Is a Medicare Cost Plan Considered a Medicare Advantage Plan?

Medicare Cost Plans are a unique type of Medicare Plan that share some similarities with Medicare Advantage Plans but also have distinct differences. Cost plans can be an attractive option for Medicare beneficiaries looking for additional coverage and flexibility. But a common question is – are Medicare Cost Plans actually considered a type of Medicare Advantage Plan?

The answer is no, Medicare Cost Plans are not Medicare Advantage Plans. However, they do have some comparable benefits and are often bundled with Part D prescription drug coverage. In this article, we’ll explain what Medicare Cost Plans are, how they work, key differences from Medicare Advantage, and who may benefit from enrolling in a Cost Plan.

What is a Medicare Cost Plan?

Medicare Cost Plans are private health plans offered by insurers that contract with Medicare. They provide all of your Original Medicare Part A and Part B benefits along with extra coverage and perks. Some key facts:

Offered by private insurance companies approved by Medicare
Provide all benefits covered by Original Medicare
Often include Part D prescription drug coverage
Allow use of out-of-network providers without referrals
Available in limited regional areas
Run alongside Original Medicare

Cost Plans serve as an addition to your Original Medicare benefits. They are not a replacement for Original Medicare like Medicare Advantage Plans.

Cost Plans have been compared to Medicare Supplement (Medigap) plans as they fill coverage gaps in Original Medicare. But unlike Medigap policies, they also bundle in prescription drug coverage.

How Do Medicare Cost Plans Work?

Here is an overview of how Medicare Cost Plans operate:

You must be enrolled in Medicare Part A and Part B to join a Cost Plan
You keep your Original Medicare benefits and coverage
The Cost Plan provides additional benefits like prescription drugs
You can see providers outside the plan’s network without referrals
Out-of-network care is covered by Original Medicare
You pay copays for in-network services and 20% coinsurance out-of-network

Medicare Cost Plans must include a network of doctors, hospitals, and pharmacies. When getting care from in-network providers, you will pay set copayment amounts for services.

If you receive care outside the plan’s network, Original Medicare kicks in to cover those services. You would be responsible for Original Medicare’s deductibles and 20% coinsurance.

At any time, members can disenroll from the Cost Plan and revert back to Original Medicare health plans with no penalties. This flexibility is a key perk of Cost Plans.

Comparison of Cost Plans vs Medicare Advantage

While Cost Plans share some common traits with Medicare Advantage, there are clear differences:

Coverage

Cost Plans – Keep Original Medicare and add supplemental benefits
Medicare Advantage – Replace Original Medicare with plan benefits

Networks

Cost Plans – Can see out-of-network providers with no referral
Medicare Advantage – Referrals typically required for out-of-network care

Premiums

Cost Plans – No extra premium beyond Part B premium
Medicare Advantage – Often have $0 or low monthly premium

Drug Coverage

Cost Plans – Part D coverage bundled in
Medicare Advantage – Most plans include Part D

Enrollment Areas

Cost Plans – Only specific regional service areas
Medicare Advantage – plans Available in your area and nationwide

Plan Choices

Cost Plans – Far fewer plan options
Medicare health Advantage – Many insurers and plans

Out-of-Pocket Costs

Cost Plans – Copays in-network, 20% coinsurance out-of-network
Medicare Advantage – Varies by plan type – copays or coinsurance

So in summary, the key traits that distinguish Cost Plans are:

They supplement Original Medicare
Provide flexibility for out-of-network care
Have limited regional availability
Offer fewer overall plan options

Who is Eligible to Enroll in a Medicare Cost Plan?

To be eligible for a Medicare Cost Plan, you must:

Be entitled to Medicare Part A
Enrolled in Medicare Part B
Live in the Cost Plan’s regional service area

You can join a Cost Plan when first eligible for Medicare if you meet the above criteria. Cost Plans accept Medicare beneficiaries at any age.

Typically you can only enroll in a Cost Plan during designated enrollment periods like:

Initial Enrollment Period when turning 65
Annual Enrollment Period from October 15 to December 7
Special Enrollment Period if moving or losing other coverage

There are specific enrollment rules if you want to join, drop or switch between Cost Plans. Working with an insurance broker makes navigating these rules easier.

Where are Medicare Cost Plans Available?

The key limitation of Medicare Cost Plans is they are only accessible in certain designated regional or county-specific service areas. Availability is very state and county dependent.

In 2023, Cost Plans are offered in parts of these states:

Colorado
Illinois
Iowa
Maryland
Michigan
Minnesota
New York
North Dakota
Pennsylvania
South Dakota
Wisconsin

Cost Plans are not available nationwide like Medicare Advantage Plans. Even within the above states, they may only be accessible in certain counties or metro areas. You must live in the Cost Plan’s defined service area to enroll.

Very few insurance companies offer Cost Plans due to the regional restrictions. Some of the largest carriers include Blue Cross Blue Shield, Aetna, and Humana among a handful of smaller regional insurers.

Benefits of Enrolling in a Medicare Cost Plan

Medicare Cost Plans offer advantages including:

Extra coverage – The ability to add benefits not covered by Original Medicare can be valuable – especially prescription drug coverage.

Premium savings – Your only premium cost is your Part B premium. There are no additional premiums to join a Cost Plan.

Network access – You get access to the plan’s network of providers and pharmacies while retaining out-of-network access.

Original Medicare fallback – The flexibility to seamlessly revert to Original Medicare is a unique perk.

Coordinated care – You can receive coordinated, managed care from in-network providers.

No referrals needed – You don’t need referrals to see specialists out-of-network unlike Medicare Advantage HMOs.

Nationwide care – When traveling, you have coverage for urgent or emergency care through Original Medicare.

Dental/vision/hearing benefits – Cost Plans frequently include extra benefits for dental, vision and hearing care.

For retirees that want additional coverage but value flexibility, Cost Plans can provide the best of both worlds.

Key Considerations Before Enrolling

If you are considering a Cost Plan, keep these factors in mind:

Verify the plan is offered in your county before enrolling
Understand the provider network you’ll be accessing
Review prescription drug formulary details if bundled
Compare benefits being offered by available Cost Plans
Understand enrollment period rules to join or leave the plan
Weigh the pros and cons versus a Medicare Supplement or Medicare Advantage Plan

Getting advice from an independent insurance agent who specializes in Medicare can help you determine if a Cost Plan is the optimal choice.

Is a Medicare Cost Plan Right for You?

Medicare Cost Plans occupy a unique middle ground between Original Medicare, Medicare Advantage, and Medigap Plans. They offer supplemental coverage that bundles in prescription drugs while maintaining out-of-network access.

But drawbacks include limited regional availability and fewer overall plan options. Weighing the pros and cons of Cost Plan enrollment requires looking at your specific healthcare needs.

In the right situation for the right beneficiary, Cost Plans can provide an appealing coverage solution. Speaking with a knowledgeable agent or broker can help you decide if pursuing this option could benefit you.

While not considered a Medicare Advantage Plan, Medicare Cost Plans still give you flexibility and options beyond Original Medicare that may enhance your coverage experience.

FAQS

Is a Medicare cost plan considered a Medicare Advantage Plan?

No, a Medicare cost plan is not considered a Medicare Advantage Plan. They are two different types of plans available to individuals who are eligible for Medicare benefits.

Are Medicare cost plans available in my area?

Medicare cost plans are not available in all areas. You will need to check with your local Medicare office to see if they are available in your area.

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. You also have the option to switch to a Medicare Advantage Plan, if available in your area.

Do Medicare cost plans offer prescription drug coverage?

Medicare cost plans do not typically offer prescription drug coverage. If you need prescription drug coverage, you will need to enroll in a separate Medicare Part D Plan.

How are Medicare cost plans similar to Medicare Advantage Plans?

Medicare cost plans are similar to Medicare Advantage Plans in that they are offered by private insurance companies. However, unlike Medicare Advantage Plans, they do not always include prescription drug coverage.

Who is eligible for a Medicare cost plan?

Medicare cost plans are available to individuals who qualify for Medicare Part A or Part B and live in an area where these plans are offered.

What are the benefits of having a Medicare cost plan?

The benefits of having a Medicare cost plan include having the freedom to use any Medicare-approved provider, receiving additional coverage for services not covered by Original Medicare, and having the flexibility to switch between Original Medicare and a Medicare cost plan.

What do I need to know about Medicare cost plans?

Some important things to know about Medicare cost plans are that they are only available in certain areas, they may not offer prescription drug coverage, and they are not considered Medicare Advantage Plans.

Can I use a Medicare cost plan with my current Medicare coverage?

Yes, you can use a Medicare cost plan in addition to your current Medicare coverage. It can provide additional benefits and coverage that may not be included in your Original Medicare Plan.

Who offers Medicare cost plans?

Medicare cost plans are offered by private insurance companies that are approved by Medicare. These companies must follow Medicare guidelines and regulations in offering these plans.