Medicare Cost Plans are a type of Medicare health plan offered by private insurance companies in certain regions of the U.S. Cost Plans provide all Original Medicare Part A and Part B benefits and often include Part D prescription drug coverage. But Cost Plans have unique rules and are not the same as standard Medicare Advantage Plans.
In this article, we’ll explain what Medicare Cost Plans are, how they work, who can enroll, and whether they are technically considered to be Medicare Advantage Plans.
Medicare Cost Plans are health plans managed by private insurance companies that have contracts with Medicare. Here are some key facts about Cost Plans:
· Provide all Part A and Part B benefits, like Original Medicare
· Usually include prescription drug coverage (Part D)
· Have provider networks you must use, like Medicare Advantage Plans
· Allow you to see any Medicare provider outside the network without referral, but you may pay more
· Available only in certain designated areas of the country
· You can join even if you only have Part B coverage
Cost Plans also offer an alternative way to get your Original Medicare benefits through a private insurer. They combine elements of both Original Medicare and Medicare Advantage.
Enrollment in Medicare Cost Plans has been declining but over 1 million beneficiaries are still enrolled. Cost Plans are most prevalent in Minnesota, Wisconsin, North Dakota and parts of New York and Massachusetts.
Here is an overview of how Medicare Cost Plans work:
· You must live in the Cost Plan's service area to join
· You pay the plan a monthly premium which varies by plan
· You receive your Part A, Part B and usually Part D benefits from the private plan
· You use doctors and facilities in the plan’s network or you can go out-of-network for higher costs
· The plan pays providers based on the actual cost of your care rather than a contracted rate
· You can disenroll from the Cost Plan and return to Original Medicare at any time
The key advantage of Cost Plans is the ability to see any Medicare provider nationwide, even if they are out-of-network. But you will typically pay higher out-of-pocket costs for going outside the plan's network.
Cost Plans often have premiums and cost sharing similar to Medicare Advantage Plans. But they provide more freedom to see providers outside the plan's contracted network compared to Medicare Advantage.
The eligibility to join a Medicare Cost Plan is broader than for Medicare Advantage. You can enroll in a Cost Plan if you are entitled to Medicare Part A OR enrolled only in Part B.
So even if you have not paid enough into Social Security to qualify for premium-free Part A, you can still join a Cost Plan as long as you are signed up for Part B.
You cannot enroll in a Cost Plan if you only have Part A but are not enrolled in Part B. You must have at least Part B coverage to join a Medicare Cost Plan.
Unlike Medicare Advantage Plans which have limited enrollment periods, you can join a Medicare Cost Plan anytime the plan is accepting new members.
Cost Plans establish their own enrollment windows which are generally the first 3 months of the year, but can also extend to other months.
You can also leave a Cost Plan and switch back to Original Medicare anytime. Your disenrollment will take effect the first day of the following month after you request it. This provides more flexibility than Medicare Advantage which has lock-in periods except for limited circumstances.
In addition to Original Medicare benefits and Part D prescription drugs, many Cost Plans offer extra benefits not covered by Original Medicare.
These can include:
· Vision benefits
· Hearing coverage
· Dental coverage
· Health club memberships
· Over-the-counter allowances
However, the specific extra benefits offered by Cost Plans vary by insurer and region. Always verify the details of a plan’s coverage before enrolling.
While Cost Plans provide similar services, there are important differences between Cost Plans and standard Medicare Advantage Plans:
· Cost Plans allow you to see any Medicare provider without a referral whereas most Medicare Advantage Plans only cover in-network providers.
· You can join a Cost Plan regardless of your Part A enrollment, while Medicare Advantage requires enrollment in both Part A and Medicare Part B.
· Cost Plans typically have more limited availability and regional restrictions compared to nationwide access to Medicare Advantage Plans.
· You can enroll in Medicare or leave a Cost Plan anytime, but Medicare Advantage has strict enrollment windows and lock-in periods.
· Cost Plans pay providers based on the actual cost of services while Medicare Advantage Plans pay a contracted rate.
So in summary, Medicare Cost Plans offer more provider flexibility but less availability compared to Medicare Advantage Plans.
Medicare Cost Plans are sometimes grouped together with Medicare Advantage Plans. However, they are technically a separate type of Medicare health plan.
According to Medicare, Cost Plans are not actually classified as Medicare Advantage Plans. The primary piece of legislation governing Medicare refers to Cost Plans and Medicare Advantage Plans separately.
Medicare Cost Plans are also regulated under a different section of federal law than Medicare Advantage Plans. Cost Plans are legally considered a different type of Medicare coverage than MA plans.
So in Medicare terminology, Cost Plans are not defined as Medicare Advantage Plans. They are an alternative option people can choose in place of Original Medicare, but have unique rules compared to standard Medicare Advantage.
Medicare Cost Plans can be a good option for some beneficiaries, depending on your location and personal needs:
· If you want to join a plan but don't qualify for premium-free Part A, Cost Plans allow this.
· The ability to see providers outside the plan network can be beneficial if you travel or have doctors you want to keep seeing.
· You can enroll anytime Cost Plans are open for new members rather than waiting for MA enrollment periods.
· The premiums and copays are often similar or lower than comparable Medicare Advantage Plans.
However, Cost Plans are restricted by geography so you would first need to verify availability in your county. And the plan networks are often still limited, so check they include your preferred doctors and hospitals.
But for some Medicare beneficiaries, Cost Plans can provide advantages over Medicare Advantage due to increased provider access flexibility and less restrictive enrollment rules.
While Medicare Cost Plans are offered by private insurers, provide similar coverage to Medicare Advantage Plans, and are sometimes grouped with MA plans, they are actually a separate and distinct type of Medicare health plan.
Cost Plans have unique enrollment, provider access, and disenrollment rules that differentiate them from standard Medicare Advantage Plans.
So in summary - no, Medicare Cost Plans are not technically classified as Medicare Advantage Plans according to Medicare. But they can still be a viable alternative for some Medicare beneficiaries to receive their benefits through private insurers with different coverage rules than MA plans.
You do not have to spend hours reading articles on the internet to get answers to your Medicare questions. Give the licensed insurance agents at Bourgeois Insurance a Call at (985) 803-8999. 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.
A Medicare Cost plan is a type of Medicare health plan offered by private companies.
Yes, Medicare Cost plans include Part D prescription drug coverage.
People with Original Medicare Parts A and B can qualify for and enroll in a Medicare Cost plan.
Medicare Cost plans provide coverage through Original Medicare. You would go to Medicare providers. The plan available in your area pays the difference in costs.
No, Medicare Advantage Plans function differently by providing Medicare benefits through the private plan's network and providers.
No, you need to enroll in a separate Part D prescription drug plan to get drug coverage with Original Medicare.
No, Cost plans are only offered in certain states and counties. Availability depends on location.
Use Medicare's Plan Finder tool to see plans in your area. Cost plans accepting new members will appear.
You can disenroll and switch back to Original Medicare or a Medicare Advantage Plan during open enrollment periods.
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Plans are insured or covered by Medicare Advantage (HMO, PPO, and PFFS) organization with a Medicare contract and/or a Medicare-approved Part D sponsor. Enrollment in the plan depends on the plan’s contract renewal with Medicare. We do not offer every plan in your area. Please contact medicare.gov or 1-800-Medicare to get information on all your options.
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