$0 Medicare Advantage plans: Are they really free?

Here’s what you need to know about $0 premium Medicare plans.

If you’re shopping for Medicare insurance, you may have noticed Medicare Advantage plans with monthly premiums as low as $0. Wary shoppers may wonder: Is there a catch?

It’s true that there are several Medical Advantage plans on the market today with $0 monthly premiums. While these plans offer a tremendous value compared to Original Medicare and Medicare Supplement plans, it’s important to evaluate the quality of a Medicare Advantage plan before choosing one. Here are some things to keep in mind.

Health plan quality

Always evaluate the quality of a health plan before purchasing health insurance. The Centers for Medicare and Medicaid Services (CMS) uses a five-star rating system to rank Medicare health and drug plans. One star stands for poor performance, while five stars stands for excellent performance.

“For example, Sharp Health Plan earned a 5 out of five-star rating from CMS,”¹ says Don Truong, the director of sales at Sharp Health Plan. You can compare the quality of different plans using the Medicare Plan Finder tool on medicare.gov.

Network quality

You’ll also want to evaluate the quality of a health plan’s network, including the doctors, hospitals, rehab facilities and other providers available to you through your health plan. You can also find and compare providers using Medicare’s website.

“A Medicare Advantage plan may help lower your health care cost if you have a doctor or medical group you’re already receiving your care from, and if you are ready to retire into Medicare,” explains Truong. Here are some of the most common questions about Medicare Advantage plans.

What is Medicare Advantage?

Private health insurance companies provide Medicare Advantage plans, also known as Medicare Part C. The federal government offers Original Medicare plans (Parts A and B).

“If you want more coverage than what you receive with Original Medicare, a Medicare Advantage plan may be a good choice for you,” explains Truong. “Medicare Advantage plans offer the same coverage as Original Medicare, plus additional benefits.”

At minimum, all Medicare Advantage plans include complete Part A and Part B coverage.

Medicare Part A (hospital coverage) provides inpatient hospital and emergency room care, home health care, hospice care and nursing home care.
Medicare Part B (medical coverage) provides services to diagnose, prevent and treat conditions, including doctor’s visits and lab visits.

When you choose a Medicare Advantage plan, you may receive value-added benefits, such as:

Dental and vision coverage
Acupuncture and chiropractic care
Over-the-counter (OTC) benefits
Free fitness resources

Medicare Advantage plans have a yearly limit on out-of-pocket costs. Once you reach that limit, you won’t pay anything for covered services. However, each plan can have a different limit and that limit may change every year. You’ll want to use health care providers within your plan’s network for the lowest costs.

Is a “free” Medicare Advantage plan really free?

Certain Medicare Advantage plans allow you to enroll with a $0 monthly premium. Keep in mind that a $0 monthly premium won’t eliminate every cost associated with your plan.

Here’s what you can expect:

Medicare Advantage plans often have lower copays and most have no deductible.
There’s no cost for Part A if you have worked 40 quarters where you paid Medicare taxes.
You will pay the standard monthly premium for Part B.

“There’s a misconception that Original Medicare is free, but it’s not,” explains Truong. “In fact, not having good coverage on top of Medicare — for example a $0 Medicare Advantage plan — could actually end up costing you more.”

Here’s an example of what a Medicare eligible beneficiary could save on their monthly premium with a Medicare Advantage plan:

With a Medicare Advantage Plan
Original Medicare ($148.50 for 2021 Part B) + Medicare Advantage Plan (Parts A, B and D = $0) = Total $148.50 a month
Without a Medicare Advantage Plan
Original Medicare ($148.50 for 2021 Part B) + Medicare Supplement (Medigap = Average $157) + Part D (Prescription = Average $33) = Total $338.50 a month

“As you can see, a Medicare Advantage plan can actually help save you money on monthly Medicare costs,” says Truong. “Keep in mind that the Part B premium may increase, depending on your income.”

What types of Medicare Advantage plans are there?

There are several types of Medicare Advantage plans, but HMO and PPO plans are two of the most common.

Health maintenance organization (HMO) plans: Most Medicare Advantage plans are HMOs. With an HMO plan, the majority of your care and services must come from providers within your plan’s network.

Preferred provider organization (PPO) plans: With a PPO plan, you’ll have the flexibility to see most health care providers and can pay less if you visit a provider or hospital within your plan’s network.

How do you qualify for a Medicare Advantage plan?

To qualify for enrollment in a Medicare Advantage plan, you must be eligible for Medicare and be enrolled in Original Medicare.

When can I enroll in a Medicare Advantage plan?

You can only join a Medicare Advantage plan during certain times of the year. Consider these points when you’re shopping for a plan:

If you do not have a Medicare Advantage plan: You can enroll in a Medicare Advantage plan during the initial period when you are newly eligible for Medicare.
If you already have a Medicare Advantage plan: You can change your Medicare Advantage plan to a different one, or to Original Medicare with or without a Part D (prescription drug plan) during the Medicare General Enrollment Period. This particular enrollment period takes place every year from Jan. 1 to March 31.
If you want to change your health coverage and add, drop or change your drug coverage: Make your changes during the Annual Medicare Open Enrollment Period, from Oct. 15 to Dec. 7.

Is a Medicare Advantage plan right for me?

A Medicare Advantage plan may help you save time and money. As with shopping for any health insurance plan, it’s important to consider your options.

What you’ll want to look for

When you’re ready to consider a Medicare Advantage plan, Truong has one more piece of advice.

“Simplicity and convenience are key here,” he says. “A Medicare Advantage plan allows you to have everything in one place: Parts A, B and D.” Sharp Health Plan’s newest Medicare offering, the Sharp Direct Advantage^® VIP Plan, offers more value and extras with $0 monthly plan premiums, $0 primary care and specialist visits and other great benefits.”