Summary: Medicare Cost plans work alongside Original Medicare to provide flexible healthcare coverage. These plans are slowly being phased out and are only available in limited areas of the country. In this article, we’ll explain how Cost plans work and how they differ from Medicare Advantage plans. Estimated Read Time: 7 min
What is a Medicare Cost Plan?
A Medicare Cost plan is a private insurance plan that works alongside Original Medicare to provide additional healthcare coverage to those enrolled in Medicare. These plans are offered by private insurance companies and can include additional coverage and benefits such as prescription coverage and more.
When you enroll in a Medicare Cost plan, you maintain your Original Medicare benefits, but may be subject to a network that determines if your Medicare Cost plan will provide benefits. With a Medicare Cost plan, you can save money by using a provider within your plan’s network. However, if you choose to get a Medicare-covered service out-of-network, you will pay your Original Medicare out-of-pocket costs.
Medicare Cost plans are an attractive option for individuals who are “snowbirds” or who like to travel. When you travel outside of your network, you can still use your Original Medicare coverage for hospital and medical services. This makes Cost plans a flexible option for frequent travelers. Individuals who prefer to spend their winters somewhere warmer can drop their Cost plan and retain Original Medicare while they stay out-of-state. Since Cost plans generally have flexible enrollment periods, snowbirds can re-enroll when they return home.
There are two plan coverage types for Medicare Cost plans: medical-only coverage and medical coverage plus prescription drug coverage. If you choose a plan that includes prescription drug coverage, your plan will help with medication costs. Not all Medicare Cost plans offer drug coverage, and if yours does not, you can enroll in a separate Medicare Part D prescription drug plan in addition to your Cost Plan.
Cost plans for Medicare are only available in certain areas of the county. As more Medicare Advantage plans become available, Medicare Cost plans are slowly being phased out.
What’s the Difference Between Cost Plans and Medicare Advantage Plans?
Medicare Cost plans and Medicare Advantage plans share some similarities but are different in significant ways.
Like Medicare Advantage plans, Medicare Cost plans are offered by private insurance companies. Each Cost plan will have a network of providers that you can use at a lower cost and plans may offer additional benefits similar to those offered by Medicare Advantage plans.
Medicare Cost plans and Medicare Advantage plans differ when it comes to enrollment. When you enroll in a Cost plan, you do not have to be enrolled in Medicare Part A and Part B. You only need to be enrolled in Medicare Part B, thus, you can get a Cost plan if you choose to delay Part A coverage. To enroll in a Medicare Advantage plan, you will need to have both Medicare Part A and Part B.
Unlike Medicare Advantage, you maintain your Original Medicare benefits as your primary coverage while enrolled in a Cost plan. This allows you to go out-of-network for Medicare-covered services and only be responsible for your Original Medicare out-of-pocket costs. In most cases, you cannot enroll in a separate Medicare drug plan when you have a Medicare Advantage plan. However, if you have a Cost plan that only provides medical coverage, you can enroll in a separate Medicare Part D plan for drug coverage.
What’s the Difference Between Cost Plans and Medicare Supplement Plans?
While there are some similarities between Medicare Cost plans and Medicare Supplement plans, it is important to understand their differences.
With both plans, you maintain your Original Medicare benefits and coverage. Both plans are also offered by private insurance companies, however, Medicare Supplement plans are standardized by the federal government. Medicare Cost plans are not standardized, so benefits vary between carriers.
You also only need to have Medicare Part B to enroll in a Medicare Cost plan. For a Medicare Supplement plan, you need to have both Medicare Part A and Part B before enrolling. With a Medicare Supplement plan, you have a six-month enrollment period once your Part B benefits begin to enroll in a plan without answering health questions. Generally, Cost plans are open to enrollment all year and do not require medical underwriting (with the exception of individuals with ESRD).
An important difference to remember is that Medicare Supplement plans help pay for costs left over from your Original Medicare coverage including deductibles, copayments, and coinsurance. Thus, they do not have any network restrictions. Medicare Cost plans have networks, so going to a provider within your plan’s network will reduce your out-of-pocket costs. When you go outside of your network and use your Original Medicare benefits, you will be responsible for all out-of-pocket costs.
Medicare Cost Plan Enrollment Period
Medicare Cost plan enrollment periods work differently than most other Medicare plans. In some cases, Cost Plans are continuously open for enrollment. If a Cost plan is continuously open for enrollment, you can apply at any time during the year. Applicants are enrolled on a first-come, first-serve basis. If a provider chooses to close its open enrollment, they must notify the public 30 days in advance.
Per CMS guidelines, Medicare cost plans that are not continuously open for enrollment must hold an annual open enrollment period for at least 30 or more consecutive days. Providers must publicize upcoming enrollment periods throughout their service areas.
Before enrolling in a Cost plan, you must meet the following requirements:
Medicare Cost Plan Eligibility Requirements:
- U.S. citizen or lawful resident for 5 or more years
- Enrolled in Original Medicare, or only have Medicare Part B (Medicare Part A is not required)
- Live in a plan’s availability area
You may be denied enrollment if you are medically diagnosed with End Stage Renal Disease (ESRD) prior to applying for a Medicare Cost plan, and plan availability varies by county, so you’ll want to make sure a plan is available in your area.
If a Medicare Cost plan offers drug coverage, you can only enroll in the drug coverage portion during applicable Part D enrollment periods. For most, this will either be during your Initial Enrollment Period, or during the Annual Enrollment Period (October 15th to December 7th).
You may drop a Medicare Cost plan at any time and return to only Original Medicare benefits. Once you drop your Medicare Cost plan, you can choose to enroll in other coverage such as a Medigap Plan or Medicare Advantage Plan. If you want to enroll in a Medicare Advantage plan after dropping your cost plan, you will need to wait for a valid election period (unless you obtained a special enrollment period).
Keep enrollment periods in mind; although you can drop your Cost Plan at any time, you will need to wait until the Annual Enrollment Period (October 15th to December 7th) to enroll in a Medicare Advantage plan or Medicare Part D plan. You can apply for a Medicare Supplement plan any time after returning to Original Medicare (medical underwriting may apply).
Which States Have Medicare Cost Plans
Federal law has begun phasing out Medicare Cost plans as of December 2018. Because of this, Medicare Cost plans are only available in certain states and counties. Like other forms of coverage, plan benefits and availability will vary between counties and carriers.
However, if a provider offers both a Medicare Cost plan and a Medicare Advantage plan in the same service area, they are not allowed to enroll new individuals into their Cost plan. Thus, making is more and more difficult for new enrollees to enroll.
Below is a list of states that have at least one county that has Cost Plans available as of 2023.
- Colorado
- Minnesota
- Iowa
- Illinois
- Maryland
- North Dakota
- South Dakota
- Virginia
- Wisconsin
Before enrolling in a Medicare Cost plan, always check with the insurance provider to make sure a plan is available in your county. Also, it is important to ensure the benefits provided best meet your needs. As these plans are being phased out, you want to be sure it is the right fit before enrolling in coverage.
How to Apply for a Medicare Cost Plan
Navigating Medicare Cost plans can be challenging due to their scarce availability. For those who live in a Cost plan service area, these plans can be a flexible option for additional Medicare coverage. You can find out if Medicare Cost plans are available in your area by visiting Medicare’s plan finder. If you have further questions about Medicare Cost plans and how they work, you can speak with a licensed agent by giving us a call at the number above.
Sources
Medicare Cost Plans, Centers for Medicare & Medicaid Services. Accessed July 2023
https://www.cms.gov/medicare/health-plans/medicarecostplans
Other Medicare Health Plans, Medicare.gov. Accessed July 2023
Health Plans – General Information, Centers for Medicare & Medicaid Services. Accessed July 2023
https://www.cms.gov/medicare/health-plans/healthplansgeninfo
Cost Plans Enrollment and Disenrollment Guidance, Centers for Medicare & Medicaid Services. Accessed July 2023
