"Zero-Cost" Medicare Plans? Not Quite

I get calls from my Medicare clients telling me they want the Medicare coverage that Joe Namath is advertising. They hear the words, “get everything you are entitled to”, “get additional benefits all at no additional cost” and “call the number on your screen now – it’s free. There’s only one problem. The actual cost can be substantial. How can these plans cost “zero” per month? Here’s how… Private insurers are able to offer these plans because the federal government actually pays them to offer Medicare Advantage plans to beneficiaries. These companies receive $1,000.00 per month (or more) per enrollee from the government. In exchange, they administer and manage the health care for individuals that sign up for their plan.

Because these companies are receiving thousands of dollars every month per enrollee they offer dental and vision coverage. They offer transportation, free meals, and more. It’s easy to see why people get all excited to get these “free” items. Joe says “get everything you are entitled to”.

When Joe mentions these “completely free” healthcare plans, many people lose sight that they still have to pay the basic part B monthly premium to Medicare. This year the monthly part B premium is $148.50. That means before any other fees and charges you will pay $1,782.00 a year for your “free” zero dollar plan.

You may visit your primary care physician twice a year, each visit with a $0 co-pay. However, you will visit your cardiologist, dermatologist or other specialists. These visits come with a co-pay of $40 per visit. Three specialist visits is $120, four specialist visits is $160.00. Many people spend much more.

If you spend two days as an inpatient in the hospital during the year at $325/day, that two-day stay would be an out-of-pocket cost of $650. These “free” plans do not cover the first five, six, or seven days as an inpatient in the hospital.

Let’s assume you go to five physical therapy sessions a year at $40 a visit, that’s an additional $200.00.

Add all this up and you can see that the out-of-pocket costs can add up to thousands of dollars. Despite the advertisements, there are no plans that are truly “zero dollars and zero worries”. That does not mean Medicare advantage plans are all bad; it means you need to pay attention to all of the details.

Some features to these managed-care, zero-premium plans that you should consider when enrolling: The plan can change mid-year and your doctor may no longer be in the plan’s network. Out-of-pocket costs: Most people do not truly expect the out-of-pocket costs that they incur as they use their insurance – they remember the commercial where Joe says, “get what you deserve, it’s free”. Remember: Caveat Emptor, Buyer Beware. The buyer purchases at their own risk in the absence of any express warranty.