In most areas of the United States, you are limited to one of two choices when it comes to Medicare coverage: Original Medicare (Part A and Part B) or Medicare Advantage (Part C), not both. What happens when there are limited Medicare Advantage options in your area? In that case, you can turn to a Medicare Cost Plan.
Original Medicare vs. Medicare Advantage
Original Medicare has the advantage of offering a nationwide network of providers, but it may not cover all the services you need. If you want prescription drug coverage, you will need to also sign up for a Medicare Part D plan. For Part A, you will pay monthly premiums (though you will get this for free if you or your spouse worked 40 quarters—10 years—in Medicare-taxed employment) and a deductible for each hospital benefit period.
For Part B, with the exception of preventive screening tests (if your healthcare provider accepts assignment), you will pay 20% for all services as well as monthly premiums. To help reduce out of pocket spending, you can enroll in a Medicare Supplement (Medigap) plan that can help you pay off your Part A and Part B deductibles, copayments, and coinsurance. Medigap plans can also help pay for emergency coverage in other countries.
Medicare Advantage, on the other hand, has a narrow network of providers but it can offer supplemental benefits that Original Medicare does not offer. These plans can also include Part D coverage. Cost-wise, you will still pay Part B premiums but you will also be responsible for any premiums, deductibles, copays, or coinsurance your plan requires. Any care you receive out of your plan’s network will cost more and in some cases, may not be covered. What may be enticing about a Medicare Advantage plan is that there is an annual out-of-pocket spending limit for any care you receive in-network.
What is a Medicare Cost Plan?
A Medicare Cost Plan is a hybrid between Medicare Advantage and Original Medicare. It offers a narrow network of providers like a Medicare Advantage plan and likewise may be able to offer you more benefits. It also gives you the freedom to use Original Medicare whenever you require care outside of your plan’s network. This could help to keep your out-of-network costs down.
Medicare Cost Plans provide the greatest flexibility of any plan. This is especially true for people who like to travel, particularly within the United States. Traveling when you are on a Medicare Advantage plan could put you at risk for needing out-of-network coverage. Whether it was an emergency or if someone were a “snowbird” (someone who moves from colder to warmer climates during the winter), they would face higher out-of-pocket costs if they were on a Medicare Advantage plan.
To be eligible for a Medicare Cost Plan, you have to be enrolled in Part B. This is a bit different than a Medicare Advantage plan which requires you to enroll in both Part A and Part B. You can sign up any time a plan is accepting applications. Depending on your needs, you may choose a plan that has prescription drug coverage or otherwise sign up for a stand-alone Part D plan. You are free to leave your plan and change to Original Medicare at any time without waiting for the Medicare Open Enrollment Period.
Cost-wise, you pay premiums, deductibles, copays, and coinsurance for your Medicare Cost Plan. You do not have to pay a Part B deductible or coinsurance unless you actually use Original Medicare.
Restrictions on Medicare Cost Plans
Medicare Advantage plans are network-based by county. To make sure each plan provides adequate access to people in rural areas, the Centers for Medicare and Medicaid Services (CMS) requires that “organizations must ensure that at least 90% of the beneficiaries residing in a given county have access to at least one provider/facility of each specialty type within the published time and distance standards.” In order for a plan to be viable, it also had to reach a certain enrollment threshold.
When Medicare Advantage was first offered in 1997, there was little reach into rural communities. Medicare Cost Plans came into existence to fill that gap. Since then the Medicare Advantage program has expanded considerably, doubling from 10.5 million enrollees to 22 million between 2009 and 2019. Now that there are more Medicare Advantage options available, the federal government is slowly phasing out Medicare Cost Plans.
Starting on January 1, 2019, the federal government eliminated Medicare Cost Plans from counties where two or more Medicare Advantage plans were competing the year before. However, that was the case only if those plans met certain enrollment thresholds.
A Word From Get Meds Info
There are few Medicare Cost Plans available in 2019, and there may be even fewer in 2020. Rural communities that do not have adequate access to Medicare Advantage plans may benefit but these plans will only be offered if there are fewer than two Medicare Advantage plans in the county.