Understanding Medicare Cost Plans

Medicare Cost Plans are a type of Medicare health plan available in certain areas of the country. Cost plans are kind of a hybrid plan between a Medicare Advantage Plan and a Medicare Supplement Insurance Plan.  It’s important to understand how Medicare Cost Plans differ from both Medicare Advantage Plans (Plan C) and Medicare Supplement Plans.  Understanding how the plan works will help you determine if a Cost Plan is right for you. It will also help you determine your options if the Cost Plans in your area are going away.

What is a Medicare Cost Plan?

Medicare Cost Plans are Medicare Plans offered by private insurance companies and approved by Medicare.  They provide additional benefits that Original Medicare does not, like dental, vision, and sometimes drug coverage (Part D). When using the plans in-network providers, you will generally have a co-pay for services such as office visits, labs, or a hospital stay.  However, unlike Original Medicare, it comes with the benefit of an out-of-pocket maximum to help reduce the out-of-pocket risk for the insured. Basically, if you reach your out-of-pocket maximum then you pay nothing out of pocket for Medicare covered services.

Under a Cost Plan, you must still maintain your Medicare Part B.  Medicare Part A is not required to join a cost plan. This makes it very different from a Medicare Supplement Plan or a Medicare Advantage Plan. If your cost plan is ending and you only have Part B, you will be required to get Part A before you can join either a Medicare Supplement Plan or a Medicare Advantage plan.  Medicare Part A is typically free if you have worked at least 40 quarters (10 years) in the USA.  If you do not qualify for free Part A it can cost up to $505 a month to purchase it.

Important facts about Medicare Cost Plans:

  • You can join if you only have Part B.
  • If you have Part A and Part B and go to a non-network provider, the services are covered under Original Medicare. You would pay the Part A and Part B coinsurance and deductible.
  • You can join anytime the plan is accepting new members.
  • You can leave anytime and return to Original Medicare.
  • You can either get your Medicare prescription drug coverage from the plan (if offered), or you can join a stand alone Medicare Prescription Drug Plan (Part D).

Benefits of Medicare Cost Plans?

The main benefit of a Medicare Cost Plan is the ability to go out-of-network and receive services under traditional Medicare Part A and Part B without restriction. This is attractive to snowbirds that live in 2 different states throughout the year, or those who travel frequently.  It’s also beneficial to people who want to continue seeing a provider or specialist that is not covered in the plan’s network.

What to do if you are losing a Medicare Cost Plan?

In some areas of the country, cost plans will be ending in specific counties, especially in Minnesota. This change is due to new regulations in the health care law.  Those insured under the plan must make a decision on new coverage. They can choose between a Medicare Advantage Plan (Plan C) or a Medicare Supplement Plan. The decision depends on the individuals needs and medical requirements. Here is a brief comparison of Cost Plans, Medicare Advantage Plans, and Medicare Supplement Plans.

Medicare Cost Plans VS. Medicare Advantage Plans VS. Medicare Supplement Pans

Benefit details/ Requirements Medicare Cost Plans Medicare Advantage plans Medicare Supplement Plans
Do I need Medicare Part A? No Yes Yes
Do I need to have Medicare Part B? Yes Yes Yes
Can I enroll anytime that I’m eligible? Yes (if the plan is accepting new members) In general, no (can enroll only during certain enrollment periods or a Special Election Period) Yes
Can I drop the plan anytime? Yes In general, no. You can drop it during the Medicare Advantage Disenrollment Period (January 1- February 14). Yes
Does the plan include prescription drug coverage? Some plans do. Yes (most plans) No
Can I go to a doctor outside the plan’s network? Yes. You pay any applicable Original Medicare copayment, coinsurance, and/or deductible amount. Depends on the type of Medicare Advantage plan. You can see any doctor who accepts Medicare
Are there additional monthly premiums? Usually yes Usually yes, but some plans offer a zero premium Yes

It is important to understand Medicare Cost Plans with the Big Medicare Shift Coming to Minnesota.  If you are not already aware, close to 400,000 Medicare recipients in Minnesota will be losing their cost plans.

Still have questions about Medicare and Cost Plans? Please feel free to call if you have any Medicare related questions. CONTACT US HERE

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