Table of Contents:

  1. The Actual Cost of Medicare Advantage Plans
  2. $0 Premium Medicare Advantage Plans
  3. How Can Private Companies Offer $0 Premiums?
  4. Are $0 Premium Medicare Plans Worth It?

Medicare Advantage (also referred to as Part C or MA) is an alternative to Original Medicare (Parts A and B). Unlike Original Medicare, these plans are offered by private health insurance companies who contract with the Medicare system. There are multiple forms of MA coverage, each of which covers a slightly different range of healthcare services.

At bare minimum, MA plans cover hospital stays, medical services, and preventative care; however, nearly all MA plans offer more than these three standard benefits. Depending on the plan you choose, you may receive increased coverage for prescriptions, over-the-counter drugs, access to out-of-network doctors, vision care, hearing care, dental care, fitness services (such as gym memberships), healthcare-related travel expenses, and more. Not every MA plan covers all of these services, so it is important to research a plan’s details before purchasing.

The Actual Cost of Medicare Advantage Plans

If you are covered through an MA plan, you are still technically enrolled in Original Medicare. This is why MA plans are always at least as comprehensive as Original Medicare (and the premiums are at least as costly). In 2021, the average MA premium is $21/month. Bear in mind, the actual cost of MA premiums is the price given in addition to the premium for Original Medicare. The monthly premium for Original Medicare in 2021 is $148.50/month. As a result, an MA plan that costs $21/month, for example, would entail a total monthly premium payment of $169.50.

For this additional premium fee, coverage will be more comprehensive, and, in most cases, other costs associated with coverage (deductibles, coinsurance, copayments, and out-of-pocket maximums) will be diminished. To what degree these costs decrease depends on the type of plan you have, but most often the rule is the higher the monthly premium, the lower the fees for individual out-of-pocket-costs.

$0 Premium Medicare Advantage Plans

$0 premium (also known as zero-dollar premium or premium-free) MA plans are simply privately-offered Medicare plans that cost the same as Original Medicare. These plans generally offer slightly more expansive coverage than Original Medicare at the same cost. Compared to MA plans with higher premiums, premium-free plans tend to cover a less comprehensive suite of benefits, and may result in higher out-of-pocket costs.

How Can Private Companies Offer $0 Premiums?

One way of thinking about premium-free MA plans is that they are a way of betting on your own health. Because these plans often include expanded preventative and fitness services compared to Original Medicare, beneficiaries have the opportunity to prevent and detect health risk and disease. If an individual’s health-related expenses end up being less than the cost of Original Medicare, a beneficiary’s MA provider still makes a profit while offering a more comprehensive form of coverage.

Are $0 Premium Medicare Plans Worth It?

The answer to this question comes down to preference. Because premium-free MA plans tend to be more comprehensive than Original Medicare, it is worth investigating them as an option. There is little risk involved in opting for a premium-free MA plan as an alternative to Original Medicare, and MA plans nearly always include a yearly out-of-pocket maximum, which can be an invaluable safeguard against catastrophically-high healthcare expenses.

Information adapted from the Centers for Medicare & Medicaid Services and

Additional data and cost information adapted from the Kaiser Family Foundation

Medicare Advantage 2021 Spotlight: First Look, 2020, Kaiser Family Foundation.