How Much Will Your “Free” Medicare Advantage Plan Really Cost?

When it comes time to shop for Medicare coverage, Medicare Advantage plans have become a very popular option. More than half (51%) of eligible Medicare beneficiaries are enrolled in Medicare Advantage in 2023. That’s an increase of 19% to 46% from 2007 to 2021.

What makes these plans so popular? One reason might be costs, specifically the low monthly premiums. Zero-premium plans are available to 99% of beneficiaries. And for many, no premium equates to free. I lost count of the number of times someone has talked about their “free” Medicare Advantage plan.

Recent real-life example

Consider this recent situation. In August, a large health system reported that it may stop accepting Medicare Advantage plans. A local news station interviewed a Medicare Advantage plan member, who said that this will “be a financial burden for a lot of people because (her plan) is free.”

The article noted the insurance company but did not identify her specific plan. In her community, this insurer sponsors four plans with health and drug coverage so I decided to check them out. Three have monthly premiums, ranging from $40-$200 so they could not be considered free.

The fourth has no monthly premium, no health plan deductible, and no copayment for the primary physician, a good start toward free. However, there are out-of-pocket costs for many services. For example, up to $40 for a specialist visit, $40 for a physical therapy visit, $405 for the first four days of inpatient hospitalization, and 20% for chemotherapy. Those who chose this specific coverage will write checks up to the plan’s maximum out-of-pocket limit, which is $6,200 in-network this year.

A chance to review your coverage

Open Enrollment begins next month, October 15. This is the opportunity to shop for and change Medicare Advantage plans. If you’re in the market for a new plan, here are some tips to help you find the most cost-effective one.

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