Are Medicare Advantage Plans Really Free? $0 Plans, Explained

With healthcare plans being fairly pricey, the idea of a free one is pretty intriguing.

However, Medicare Advantage plans that boast $0 premiums could end up costing you more in the long run.

In this blog, we will delve into these $0 plans, what they mean, and how that can impact your coverage.

Disclaimer: Medicare Allies is not affiliated with Medicare or any other government agency. We do not offer every plan available in your area. Any information we provide is limited to those plans we do offer in your area. Please contact Medicare.gov or 1-800-MEDICARE to get information on all of your options.

Can Medicare Advantage plans be free?

No Medicare Advantage plan is free.

In fact, if Medicare Advantage providers market anything as “free,” they are going against guidelines established by CMS, the government organization that oversees all Medicare rules and regulations.

Just like in all aspects of life, if something feels too good to be true, it probably is.

“Free” products, offers, and promotions are often red flags for potential scams.  

• Want to know what questions you should be asking when reviewing Medicare Advantage plans? Check out the 6 Questions You Need to Ask Before Enrolling in Medicare Advantage.

What are $0 premium plans?

$0 premium Medicare Advantage plans are offered by some providers. It means that you will have no monthly premium fee you will need to pay to the insurance company when enrolled in that plan.

Does a $0 premium plan save me money?

In many cases, you may not save any money by enrolling in a $0 premium plan. Premiums are only part of the total costs that go into having medical coverage.

Other costs include copayments, coinsurance and prescription drug costs for both medical and drug coverage. These costs can add up, especially if you have a health event, such as a hospital stay.

A word of warning  

While low premiums or deductibles are nice, it is important to look at the mechanics of your plan as well.

• What does your network look like?
• Are the doctors, pharmacies and hospitals you want included on your plan?  
• If you were to have a 5-day inpatient hospital stay, what would your out-of-pocket costs be? Does that work for you?

When reviewing any Medicare coverage plan, look at what you need from the plan and let that be the deciding factor. Things like $0 premiums should be a nice additional benefit of the plan and not the sole consideration.

$0 Premium MA vs. Medigap Plan G Example

All plans are different, but for the sake of an example, let's compare a $0 premium MA plan against a Medigap Plan G.

The Medigap Plan G comes with a $101 monthly premium in our example. This is a good premium price for a 65-year-old female, for reference. Plan G picks up all costs that are Medicare-approved after you meet the deductible of $226 (as of 2023).

If you have a 5-stay inpatient hospital stay, your total out-of-pocket costs with a Plan G would be $1,438. That includes all of your monthly premiums for the year and your $226 deductible.

The cherry on top? That's the maximum you'd pay that year. If you had 5 hospital stays, that's still the most you'd pay.

Medicare Advantage doesn't quite work the same way. We picked a popular Medicare Advantage plan at random for this example, but please note that each plan is different.

Let's say your premium is $0, but the inpatient hospital coverage is a $320 copay per day, totaling $1,600 for five days. You'll likely also have coinsurance or copays for labs (up to a $40 copay) and possibly a ground ambulance ($290 copay).

That hospital stay is pretty close to $2,000, and you would still have expenses for other medical services you get throughout the year.

If you never use your Medicare Advantage coverage? You'd spend less in the wrong run.

But we buy insurance for the unexpected, and if you have some serious health problems throughout the year, a Medigap plan will serve your wallet a lot better.

There's no "right" or "best" plan – it's a matter of your risk tolerance and current health. Our licensed sales agents can help you choose which plan is right for you.

Can I get stuck in a $0 premium plan?

Yes, it is possible to be stuck in a Medicare Advantage plan you do not like. There are only a few times per year you can make changes to your coverage. However, you don’t have to be stuck forever.

There are two times each year you can make changes to your Medicare Advantage coverage, outside of special enrollment periods.

Annual Enrollment Period (AEP)

The Annual Enrollment Period (AEP) is from October 15-December 7 every year. For most Medicare users, this is the only time each year you can switch up your Medicare coverage.

You can add, change, or drop Medicare Advantage coverage during that time. You can find out more about how to maximize your AEP experience here.

Medicare Advantage Open Enrollment Period (MA-OEP)

For those already enrolled in a Medicare Advantage plan, there is a special bonus enrollment period each year called the Medicare Advantage Open Enrollment Period (MA-OEP).

From January 1-March 31 each year, you can switch to a new plan or return to Original Medicare. Learn more about the MA-OEP here.

How can I make sure I like a Medicare Advantage plan before enrolling?

The best way to make sure you like a Medicare Advantage plan before enrolling is to carefully review the plan materials. This is where a licensed insurance agent can help!

Having an agent help you navigate your plan options and review coverage can help you better understand the nuances of a plan and so you can make a more informed coverage decision.  

Conclusion

$0 premium plans exist, but they may not be the coverage option that’s best for you. Make sure you are not sacrificing coverage you may need for any savings that may come from the lowered premium fees.

The Annual Enrollment Period is open from October 15 through December 7. Schedule an appointment with one of our agents today to discuss your current coverage and learn more about your options for next year.

Our team of licensed insurance agents can also help you verify your in-network providers to help you make informed coverage decisions. We are here to help!