Medicare Advantage plans may have monthly premiums as low as $0. However, a zero monthly premium does not mean Advantage plans are free, as there are other costs.

This article discusses the various Medicare Advantage plans, including zero-premium plans. It also looks at coverage options and costs.

We may use a few terms in this piece that can be helpful to understand when selecting the best insurance plan:

  • Deductible: This is an annual amount that a person must spend out of pocket within a certain time period before an insurer starts to fund their treatments.
  • Coinsurance: This is a percentage of a treatment cost that a person will need to self-fund. For Medicare Part B, this comes to 20%.
  • Copayment: This is a fixed dollar amount that an insured person pays when receiving certain treatments. For Medicare, this usually applies to prescription drugs.
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A zero monthly premium does not mean Medicare Advantage plans are free as there are other costs.

Medicare Advantage plans (Medicare Part C) are offered by private companies. There are many companies offering various plans, and a premium-free plan is sometimes offered to persuade a person to look at that company’s plans.

However, the plans are not free of all costs, and a person may wish to check for specific benefits, covered drugs, and any other costs such as a Part B premium, copays, and coinsurance.

This online tool can help a person search for Advantage plans in their area with zero or low monthly premiums.

Medicare Advantage plans, also called Part C, are an alternative to original Medicare Part A and Part B. The plans are offered by health insurance companies contracted to Medicare. To be eligible to join a Medicare Advantage plan, a person must be enrolled in original Medicare.

Advantage plans offer the same basic coverage as original Medicare (parts A and B), except for hospice services. The plans may also offer additional benefits, including prescription drug benefit (Medicare Part D). From January 2020, plans must offer coverage for outpatient department (OPD) services.

Medicare pays a fixed sum to the insurance company for health care. The insurer may renew its contract with Medicare yearly, and Advantage plan costs, benefits, and drug lists (called a formulary) may change from year to year.


Basic Advantage plan coverage includes hospital and doctor visits, while many plans include drug prescriptions. They may also offer coverage for dental, hearing, and vision services, eye exams, hearing exams, and eyeglasses.

Depending on the type of Medicare Advantage plan a person chooses, they may be required to use an in-network healthcare provider. In-network healthcare providers include doctors, hospitals, drug stores, and other healthcare providers.

With some plans, if a person chooses to use a health provider outside the plan’s network, they may incur higher costs, or may not be covered for the service.

Types of plans

There are several Advantage plans, although all the plans may not be available in all areas. A person can search for all available plans in their area with this online tool.

Four common types of Advantage plans include:

  • Private fee-for-service (PFFS) plans, which offer a person the flexibility of range of service providers.
  • Preferred provider organization (PPO) plans, which allow a person to use out-of-network services, though at a different rate.
  • Health maintenance organization (HMO) plans, which provide services from in-network doctors and providers.
  • Special needs plans (SNP), which are for a person with long-term health conditions.

Other Advantage plan options may include a Medicare Medical savings account (MSA) plan, and a HMO point-of-service (HMO-POS) plan.

Zero-premium plans are Advantage plans with no monthly premium. However, even though the monthly premium may be zero, a person must usually pay the Part B premium.

The zero-premium plan may also have a higher deductible, higher copays, or more out-of-pocket costs compared to Medicare Advantage plans with non-zero monthly premiums.

According to the Kaiser Family Foundation (KFF), almost half (49%) of Advantage plans will offer zero premiums.

Depending on a person’s health coverage needs, a Medicare Advantage plan with a monthly premium may provide better coverage than a zero-premium plan.

A person can search online for zero-premium Advantage plans in their area.

Advantage plan costs generally include the monthly Part B premium, plus out-of-pocket costs.

The average monthly premium for an Advantage plan with prescription drug coverage is an estimated $23 in 2020. The monthly premium averaged $26.87 in 2019.

According to the Kaiser Family Foundation (KFF), the average out-of-pocket limit in 2020 is $4,925 for in-network services (HMOs and PPOs) and $8,828 for both in-network and out-of-network services (PPOs).

After a person has reached their plan’s out-of-pocket limit, they will generally not pay anything for covered service.

Other out-of-pocket costs may include a yearly deductible, copays and coinsurance.

A person can check for more information on the documents sent to them by their plan. Information in the notices include evidence of coverage (EOC), which provides more information about plan coverage, and costs, and annual notice of change (ANOC) information, which will include any changes made to the plan, including costs, and coverage.


In 2021, a person with end stage renal disease (ESRD) will be eligible to enroll in Medicare Advantage plans. According to KFF, out-of pocket limits will increase to $7,550 (in-network) and $11,300 (in-network and out-of-network).

Making a choice between a premium-free Medicare Advantage plan and a plan with a monthly premium means considering several cost factors and personal healthcare needs.

Costs may include deductibles, copays, and coinsurance.