Medicare cost plans and Medicare Advantage Plans share some similarities but also have important differences. If you’re evaluating Medicare options, it’s helpful to understand what cost plans are, where they are available, and how they compare to Medicare Advantage.
Below we explain what makes Medicare cost plans unique, when they could be a good option, and how to decide if a cost plan is right for Medicare coverage.
What is a Medicare Cost Plan?
A Medicare cost plan is a type of Medicare health plan offered by private insurance companies in certain states. Cost plans provide all of your Original Medicare Part A (hospital insurance) and Part B (medical insurance) coverage. They also often include Medicare Part D prescription drug coverage.
However, cost plans also allow you to use out-of-network providers who accept Medicare. When seeing providers outside the plan’s network, your Medicare-covered services are paid for through Original Medicare instead of by the cost plan.
In addition to basic Part A and Part B benefits, cost plans must options frequently include extra benefits not covered by current Medicare Plan options like dental, vision, and hearing services. Most also provide coverage for prescription drugs.
Some key facts about Medicare cost plans:
- Available in limited areas from select insurers
- Combine Original Medicare and a plan network
- Allow out-of-network coverage under Original Medicare
- Often extra benefits like dental and vision
- May include Part D prescription drug coverage
After learning the basics of what Medicare cost plans are, a common question is how they compare and differ from Medicare Advantage Plans.
How Do Cost Plans Compare to Medicare Advantage?
Medicare Advantage Plans (also known as Medicare Part C) are also offered by private insurers as an alternative way to get your Medicare benefits. But there are some clear differences between Advantage Plans and cost plans:
- Medicare Advantage Plans require you to use in-network providers except in emergencies.
- Cost plans allow you to use out-of-network providers and still receive Original Medicare coverage.
- Medicare Advantage Plans usually provide more coordinated, managed care similar to an HMO.
- Cost plans allow flexible use of non-network providers without referrals.
Covers original benefits
- Both Advantage Plans and cost plans cover all Part A and Part B benefits.
Offers extra benefits
- Both types can offer additional benefits like dental and vision not covered by Original Medicare.
- Many Advantage Plans and cost plans provide Part D prescription drug coverage.
So in summary, the key unique elements of a Medicare cost plan are the ability to use out-of-network providers and get coverage under Original Medicare, as well as typically having more flexible access to care.
Where Are Medicare Cost Plans Available?
One important thing to know about Medicare cost plans is that they are only available in certain designated areas. Cost plans are allowed in regions where Original Medicare spending has historically been low and predictable.
As of 2023, cost plans are only available in these 19 states:
- New York
- North Dakota
- Rhode Island
- South Dakota
And within those states, cost plans may only be an option in certain counties or zip codes. Unfortunately, since cost plans have limited availability, they won’t be a choice for many Medicare beneficiaries. If they are accessible in your state and region, cost plans can be worthwhile to consider.
When Might a Cost Plan Be a Good Choice?
Because of their flexibility and benefits, Medicare cost plans can be an excellent option for certain enrollees such as:
- Those wanting Original Medicare flexibility along with extra benefits
- People who travel often within the US
- Enrollees used to PPO-style insurance plans
- Beneficiaries looking for specific doctors/hospitals locally and nationally
- Individuals not needing managed coordinated care
- Rural residents with spotty Medicare Advantage access
Cost plans let enrollees tap into nationwide Original Medicare coverage while also accessing plan benefits. Just remember cost plans including prescription drug coverage may have higher premiums than Medicare Advantage Plans with built-in Part D.
How Do You Enroll in a Medicare Cost Plan?
To enroll in a Medicare cost plan, you must be entitled to Medicare Part A and enrolled in Medicare Part B. Cost plans have annual enrollment periods allowing you to sign up, switch plans, or drop your plan.
The Medicare cost plan enrollment periods are:
- October 15 to December 7 – Anyone can enroll in a cost plan for coverage starting January 1
- January 1 to March 31 – Those in Original Medicare can enroll anytime
- April 1 to June 30 – Only those in other cost plans can enroll
To join a cost plan, contact insurers in your state during an applicable enrollment period. Ask if they offer cost plans in your county and request detailed information on premiums, drug coverage, and benefits to find the best option.
How Do Cost Plans Affect Medigap and Part D?
If you enroll in a Medicare cost plan, you cannot purchase or use a Medigap policy. Cost plans provide benefits and coverage beyond Original Medicare that would overlap with a Medigap Plan.
You can enroll in a standalone Part D prescription drug plan while in a cost plan only if the cost plan doesn’t include built-in drug coverage under Medicare Part D. If your cost plan does include Part D, you cannot also get a separate policy just for prescription drugs.
Is a Medicare Cost Plan Right for You?
Medicare cost plans offer excellent benefits and flexibility for some beneficiaries. But due to limited availability, they are not an option for most.
Weigh pros and cons like provider access and coordinated care to decide if a cost plan meets your needs. Cost plans can provide valuable Original Medicare benefits plus extra coverage for policyholders in select areas of the country.
We’re Here to Help
You do not have to spend hours reading articles on the internet to get answers to your Medicare questions. Give Scott Sims at Sims Insurance Medicare Plans a Call at (541) 915-0939. You will get the answers you seek in a matter of minutes, with no pressure and no sales pitch. We are truly here to help.
Frequently Asked Questions About Medicare Cost Plans
Is a Medicare Cost Plan considered a Medicare Advantage Plan?
No, a Medicare Cost Plan is not considered a Medicare Advantage Plan. Although both of these plans are part of the Medicare program, there are some key differences between them.
How do Medicare Cost Plans work?
Medicare Cost Plans work by allowing you to receive your Medicare benefits through a private insurance company. These plans are available in certain areas and provide coverage for both Medicare Part A and Part B services.
Am I eligible for a Medicare Cost Plan?
To be eligible for a Medicare Cost Plan, you must meet certain criteria. You must be enrolled in both Medicare Part A and Part B, and you must live in an area where Medicare Cost Plans are available.
What are the benefits that come with Medicare Cost Plans?
Medicare Cost Plans offer a range of benefits similar to Medicare Advantage Plans. These benefits may include coverage for doctor visits, hospital stays, skilled nursing care, prescription drugs, and more.
Can I return to Original Medicare if I have a Medicare Cost Plan?
Yes, you can return to Original Medicare at any time if you have a Medicare Cost Plan. Simply contact your plan provider and let them know that you would like to switch back to Original Medicare.
Can I switch between Medicare Cost Plans and Medicare Advantage Plans?
It is not possible to switch between Medicare Cost Plans and Medicare Advantage Plans. These are two separate types of plans, and you can only enroll in one at a time.
Are Medicare Cost Plans offered in all areas?
No, Medicare Cost Plans are not offered in all areas. Availability can vary depending on where you live. It’s important to check if this plan is available in your area before enrolling.
What are the differences between Medicare Cost Plans and Medicare Supplement Plans?
Medicare Cost Plans and Medicare Supplement Plans are different types of plans. While Medicare Cost Plans work with Medicare Part A and Part B, Medicare Supplement Plans work alongside Original Medicare to provide additional coverage.
How do I find a Medicare Cost Plan in my area?
To find a Medicare Cost Plan available in your area, you can use Medicare’s Plan Finder tool on their official website. This tool will help you search for plans based on your location and individual needs.
Who offers Medicare Cost Plans?
Medicare Cost Plans are offered by private insurance companies that have been approved by Medicare. These companies must follow the guidelines set by the Centers for Medicare and Medicaid Services (CMS).