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Are Medicare Cost Plans Considered Medicare Advantage Plans?

October 14, 20237 min read

When you first become eligible for Medicare, one of the decisions you need to make is which type of Medicare Plan to enroll in. Two options you may consider are Medicare Cost plans and Medicare Advantage Plans. But are Cost plans actually a type of Medicare Advantage Plan? Or are they separate and distinct?

While both are offered by private insurance companies and provide Medicare Part A and B benefits, Medicare Cost plans and Medicare Advantage Plans have some important differences. Understanding how Cost plans work and how they compare to Advantage Plans can help you determine if this type of Medicare coverage might be suitable for your needs.

What are Medicare Cost Plans?

Medicare Cost plans are a type of Medicare health plan offered by private insurance companies in certain areas of the country. Here’s an overview of how they work:

·        Provide all Medicare Part A and Part B coverage

·        Allow you to go to out-of-network providers as long as they accept Medicare

·        Available in limited regional areas, not nationwide

·        May include prescription drug coverage

With a Medicare Cost plan, you are still enrolled in Original Medicare. The Cost plan provides your Part A and Part B benefits, but the costs and claims are still processed through Medicare. You also get a Medicare Part B premium refund since you are technically still in Original Medicare.

Your Cost plan provides an additional network of providers you can use, but you’re not restricted only to in-network care like with Medicare Advantage Plans. You can see any healthcare provider nationwide that accepts Medicare at the same cost-sharing amounts.

Cost plans include networks with potentially lower costs for in-network care. But the flexibility to go out-of-network is a key difference from most Medicare Advantage Plans.

How Medicare Cost Plans Compare to Medicare Advantage

Medicare Advantage Plans, sometimes called Medicare Part C, also provide Medicare benefits through private insurers. So how exactly do Cost plans compare?

Some key differences:

·        Out-of-network coverage - Cost plans cover out-of-network care at Medicare rates. Most Advantage Plans only cover in-network providers.

·        Plan availability - Cost plans available regionally, Advantage Plans available nationwide.

·        Drug coverage - Cost plans may include prescription drug coverage. It’s included with most Advantage Plans.

·        Original Medicare - You keep Original Medicare with a Cost plan. Medicare Advantage replaces it.

·        Cost structure - Cost plan costs based on Medicare-approved amounts. Advantage has fixed costs.

·        Plan types - Cost plans a separate type of plan. Advantage Plans have HMO and PPO options.

While there are similarities between the two plan types, Medicare Cost plans work differently than Medicare Advantage Plans in a number of key ways.

How to Enroll in a Medicare Cost Plan

During your Initial Enrollment Period when first eligible for Medicare, you can enroll in either Original Medicare or a Medicare Advantage Plan nationally.

But to join a Medicare Cost plan, you must live in a region where they are available. Cost plans currently have availability in certain areas of these 18 states:

·        Colorado

·        Illinois

·        Iowa

·        Maryland

·        Michigan

·        Minnesota

·        North Dakota

·        Nebraska

·        New York

·        Pennsylvania

·        South Dakota

·        Wisconsin

·        Wyoming

·        Massachusetts

·        Maine

·        Rhode Island

·        Vermont

·        Washington

You can enroll in a Cost plan even if you currently have a Medicare Advantage Plan. Simply join the Cost plan you are interested in, and your Medicare Advantage Plan will be automatically disenrolled.

Cost plans have an annual enrollment period from January 1 to March 31 each year when anyone can join, switch, or drop Cost plan coverage.

How Medicare Cost Plans Work

There are a few key things to understand about how Medicare Cost plans operate:

·        The costs are regulated by Medicare and based on the actual costs in your region.

·        You are still enrolled in Original Medicare Parts A and B.

·        You can use any healthcare provider nationwide that accepts Medicare.

·        Prescription drug coverage is available through the Cost plan or you can enroll in a Medicare Part D Plan.

·        You get money back for your Medicare Part B premiums.

·        Plans have an annual out-of-pocket limit on your costs for Part A and B services.

Medicare Cost plans can be a good option if you want the flexibility of Original Medicare without network restrictions. The premiums also may be lower than Original Medicare since the plans are designed to be budget-friendly in your area.

Leaving a Medicare Cost Plan

One thing to know about Medicare Cost plans is that they are not guaranteed to be available permanently in your region. Insurance companies can discontinue plans from year to year.

If your Cost plan is discontinued, you will have a Special Enrollment Period to switch to a new Medicare Plan. You cannot be left without coverage.

You can also voluntarily leave a Cost plan and return to Original Medicare or a Medicare Advantage Plan at any time during the year for any reason. You would simply enroll in the new Medicare Plan you want, and your Cost plan would be disenrolled automatically.

Are Medicare Cost Plans Right for You?

Medicare Cost plans can be a smart choice if:

·        You want the freedom to see any healthcare provider that accepts Medicare.

·        You don't mind paying the Medicare Part B premium to keep Original Medicare.

·        You value cost predictability and protection from unexpected medical bills.

·        You qualify for additional financial assistance by keeping Original Medicare.

·        You need Part D prescription drug coverage included in your plan.

Just make sure Cost plans are available in your state and county first. And work with an independent insurance agent to determine if a Cost plan or Medicare Advantage Plan is the better fit for your situation.

While Cost plans share some similarities with Medicare Advantage, they remain a distinct type of Medicare coverage with their own unique rules and benefits. Checking if Cost plans are available in your area can provide more options for Medicare health benefits.

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 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.


Are Medicare Cost Plans Considered Medicare Advantage Plans?

 No, Medicare Cost Plans are not considered Medicare Advantage Plans.

What is a Medicare Advantage Plan?

A Medicare Advantage Plan is a healthcare plan offered by private companies approved by Medicare. It provides you with all the benefits of Original Medicare (Part A and Part B) and may include additional benefits such as prescription drug coverage.

Can I enroll in a Medicare Cost Plan?

You can enroll in a Medicare Cost Plan if one is available in your area. However, not all areas offer Medicare Cost Plans.

What is Original Medicare?

 Original Medicare is the traditional Medicare program provided by the government. It consists of Medicare Part A (hospital insurance) and Medicare Part B (medical insurance). It's free to enroll in Medicare when you turn 65.

What is a Medicare Supplement Plan?

 A Medicare Supplement Plan, also known as Medigap, is a private health insurance plan that helps cover the expenses not covered by Original Medicare, such as deductibles, copayments, and coinsurance.

Can I have both a Medicare Cost Plan and a Medicare Supplement Plan?

No, you cannot have both a Medicare Cost Plan and a Medicare Supplement Plan. You can only have one or the other.

Can I switch from a Medicare Cost Plan to Original Medicare or a Medicare Advantage Plan?

 Yes, you can switch from a Medicare Cost Plan to Original Medicare or a Medicare Advantage Plan during certain enrollment periods.

Are prescription drug coverage included in Medicare Cost Plans?

Medicare Cost Plans may or may not include prescription drug coverage. Drug plan depends on the specific plan or plan available in your area.

What is the difference between Medicare Cost Plans and Medicare Advantage Plans?

Unlike Medicare Advantage Plans, Medicare Cost Plans are only available in certain areas and can be accessed by people with Medicare who are also eligible for a Medicare Cost Plan. Medicare Advantage Plans are available to all people with Medicare, regardless of whether they are eligible for a Cost Plan or not.

Where can I learn more about Medicare?

You can learn more about Medicare by visiting the Centers for Medicare and Medicaid Services (CMS) website or by contacting their helpline.

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