Have you gotten a quote
for a zero premium Medicare Advantage plan and
wondered how in the world a Medicare Advantage
plan could be free? Hi, there. If we haven't met yet,
I'm Daniel Kunkel Roberts, co-founder here
at Boomer Benefits and a member of the
Forbes Finance Council. In this video, we'll explore
why Medicare Advantage plans may cost less than Medigap
plans, how some of them can have zero premiums,
who pays for the plan then, and what some of the costs
are that you will pay if you enroll in an advantage plan. You'll discover that while
some plans have a zero premium, they are definitely not free. And even Medicare itself will
never refer to them as free.
Stay tuned until the end to
grab our free guide on Medicare Advantage versus Medigap plans
so you can explore the pros and cons of each option. And don't forget to hit
the Subscribe button below, so that you'll
always be notified when we release a new video. The Medicare
Advantage program was designed to give
beneficiaries an alternative to original Medicare that
you pair with a Medigap plan. Not everyone can afford
Medigap insurance. And Medicare Advantage
offers lower premiums if you are willing to abide
by the plan's conditions and use the plan's
network of providers. When you join a
Medicare Advantage plan your providers no longer bill
Medicare for your health care services. Instead they build
the Advantage plan. This transfers all the medical
risk away from Medicare, and Medicare's willing
to pay for that. Medicare pays the Medicare
Advantage companies somewhere around $1,000 a month
to take on your medical risk. This means the Medicare
Advantage company makes their money from Medicare. So that is why they can
charge you such low premiums. They're already getting
paid by Medicare.
In some urban areas, you can
find plans with a zero premium. This means that when
you join the plan, you don't pay any monthly
premium for the plan itself. But as I just shared, this
doesn't mean the plan is free. It simply means that
Medicare is paying the plan to take you on as a member. So what are your costs then? One, you still pay your
Medicare Part B premium to Social Security each month
because Medicare is still paying for your care. It's just now paying for
it in an indirect route through the Advantage plan. Two, you are responsible
to pay for the plan premium if there is one. As I mentioned, some
plans charge zero, but many charge more than that. Three, you pay for your co-pays,
deductibles, and coinsurance, as you use the plan services. Your agent will provide you
with a summary of benefits that details everything that
you will pay as you go along. It could be that you
pay $50 each time you visit a specialist.
Or if you go in the hospital,
maybe you pay $200 a night depending on the plan. The part that is probably
most concerning to many people is that Advantage
plans will often have you pay a 20% coinsurance
for chemotherapy, radiation, and dialysis. So you'll pay that
20% yourself until you hit the plan's cap,
which is called your out-of-pocket maximum. This is an annual
limit on how much you'll spend on part
A and B services during any calendar year. For many plans, this
limit is $6,700. So that's the most you could
spend in a calendar year. But that's a lot
for many people who are living on fixed incomes. And your part D expenses,
like co-pays and deductibles are separate and additional. Keep in mind also
that the summary of benefits for your plan
is only good for one year. Advantage plans can and do get
to change their plan premiums, co-pays, and coinsurance
from year to year. You'll want to review your
Annual Notice of Change that they send you each fall
so you can see what's coming and use that
opportunity to switch Advantage plans during
the annual election period if you don't like the
changes for the next year.
So are zero premium
Medicare Advantage plans ever really free? Definitely not. You will pay for Part B. You'll
pay for the plan's premium if there is one. And you will pay some cost
sharing as you go along and use various
medical services. Keep in mind too, that
if the plan is offering to let you join and
pay absolutely nothing, you might find that the
co-pays and coinsurance you pay for medical
services on that plan are higher than if you had
joined a plan that did charge you a monthly premium. Moral of the story, when it
comes to Medicare, folks, there's no free lunch
for most people. The only way that you might
pay nothing out of pocket is if you are a low
income person eligible for both Medicare and Medicaid. Medicaid will then
step in to pay for some of your deductibles,
co-pays, and coinsurance, on your original
Medicare benefits or on some Medicare Advantage
plans that are specifically designed only for low
income individuals. All of this doesn't mean that a
zero premium Medicare Advantage plan is bad.
It's just not free. And around here,
we like to be very honest with our prospective
clients about the plans that they are considering. We find that if someone
knows and accepts these risks upfront, they are far happier
with their plan in the long run because there are no surprises. Do you have a question
about the costs associated with Medicare Advantage plans? Drop it in the comments below. And I'll be sure to answer. And to grab our free
guide that I mentioned at the start of the video,
visit the special link that I'm providing in the
description below this video.
Thanks for watching and we'll
see you in the next video..
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