Is a $0 Premium Medicare Advantage Plan Really Cheaper?
That $0 on a Medicare plan advertisement can get your attention. It just shouldn't make the decision for you.
Every fall, Medicare beneficiaries see advertisements for Medicare Advantage plans with a $0 monthly plan premium.
Naturally, that sounds pretty good.
If one Medicare plan charges a monthly premium and another says $0, wouldn't the $0 plan automatically cost less?
Not necessarily.
I'm Sandra Reith, a licensed Medicare broker serving Green Valley, Sahuarita, Tucson, and Southern Arizona. I speak fluent Medicare, and one of the conversations I have often with clients is about the difference between what Medicare coverage costs to have and what it may cost to use.
Those aren't always the same thing.
A $0-premium Medicare Advantage plan can absolutely be the right choice for some people. For others, a plan with a monthly premium or a different type of Medicare coverage may better fit their healthcare needs, budget, doctors, prescriptions, or preferences.
So rather than asking:
"Which Medicare plan has the lowest premium?"
I encourage people to ask:
"What could my healthcare actually cost under this plan?"
That's a much more useful question.
Watch: $0 Premium or Better Coverage?
In this week's video, I talk about a question I hear regularly from Medicare beneficiaries: Should I choose coverage with a monthly premium or a Medicare Advantage plan with a low or $0 monthly plan premium?
There isn't one answer that works for everyone.
Your health, budget, doctors, prescriptions, healthcare usage, and comfort with potential out-of-pocket expenses all matter.
Let's break it down.
What Does "$0 Premium Medicare Advantage" Actually Mean?
First, let's clear up one of the biggest misconceptions.
A $0-premium Medicare Advantage plan doesn't mean Medicare or healthcare suddenly becomes free.
It means the Medicare Advantage plan itself does not charge an additional monthly plan premium.
Most Medicare Advantage enrollees still have to pay their Medicare Part B premium. Depending on the plan and the healthcare services you receive, you may also have other expenses, including deductibles, copayments and coinsurance.
So when you see:
$0 MONTHLY PREMIUM
don't mentally translate that into:
$0 HEALTHCARE COSTS.
They're two very different things.
That's not a criticism of $0-premium plans.
It's simply important to understand what you're buying.
How Can a Medicare Advantage Plan Have a $0 Premium?
This is another question people understandably ask.
Medicare Advantage plans are offered by private insurance companies that contract with Medicare.
Medicare pays these companies to provide Medicare-covered Part A and Part B services to people enrolled in their plans. Plans determine their premiums, cost-sharing and benefits within Medicare's rules.
Some are therefore able to offer coverage with no additional monthly plan premium.
Again, that doesn't make the plan "free."
It means its costs are structured differently.
And that brings us to the part I want Medicare beneficiaries to pay attention to.
Premium vs. Copay: You're Looking at Two Different Kinds of Costs
A premium is generally what you pay regularly to maintain insurance coverage.
A copayment is an amount you may pay when you receive a particular healthcare service.
Depending on your Medicare Advantage plan, you may encounter copays or coinsurance for things such as:
Primary care visits
Specialist appointments
Urgent care
Emergency room visits
Diagnostic testing
Outpatient procedures
Hospital stays
Physical therapy
Medical equipment
Prescription medications
The details vary considerably by plan.
This is why comparing two Medicare plans solely by looking at their premiums doesn't tell you enough.
One plan may cost more each month and have lower cost-sharing for certain services.
Another may have a $0 monthly plan premium but require you to pay more when you use particular healthcare services.
Neither arrangement is automatically better.
What matters is how those costs intersect with the healthcare you actually use.
The Question Isn't Just "What Does It Cost?" It's "When Do I Pay?"
Here's a way to think about it.
Imagine two people living in Green Valley.
We'll call them John and Mary.
John is relatively healthy. He sees his primary care physician for routine care, takes a couple of medications and rarely needs specialists.
Mary sees several specialists, receives regular diagnostic testing and manages multiple ongoing health conditions.
A $0-premium Medicare Advantage plan might look identical on paper to both of them.
Their actual healthcare spending under that plan could look very different.
That doesn't mean Mary shouldn't choose the plan.
It means Mary has more healthcare usage to consider when estimating what that coverage could cost her throughout the year.
This is why I don't like choosing Medicare coverage based on a single number.
Your healthcare isn't a single number.
Six Things to Compare Besides the Monthly Premium
When you're reviewing Medicare Advantage coverage for 2027, I recommend looking beyond the headline premium.
1. Your doctors
Are your primary care physician and specialists in the plan's network?
For those of us in Green Valley and Sahuarita, this can be especially important because you may receive routine healthcare locally while seeing specialists or receiving hospital care in Tucson.
Check the providers you actually use.
2. Your prescriptions
Look at your medications individually.
Are they covered?
Which formulary tiers are they on?
What will you pay?
Does the plan have pharmacy network considerations that could affect your costs?
A plan that looks inexpensive based on its monthly premium can look quite different once prescription expenses are included.
3. Specialist and healthcare service costs
If you regularly see specialists, receive physical therapy, undergo testing or use other healthcare services, examine the applicable copays and coinsurance.
Don't compare hypothetical healthcare.
Compare your healthcare.
4. Hospital costs
People don't generally choose Medicare coverage expecting to be hospitalized.
Still, understanding what your plan requires if hospitalization occurs is part of understanding your coverage.
Look at inpatient hospital cost-sharing and how the plan structures those expenses.
5. The annual out-of-pocket maximum
Medicare Advantage plans have an annual limit on what you'll pay out of pocket for covered Medicare Part A and Part B services.
Once you reach your plan's applicable limit, the plan pays 100% of covered Part A and Part B services for the remainder of the year.
That number matters.
Even if you don't expect to reach it, you should know what it is.
6. Your comfort with variable healthcare expenses
This one doesn't show up in a plan brochure.
Two people with identical health histories may feel very differently about money.
One person may prefer lower monthly expenses and be comfortable paying copays as healthcare is needed.
Another may prefer more predictable monthly expenses and fewer surprises when healthcare needs increase.
Neither person is wrong.
Your comfort with how you pay for healthcare belongs in the conversation.
What Happens If Your Health Changes?
This is the part of Sandra's original video that I think deserves much more attention.
She notes that people sometimes choose lower-premium coverage while they're healthy and begin paying more in copays as their healthcare needs increase. Sandra Reith Edited Video Title…
None of us can perfectly predict our future health.
But we can understand how our insurance works if our healthcare needs change.
Ask yourself:
What happens financially if I need considerably more healthcare next year than I needed this year?
That's not pessimistic.
It's good insurance planning.
Look at the services you're likely to use, but also understand the plan's cost-sharing structure and annual out-of-pocket maximum.
You don't need to predict every medical event.
You do need to understand what your coverage asks you to pay if something changes.
What About Medicare Supplement Coverage?
This is where comparisons can become confusing because Medicare Supplement Insurance, also called Medigap, works differently from Medicare Advantage.
Medigap policies work alongside Original Medicare and help pay certain out-of-pocket costs left by Original Medicare.
Depending on the Medigap policy, that generally means paying a monthly premium in exchange for help covering certain Medicare cost-sharing expenses.
Medigap policies also don't use provider networks in the same way Medicare Advantage plans often do. With Original Medicare and Medigap, you generally can see healthcare providers nationwide who accept Medicare.
Prescription drug coverage is separate, so people with Original Medicare and Medigap generally need a separate Part D plan if they want Medicare prescription drug coverage.
That's very different from many Medicare Advantage plans, which may combine medical and prescription drug coverage and additional benefits in one plan.
This is why I don't think Medicare Advantage versus Medicare Supplement should be reduced to:
"This one costs $0 and that one costs $___."
You're comparing different approaches to receiving Medicare coverage.
The better question is which structure fits you.
Are $0 Premium Medicare Advantage Plans a Good Choice?
They certainly can be.
For the right person, a $0-premium Medicare Advantage plan may provide coverage that fits their doctors, prescriptions, healthcare usage and budget very well.
The words "$0 premium" aren't a warning sign.
They're simply one piece of information.
Likewise, paying a higher monthly premium doesn't automatically mean you're getting a "better" plan.
Price and suitability aren't the same thing.
That's why I want my clients to understand what they're comparing before making a decision.
A Simple Medicare Plan Comparison Exercise
Before choosing your Medicare coverage for 2027, sit down with four things:
Your doctors.
Your prescriptions.
Your healthcare usage.
Your budget.
Then compare your options against those four things.
Not against the television commercial.
Not against the plan your neighbor loves.
Not against the plan your sister uses in another state.
And not solely against the monthly premium.
Medicare is personal.
The plan that's wonderful for your neighbor may not be the right plan for you.
Questions to Ask Before Choosing a $0-Premium Medicare Advantage Plan
Before enrolling, ask:
Are my doctors in the network?
Are my medications covered, and what will they cost?
What are my specialist copays?
What could I pay for diagnostic tests or outpatient procedures?
What would hospitalization cost?
What is the annual out-of-pocket maximum?
Do I understand the plan's referral or prior authorization requirements?
What happens when I travel?
Am I comfortable with the way this plan divides my healthcare costs between monthly expenses and expenses when I receive care?
If you can answer those questions, the "$0" on the front of the brochure becomes much less important.
Now you're comparing actual coverage.
Medicare Advantage Cost Questions People Ask Me
Is a $0-premium Medicare Advantage plan really free?
No. A $0 plan premium means you don't pay an additional monthly premium to the Medicare Advantage plan. Most people still pay their Medicare Part B premium, and the plan may have deductibles, copays, coinsurance and other out-of-pocket expenses.
Do all Medicare Advantage plans have $0 premiums?
No. Premiums and benefits vary by plan and location.
Do Medicare Advantage plans have an out-of-pocket maximum?
Yes. Medicare Advantage plans must limit annual out-of-pocket spending for covered Medicare Part A and Part B services. The amount varies by plan.
Is Medicare Advantage cheaper than Medicare Supplement coverage?
There isn't one answer that applies to everyone. Medicare Advantage and Original Medicare plus Medigap structure costs differently. Your premiums, healthcare usage, prescriptions and coverage preferences all affect the comparison.
Can I use any doctor with Medicare Advantage?
Not necessarily. Many Medicare Advantage plans use provider networks. Network requirements depend on the specific plan.
Are there $0-premium Medicare Advantage plans in Green Valley, Arizona?
Plan availability depends on your service area and can change from year to year. A licensed Medicare broker can review Medicare Advantage plans available in your ZIP code and help you compare their costs, provider networks and benefits.
What Does the Right Medicare Plan Cost?
That's the question I'd rather help you answer.
Not:
What's the cheapest plan?
Not:
Which plan gives me the most extras?
And certainly not:
Which advertisement sounds the best?
Instead:
Which Medicare coverage gives me the combination of access, benefits, costs and predictability that makes sense for me?
That's a much better conversation.
Medicare Open Enrollment runs October 15 through December 7.
If you're in Green Valley, Sahuarita, Tucson or Southern Arizona and would like help reviewing your Medicare coverage for 2027, give me a call.
Sometimes we'll discover another option deserves consideration.
Sometimes we'll discover you should keep exactly what you have.
Either answer is a good answer when it's based on information you understand.
