Medicare Advantage plans may have monthly premiums as low as $0. However, a zero monthly premium does not mean Advantage plans are free, as other costs exist.
This article discusses the various Medicare Advantage plans, including zero-premium plans. It also looks at coverage options and costs.
Glossary of Medicare terms
- Out-of-pocket cost: This is the amount a person must pay for care when Medicare does not pay the total amount or offer coverage. Costs can include deductibles, coinsurance, copayments, and premiums.
- Premium: This is the amount of money someone pays each month for Medicare coverage.
- Deductible: This is an annual amount a person must spend out of pocket within a certain period before Medicare starts to fund their treatments.
- Coinsurance: This is the percentage of treatment costs that a person must self-fund. For Medicare Part B, coinsurance is 20%.
- Copayment: This is a fixed dollar amount a person with insurance pays when receiving certain treatments. For Medicare, this usually applies to prescription drugs.
Medicare Advantage plans (Medicare Part C) are offered by private companies. Many companies offer various plans, and a premium-free plan is sometimes offered to persuade people to look at a 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 people search for Advantage plans with zero or low monthly premiums in their area.
Medicare Advantage plans, also called Part C, are an alternative to Original Medicare Part A and Part B. They are offered by health insurance companies contracted to Medicare. A person must be enrolled in Original Medicare to be eligible to join a Medicare Advantage plan.
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 benefits (Medicare Part D). Since January 2020, plans must offer coverage for outpatient department (OPD) services.
Medicare pays the insurance company a fixed sum 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.
Coverage
Basic Advantage plan coverage includes hospital and doctor visits, while many plans include drug prescriptions. They may also offer coverage for:
Depending on the type of Medicare Advantage plan a person chooses, they may need 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 not be covered for the service.
Types of plans
There are several Advantage plans, although they 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: These plans offer a person the flexibility of a range of service providers.
- Preferred Provider Organization (PPO) plans: These plans allow a person to use out-of-network services, though at a different rate.
- Health Maintenance Organization (HMO) plans: These plans provide services from in-network doctors and providers.
- Special Needs Plans (SNP): These plans are for people 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, copays, or more out-of-pocket costs than Medicare Advantage plans with non-zero monthly premiums.
According to the Kaiser Family Foundation (KFF), in 2024, 66% of Advantage plans offered 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 premium-free Advantage plans in their area.
Advantage plan costs generally include the monthly Part B premium, plus out-of-pocket costs.
Experts expect the average monthly premium for an Advantage plan with prescription drug coverage to decrease from $18.23 in 2024 to $17.00 in 2025.
According to the Kaiser Family Foundation (KFF), in 2024, the average out-of-pocket limit for in-network services (HMOs and PPOs) was $4,882, and for both in-network and out-of-network services combined (PPOs), it was $8,707.
After a person has reached their plan’s out-of-pocket limit, they will generally not pay anything for covered services.
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 includes 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.
Exceptions
The KFF reports that in 2025 Medicare Advantage will cap out-of-pocket limits for enrollees at $2,000 per year. This limit is part of the enhancements the Inflation Reduction Act (IRA), introduced to improve affordability for beneficiaries enrolled in Medicare.
However, each plan may handle in-network and out-of-network costs differently.
Medicare resources
For more resources to help guide you through the complex world of medical insurance, visit our Medicare hub.
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.
A person should research plans in their area, comparing coverage options, and evaluating provider networks, to empower them to make an informed decision.
