When you finally reach the stage of life where you are eligible for the Medicare enrollment period, it can be overwhelming to understand your many options. It can also be confusing to make sense of the different costs involved and your financial responsibilities.
When browsing your options, you may see the statement “Enroll in a $0 Premium Medicare Plan.” This seems like a cost-effective way to secure affordable health care and low-cost medical services, and it is, but it is important to understand what exactly this means.
The phrase “$0 premium plan” can be a bit misleading. When insurance companies reference that you will have a $0 monthly premium, what they actually mean is that you will not have an additional monthly premium above the required Part B premium that is automatically deducted from your social security check. This premium payment is required whether you enroll in Original Medicare or a Medicare Advantage Plan. Therefore, your Medicare cost is not “free,” but it is affordable.
Here is an overview of Part A Zero Premium Original Medicare and Part A Zero Premium Medicare Advantage plans.
What is a premium?
To understand your financial costs when enrolling in Medicare, it is important to understand the meaning of the word “premium.” An insurance premium is a specific dollar amount that you pay to an insurance company each month to ensure that you have health insurance coverage, regardless of whether you use any covered services during that time period or not. Medicare premium costs will vary depending on the insurance plan you select and the amount of income you have.
For Medicare, your monthly premium is associated with Part B of your insurance and the cost can vary each year, though the changes may be insignificant. This premium does not typically pay for any healthcare services, it is simply the cost for securing and maintaining health insurance coverage each month.
$0 Premium Original Medicare Plans
Original Medicare consists of Part A Hospital Insurance and Part B Medical Insurance. Typically, Part A has no premium costs, and Part B costs are minimal depending on the standard for the year and your income. You must be enrolled in Part B to enroll in Part A. Part D is not required and does involve a monthly premium, though the cost will vary based on your selected coverage.
A monthly premium is not the only Medicare cost. You are also responsible for a yearly deductible, coinsurance, and copays when you receive care. A deductible is the amount of money that you are required to pay out of pocket before your insurance begins to cover services, coinsurance is the percentage of covered services that you are responsible for, and copays are a set amount that you must pay toward services.
$0 Premium Medicare Advantage Plans
Medicare Advantage is an alternative option to Original Medicare. Private insurance companies offer a bundled service of Part A, Part B, and additional services such as prescription drug coverage, dental, vision, hearing, and fitness perks depending on the plan you select.
$0 Medicare Advantage plans are available but they may not always be the best option available, especially for those with significant healthcare needs. This is because these plans typically involve a higher deductible, coinsurance, and copays. Though these plans often have a more strict policy for Maximum Out of Pocket expenses.
Therefore, even if you select a $0 Premium Plan, Medicare insurance is not free because you must pay the Part B premium and additional expenses when you receive health care services.
Enrolling in a Zero Premium Plan
One of the biggest mistakes Medicare enrollees make is not getting clarity on their options or questions. There are many reasons to ensure that you enroll correctly in the best plan available for you and your specific needs. One such reason is that there are potential penalties or additional costs for not enrolling when you are first eligible, usually when you turn 65.
To avoid penalty and confusion, our team at Patriot Insurance Brokers is available to answer all of your questions and assist with your enrollment process. Call us today to enroll in a zero-premium Medicare Advantage plan or Original Medicare plan. We are here to help.