You might have seen advertisements on television or received unsolicited phone calls from insurance agents trying to sell you “free” or “premium-free” Medicare Advantage plans. Buyer Beware… nothing in this world is free, and it is important understand the hidden costs, restrictions and limitations associated with this type of coverage.
I speak to folks every day who are trying to decide whether it would be in their best interest to choose an original Medicare supplement plan or to enroll in Medicare Advantage. Medicare Advantage, contrary to popular opinion, is not Medicare; it is a substitute for Medicare where you forfeit your rights and protections of Medicare Part A & B in exchange for a managed care plan (HMO/PPO) where the health plan dictates your coverage for you.
Many folks struggle with the decision of paying a flat monthly premium for an “original Medicare” supplement (Medigap) versus choosing one of the “free” Medicare Advantage plans that might be offered in their zip code.
“Why should I pay an extra $100 per month when I can get this for free?”
The definition of “free” in the dictionary means “without cost or payment.” Some people may refer to $0 premium Medicare Advantage plans as “free.” However, these plans are not actually free in the way that they could still cost you.
Are Medicare Advantage plans actually free?
While researching your coverage options, you might have found Medicare Advantage plans available in your zip code that are offered with a $0 monthly premium. This plan may appear to be “free” in that you don’t have to pay an additional monthly amount to be covered by the plan. However, you generally are still required to pay your Medicare Part B premium, however.
Keep in mind that Medicare Advantage plans are offered by private insurance companies who operate to make a profit. In order to offer $0 premium plans, they may charge you in other ways, such as copayments, coinsurance and deductibles. A copayment is an amount you pay whenever you receive a service (such as a doctor visit or an emergency room trip) or pick up a prescription drug. Coinsurance is the percentage of costs of a covered healthcare service you pay (20%, for example) after you’ve paid your deductible. In fact, plans with lower premiums or $0 premiums typically have much higher copayments and coinsurance.
Another way a $0 premium Medicare Advantage plan may cost you is with a deductible. A deductible is an amount, for example $1,000, that you must pay out of pocket before your Medicare Advantage plan begins to pay your medical bills. Most Medicare Advantage plans have separate medical and prescription drug deductibles. You may have a $0 medical deductible, for example, but a $250 prescription drug deductible.
Opportunity Costs of Medicare Advantage plans
Medicare Advantage may have some disadvantages that Original Medicare does not.
· Limited Service providers: If you choose one the more popular Medicare Advantage plan types, such as an HMO plan, you may be limited in the providers you can see. You may even face higher fees if you choose to go to an out-of-network provider with these plans
· Overwhelming plan offerings: If you’re using the Find a Medicare 2020 Plan tool on the www.Medicare.gov website, you’ll see that there are plenty of Medicare Advantage plan options on the market. While having options is a good thing, it can also be overwhelming, and confusing especially when trying to compare plans.
· Additional Costs: Original Medicare charges a premium, deductible and coinsurance for both Parts A & B, plus any Part D or Medigap costs.
Medicare Advantage plans bundle these costs into one plan, but you may notice that they charge you additional fees. For example, high drug deductibles and specialist visit copays can add up very quickly over time with some Medicare Advantage plans.
· Limited Coverage Area: Original Medicare offers continuous coverage all over the Unites States. However, most Medicare Advantage plans only offer coverage specific to your service area. This means that if you travel frequently, your Medicare Advantage plan may not your outside for your local area, county of state.
Can I get free Medicare coverage?
If you’re a low-income person who is eligible for Medicare, you also may be eligible for Medicaid. Medicaid is a federal and state program that helps with medical costs for some people with limited income and resources. Being eligible for both Medicare and Medicaid is called being “dual eligible.” Unlike other types of Medicare coverage, you may not have premiums, deductibles, or copayments/coinsurance if you are covered by Medicaid. Medicaid may also offer additional benefits that Medicare doesn’t, such as routine dental and routine vision services and hearing aids.
In life, nothing is free, and you get what you pay for. Medicare Advantage plans may offer some benefits and added services to Original Medicare, but they do not come without cost. There are some disadvantages as well, including provider limitations, higher out-of-pocket costs and lack of coverage while travelling. Whether you choose Original Medicare of Medicare Advantage, it’s important to sit down and review all your options and healthcare needs before choosing the coverage you want.
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About Medicare Dave
As a licensed, accredited and unbiased Medicare benefits expert, Medicare Dave’s focus is on helping folks to cover the out-of-pocket expenses that Medicare doesn’t cover.
I cut through the clutter of information to simplify complex and confusing topics in an easy to understand manner. By eliminating their stress and confusion, I enable people to feel safe, protected and happy.
My gift is in informing, educating, & advising seniors on how best to provide full healthcare coverage at the lowest cost… and all of our services are completely FREE OF CHARGE!