Nowadays, we here free thrown out and used all the time. It’s hard to turn on the TV and not hear people arguing about free healthcare, free college, etc. The more you educate yourself on a topic, the more you learn that “free” isn’t truly free. This also applies to Medicare Advantage plans, they are not actually free. The money to pay for it has to come from somewhere.

Medicare Advantage Plans are Not Free

To understand the concept, we first need to understand what a Medicare Advantage plan is. A Medicare Advantage plan is another way to receive your Medicare benefits.

Instead of using the Original Medicare system, you elect to enroll in an all-in-one plan that encompasses all of your Original Medicare benefits. These plans will usually include your drug coverage. Medicare Advantage plans generally contain additional benefits not covered by Original Medicare.

These plans are annual contracts. Most of the time, starting January 1st and ending on December 31st. This start date applies unless you start Medicare after January 1st, or have a Special Enrollment Period that allows you to change during the year.

Your Premium is Zero, But Not Your Out of Pocket Costs

While many Medicare Advantage plans have a $0 premium, they are not free. You must still pay your Medicare Part B premium. In some areas, Medicare Advantage plans can lower your Part B premium.

You’ll pay co-pays or coinsurance when you visit the doctor or have medical services. It’s not common, but some plans have deductibles on medical services. In addition, in many cases, you have co-pays and deductibles for your prescription drugs.

These plans will have a maximum out-of-pocket (MOOP). Thie MOOP will limit the medical costs you would be responsible for annually.

Are Medicare Advantage Plans the Same as Medicare Supplements?

A Medicare Advantage plan is not a supplement to Original Medicare. Supplements to Medicare are called Medicare Supplements or Medigap plans.

These plans are additional insurances that have premiums. Original Medicare is your primary coverage then these plans help fill the gaps. They do not include drug coverage. You must take a Part D plan to receive drug coverage if you choose this path.

How does the Medicare Advantage carrier get paid?

For each Medicare beneficiary that elects to enroll in a Medicare Advantage plan, Medicare allocates the estimated costs that the beneficiary would cost them over the year. Medicare pays the carrier a monthly fee to take on your risk. Therefore, the Medicare Advantage carrier pays instead of Medicare.

Because they receive their money this way, it’s in their best interest to keep you healthy with preventative plans and procedures.

Extra Measures to Keep You Healthy and Their Costs Down

Carriers will offer disease management and preventative care programs to help their members maintain their health. The healthier you are, the less the healthcare costs are.

You’ll usually schedule more appointments, and they monitor your health more closely. Their focus is on keeping you healthy and determining conditions you may be prone to and trying to prevent them from occurring.

Because their primary focus is keeping you healthy, many have incentives to encourage healthy living. This includes healthy food cards you can use on purchasing healthy meals, gym memberships, and other incentives and rewards programs.

In addition, companies usually enter a contract with a network of doctors and hospitals. When your insurance company contracts with a network, you pay less to see doctors and hospitals in the network.

It also means that going out-of-network will cost more if you are covered at all. You always have coverage in an emergency.

Why doesn’t everyone choose this path for Medicare?

Everyone’s needs are different. Imagine that you have a medical condition like cancer that is very expensive to treat. You turn 65 and start Medicare. You need a plan that will allow you to predict your out-of-pocket costs.

Cancer treatments are expensive, so being on Original Medicare and purchasing a Medigap with a fixed monthly payment may be your best option. Enrolling in a Medigap allows you to know what your monthly costs will be and your budget.

It also allows you to see any doctor nationwide that accepts Medicare without a referral. Speaking with a licensed insurance broker is wise due to needs being different. A broker will help provide you with the proper information and explain your options.

Can I get Free Medicare Coverage?

If you are low-income, there are Medicare Savings Programs out there that will help cover some or all of your Medicare costs. These programs range from lowering your drug costs and premiums to paying for your Medicare Part B premium and even at times covering you portions of co-pays, deductibles, and coinsurance.

How to Get Help Understanding my Medicare Options

We will be glad to assist you with any questions you may have. Our licensed agents can determine in which plans you qualify. They can even help guide you through getting assistance if you are low income. Give us a call, or fill out our online request form. We will reach out to you to help.

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by Lindsay Malzone, Lindsay Malzone is the Medicare expert for Medigap.com. She's been contributing to many well-known publications as an industry expert since 2017. Her passion is educating Medicare beneficiaries on all their supplemental Medicare options so they can make an informed decision on their healthcare coverage.