Experts Urge Consumers to Exercise Caution With Zero-Premium Medicare Advantage Plans

Health insurers will flood the Medicare Advantage market again this fall with enticing offers for plans that have no monthly price tag.

The number of so-called zero-premium plans has been growing for years, and they can appeal to retirees who live on fixed incomes. Experts say shoppers should exercise caution, because they might find better coverage at a relatively small monthly cost.

“It’s not a one-size-fits-all program,” said Melissa Brenner, a broker in Charlotte, North Carolina. “You don’t want to look at a zero plan and just enroll in it.”

Medicare Advantage plans are privately run versions of the government’s Medicare program for people who are age 65 and older or have certain disabilities. The annual enrollment window for 2023 Medicare Advantage coverage opens next week.

A closer look at the coverage:

A GROWING OPTION

Nearly seven out of 10 people who enrolled in an individual Medicare Advantage plan with prescription drug coverage for this year opted for no-premium plans, according to the Kaiser Family Foundation, a nonprofit that studies health care issues. That’s up from around five in 10 in 2015.

Kaiser also found that 98% of people eligible for Medicare had access to an Advantage plan with drug coverage that charged no premium.

“They’re everywhere,” said Bob Rees, vice president of Medicare sales for the online insurance broker eHealth.

Medicare Advantage shoppers had plenty of choices in general. Kaiser found that the average person eligible for Medicare had access to 39 Advantage plans during last fall's enrollment window, including those that charged premiums.

For 2023, about 57% of Medicare Advantage plans will have no premium, according to the Centers for Medicare and Medicaid Services.

KNOWING THE CATCH

The adage that nothing in life is free applies here.

The plans charge no premium, but most people who qualify for Medicare will still pay a monthly cost for the program’s Part B, which covers doctor visits and other outpatient care. That usually comes out of Social Security checks and will total $164.90 next year.

Government funding helps insurers offer an array of Medicare Advantage plans with no premiums and extras like dental or vision care that are not covered in traditional Medicare.

One key difference from traditional Medicare: These plans usually require patients to visit doctors, hospitals or pharmacies in a network. Some plans may not cover care received outside those networks.

WHAT TO CONSIDER IN A MEDICARE ADVANTAGE PLAN

Before looking at a plan’s price, Brenner recommends that shoppers check to see whether their doctors are in the network and how regular prescriptions would be covered.

Then they should look at coverage basics. That can include what sort of copays would come with a specialist visit or a hospital stay. They also should look at the annual out-of-pocket maximum.

Some of these payments might be higher with a plan that has no premium, so customers could lose any savings if they use the coverage frequently.

“There’s always going to be a give and take,” said Brenner, an independent broker who specializes in Medicare Advantage.

The federal Medicare.gov website lets visitors compare plan coverages, including for prescriptions.

THE DOWNSIDE OF A NO-PREMIUM MEDICARE ADVANTAGE PLAN

A plan that charges no premium may wind up being a bargain for someone who is relatively healthy. But it can be hard for shoppers to predict what specialists they may need to see or if they will want access to, say, an out-of-state cancer hospital in a given year.

“Older people tend to get sick and use services, so it’s a gamble,” said Tricia Neuman, a Kaiser Family Foundation Medicare expert.

Sometimes even routine expenses will stick out.

Charles Kolton picked a zero-premium plan several years ago but was disappointed with the limited dental coverage that came with it. He later switched to a plan that charges $24 a month but also pays for up to $2,000 in dental costs, or roughly double what his previous option covered.

“You can rack up these dental bills pretty quickly,” the 79-year-old North Carolina man said.

WHEN IS THE DEADLINE FOR OPEN ENROLLMENT?

People will have from Oct. 15 until Dec. 7 to pick a new plan or decide whether they want to keep the same coverage. Rees, the eHealth executive, warns shoppers not to wait until December.

There’s generally a big rush to sign up at the end. Late shoppers can get locked out if they haven’t chosen a plan already.

Nearly half the people eligible for Medicare enroll in Medicare Advantage plans, according to Kaiser. People also can stick with traditional Medicare and sign up for supplemental coverage, which generally comes with a higher premium than an Advantage plan.

For Medicare Advantage shoppers, Neuman expects that insurers will continue to offer more zero-premium plans in 2023 as they push to grow enrollment.

“Plans understand that seniors are focused on premiums,” she said.