How can a Medicare Advantage Plan be “zero premium”?

A lot of health insurance companies are advertising “0 premium” Medicare plans that cover the full spectrum of hospital visits, office visits, labs, imaging, prescriptions and some even add in a few more goodies like gym memberships. 

What’s the catch?

Here’s how these “zero premium” plans work. 

The federal government estimates that it will cost them a certain amount per person to be on Medicare. 

A private insurance company can participate in a Medicare Advantage program, also called Part C, where they take a sum of money per enrollee from Medicare and create a comprehensive plan.

It’s not really $0 cost

In order to qualify for an Advantage Plan, you’ll have to sign up for both Part A and B. Unless you qualify for state assistance, you’ll still have to pay your Part B premiums ($104.90 a month per person for individuals making less than $85,000 single/$170,000 joint in 2015).  

In addition, these plans do not cover 100% of expenses.  They will typically have co-pays, deductibles, and co-insurance for services and prescriptions. 

Why would I go with an Advantage Plan?

The benefits of having an Advantage plan:

1.     There’s a maximum limit on how much you can spend on Medical expenses versus no limit with just Parts A and B.

2.     Some plans throw in prescription coverage for no additional charge

3.     You may get some extra benefits not covered by Medicare just as discount gym memberships, dental, hearing aids, or an allowance for glasses 

What are the downsides?

Most advantage plans limit you to a network of doctor’s and hospitals.

Networks are usually limited by geographical region and can be difficult for individuals who live in different parts of the country for months at a time.

Also, you may have significant out of pocket expenses in terms of co-pays and deductibles if you frequently visit the doctor or hospital.   In certain cases, a Supplemental Plan with a typically higher monthly premium but lower out of pocket expenses could be more economical. 

Despite having some limitations, Advantage plans can be a good choice for individuals depending on their personal preferences and health. 

With Advantage plans, benefits can change from year to year.  It’s wise to check in October when the new benefits are published to see if there are better options.