Private insurance companies offer certain Medicare Advantage plans with zero premiums.
With these plans, there is no monthly premium to pay. Some people find that these plans help them save money on health insurance costs.
This article explains what zero premium Medicare Advantage plans cover and any additional costs there may be. It also provides a comparison of different plans.
Private insurance companies offer standard and zero premium Medicare Advantage plans to eligible individuals. Medicare Advantage plans typically offer more benefits than traditional Medicare coverage.
Medicare Advantage plans provide coverage for Medicare Part A and Part B. Most plans also include prescription drug coverage.
Some plans also provide dental, vision, and hearing coverage, plus other health and fitness perks.
The following sections will outline which benefits each part provides.
Medicare Part A provides hospital coverage. This includes:
- hospital care as an inpatient
- some home health services
- skilled nursing facility care for recovery after a stay in a hospital
- hospice care
Medicare Part B provides medical coverage to prevent, diagnose, and treat medical conditions, including:
- medically necessary services
- preventive services
- ambulance services
- durable medical equipment
Medical Advantage options
Medicare Advantage plans have different options. The most common plans are:
- Health maintenance organization (HMO) plans: These provide services from in-network doctors and providers.
- Preferred provider organization (PPO) plans: These allow people to use out-of-network services, though at a different rate.
- Private fee-for-service plans: These offer flexible coverage of a wide range of service providers.
- Special needs plans: These provide coverage for people with long-term health conditions.
Other Medicare Advantage plans may include:
- Medicare Medical Savings Account plans: These incorporate a high deductible healthcare plan with a Medical Savings Account.
- HMO point of service plans: These allow a person to use out-of-network services, though at a different rate.
Zero premium Medicare Advantage plans are Advantage plans with no premiums to pay. An individual does not pay an annual amount to enroll in the plan.
Both Medicare Advantage standard plans and zero premium plans typically offer the same coverage, which includes parts A and B, plus some other benefits.
Medicare gives contracted insurance companies a set amount of money to provide Part A and Part B insurance. When companies use options such as in-network providers, they save money. They can then pass this saving on to their clients in the form of zero premium Medicare Advantage plans.
With a zero premium Medicare Advantage plan, there is no monthly premium to pay, but people will need to pay some out-of-pocket costs for their healthcare coverage. These include the Part B premium.
Part B premium
Most zero premium Medicare Advantage plans still charge a monthly Part B premium.
Part B’s standard premium usually changes each year, but the amount might be higher or lower, depending on an individual’s income.
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.
Deductible amounts vary from plan to plan. For example, if the deductible is $1,000, an individual must pay $1,000 out of pocket before their plan coverage starts.
An individual may also have to pay a prescription drug deductible.
Some zero premium Medicare Advantage plans also have $0 medical deductibles.
People should also consider the maximum out-of-pocket (MOOP) amount. This amount is the most an individual will have to pay each year for Medicare-covered health services.
Once someone has reached their MOOP amount through deductibles, coinsurance, and copayments, they will not have to pay for any further costs. Monthly premiums and prescription drug costs do not count toward the MOOP amount.
All Medicare Advantage plans have a MOOP amount. In 2021, the MOOP amount is $7,550, but the insurance company can set lower limits for a plan. The amount varies between plans and can change each year.
It is important to note that original Medicare has no MOOP amount.
If a plan covers health services from out-of-network providers, such as a PPO, there will be two MOOP limits. There is one limit for in-network costs and a second limit for both in-network and out-of-network costs.
Many people find that a Medicare Advantage plan with zero premiums is a cost effective option to receive Medicare benefits.
For example, in 2019, the Kaiser Family Foundation (KFF) found that 56% of people who enrolled in a Medicare Advantage plan with prescription drug coverage chose a zero premium plan.
However, because the plan details and benefits can vary significantly, they do not automatically represent the best value for everyone.
Depending on a person’s state of health and individual circumstances, they may find that it is less expensive overall to pay higher monthly premiums that provide a greater level of coverage.
People should consider all the details of a zero premium Medicare Advantage plan to see if it is the best choice. Comparing different plans can help someone decide if a zero premium plan is best for them.
People can search for zero premium Medicare Advantage plans in their area by using the find a Medicare plan tool and sorting the plans by the lowest monthly premium.
The table below offers a comparison of three Medical Advantage plans.
|Example A: |
Zero premium Medicare Advantage plan
|Example B: |
Standard Medicare Advantage
|Example C: |
Standard Medicare Advantage
|$0||$20 monthly or $240 annually*||$32 monthly or $384 annually*|
|Out-of-pocket maximum||$6,700||$4,486*||$8,795* for in-network services|
|Annual cost of plan |
(if MOOP amount reached)
*Average figures, according to the KFF Medicare Advantage 2020 report
It is essential to review the plan’s details before enrolling in it.
For example, the table above shows that example A has zero premium, but example B has a lower out-of-pocket cost over the year.
Example C has higher costs, but it may be a better choice for some people.
Zero premium Medicare Advantage plans are private Medicare insurance plans with no monthly premium.
An individual must still pay the standard out-of-pocket costs for other premiums, deductibles, and copayments for medical services and prescription drugs.
People should carefully compare each plan to find out which one offers the most suitable and cost effective healthcare coverage for their needs.