantage plan.