Advertiser Disclosure

What is a Medicare Cost Plan, and Should You Have One?

6 mins read
Our goal is to give you the tools and confidence you need to improve your health and finances. Although we may receive compensation from our partner insurance companies, whom we will always identify, all opinions are our own. CoverRight Inc. and CoverRight Insurance Services Inc. (NPN: 19724057) are collectively referred to here as "CoverRight".

Deciphering the complex world of healthcare plans can be overwhelming, especially when it comes to Medicare and its myriad options. One lesser-known but valuable choice is the Medicare Cost Plan. Much like a Medicare Advantage Plan, it offers enrollees access to a network of healthcare providers and may provide additional benefits beyond what’s offered through Original Medicare. Unlike Medicare Advantage plans, however, Cost Plans allow you to seek coverage outside the Medicare network for covered services.

As healthcare needs and personal situations change, a well-rounded understanding of this plan could be vital to making decisions that suit your medical and financial needs. Given that only a limited number of states offer Medicare Cost Plans, and with fluctuating enrollment numbers due to legislative changes, it’s worthwhile to be well-informed about what these plans can offer.

Understanding Medicare Cost Plans

Medicare Cost Plans are similar to Medicare Advantage plans in that private insurance companies provide both and offer a network of healthcare providers for your medical needs. The key difference lies in the flexibility Medicare Cost Plans offer, as they allow enrollees to seek care outside the established network without losing coverage. If you choose to go out-of-network, Original Medicare covers the services Medicare approves.

Comparing Medicare Cost Plans with other types of Medicare coverage makes it easy to identify their unique attributes. Original Medicare is the federal program that provides healthcare coverage for senior citizens aged 65 and above, along with individuals with certain disabilities and diseases. Medicare Advantage Plans are private plans that replace Original Medicare, usually offering additional benefits like vision and dental care. 

Another option is Medigap, a supplemental insurance plan that works alongside Original Medicare to cover out-of-pocket expenses. Unlike Medicare Advantage, Medicare Cost Plans work in tandem with Original Medicare rather than replacing or supplementing it. That means you can move freely between Original Medicare and your Medicare Cost Plan to access an additional layer of flexibility.

The flexibility and coverage options provided by Medicare Cost Plans are significant. You can switch back to Original Medicare at any time, and if the plan offers Part D prescription coverage, you can either opt for it or choose a different stand-alone Part D plan. This makes Medicare Cost Plans a versatile choice for beneficiaries who want to maintain their options or are not sure of their long-term healthcare needs.

Benefits and Features of Medicare Cost Plans

Medicare Cost plans cover a range of medical services similar to those provided under Original Medicare. This includes essential healthcare needs like hospital care and medical services such as doctor visits and preventive care. Some Medicare Cost Plans even offer additional perks, like dental, vision, and wellness programs, which aren’t usually covered by Original Medicare.

The standout feature of Medicare Cost Plans is the option for out-of-network coverage. Unlike Medicare Advantage Plans that restrict you to a network of approved healthcare providers, Medicare Cost Plans allow you to seek care outside the network while still maintaining Medicare coverage. This offers you the best of both worlds—lower costs within the network and freedom to choose providers outside of it.

When it comes to cost-effectiveness, Medicare Cost Plans can offer significant savings, especially if you primarily use the plan’s network of healthcare providers. Since these plans often come with lower copayments and deductibles within the network, they can be a more budget-friendly option for many beneficiaries. Because Medicare Cost Plans allow you to switch back to Original Medicare or a different plan at will, you aren’t locked into a decision that might not serve you well in the future.

Consider these scenarios: 

  • Jane, a 70-year-old with chronic conditions requiring regular specialist visits, can see her in-network specialist at a lower cost and still go out-of-network for a second opinion without losing her Medicare coverage.
  • Tom, 65, is a snowbird who spends half the year in a state that doesn’t offer Medicare Cost Plans. He opts for a Cost Plan in his home state that allows him the flexibility to revert to Original Medicare during the months he’s away without any penalty. 

Enrollment Process and Eligibility Criteria

If you’re considering enrolling in a Medicare Cost Plan, there are specific eligibility requirements you must meet. Generally, anyone who is eligible for Medicare Part A and Part B can enroll in a Cost Plan as long as the plan is available in your geographical area. Keep in mind that only certain parts of the country offer these plans, so the first step in the enrollment process is to verify whether your region has a Medicare Cost Plan available.

Once you’ve confirmed availability, you can start the application process. You’ll need to fill out the necessary forms, which typically include proof of your Medicare Part A and Part B enrollment. Some plans may ask for additional information such as medical history or other documentation to complete the application. After submitting your application, you’ll usually hear back from the insurer with your coverage details within a few weeks.

Enrollment periods are an essential part of understanding how and when you can join or leave a Medicare Cost Plan. Unlike some other Medicare plans, Cost Plans allow more flexibility in this regard. You can join a Cost Plan whenever it is accepting new members, and you can leave at any time to return to Original Medicare. This flexibility makes it easier for beneficiaries to adapt their healthcare coverage to fit their needs over time.

It’s also worth noting that if you only have Medicare Part B, you can still join a Medicare Cost Plan. This offers a unique advantage for those who might not be eligible for other Medicare plan options that require enrollment in both Part A and Part B.

Switching to or from a Medicare Cost Plan is also fairly straightforward. If you’re in a Cost Plan and want to switch to a Medicare Advantage Plan or a different Medicare Cost Plan, you can generally do so during the Annual Election Period from October 15th to December 7th. If you decide that a Cost Plan isn’t right for you, you can leave the plan at any time and return to Original Medicare without any penalties. It’s a user-friendly and accommodating process that allows you the freedom to choose the best healthcare coverage for your needs.

Limitations and Considerations for Medicare Cost Plans

One of the significant limitations of Medicare Cost Plans is their availability. Not all states offer these plans, and even within states that do, specific counties may limit their availability. If you move to an area where your Medicare Cost Plan is not available, you’ll need to switch to a different plan or return to Original Medicare. It’s essential to verify the service area before enrolling, especially if you’re planning a move or travel frequently.

Another factor to keep in mind is that while Medicare Cost Plans cover many of the same services as Original Medicare, they may not cover all your healthcare needs. For example, not all Cost Plans include prescription drug coverage. If drug coverage is important to you, you’ll need to check if your plan offers this feature or consider enrolling in a standalone Part D plan.

Cost is another important consideration. Although Medicare Cost Plans can be more budget-friendly due to lower copayments and deductibles within the network, you may still encounter out-of-pocket costs. These can range from annual deductibles, premiums, and cost-sharing for specific services. It’s essential to review the Summary of Benefits of any plan you’re considering to understand all the associated costs fully.

Specialized healthcare needs also require careful consideration. While Cost Plans often include a network of general practitioners and specialists, they may not cover highly specialized treatments or services that are only available out-of-network. If you need specific types of medical care or treatments, it’s crucial to consult the plan’s network and coverage limitations.

At CoverRight, we help you find the Medicare plan that’s tailored just for you. Get started today for a worry-free tomorrow.

Frequently Asked Questions

How do out-of-network benefits work with Medicare Cost Plans?

One of the unique features of Medicare Cost Plans is the flexibility they offer for out-of-network care. If you choose to seek medical services outside of your plan’s network, Original Medicare will cover these services. You would be responsible for the Original Medicare costs such as copayments and deductibles, just as you would be if you were solely on Original Medicare. This allows you the freedom to see any healthcare provider who accepts Medicare, providing you with a wider range of options for your medical care.

Can I switch from a Medicare Cost Plan to another type of Medicare plan if my healthcare needs change?

Yes, switching from a Medicare Cost Plan to another Medicare option is generally straightforward. You can typically make this switch during the Annual Election Period, which runs from October 15 to December 7 each year. During this time, you can switch to a Medicare Advantage Plan, another Medicare Cost Plan, or go back to Original Medicare. If you decide that the Cost Plan isn’t meeting your needs, you can leave the plan and revert to Original Medicare at any time without facing any penalties. This flexibility makes it easier for you to adapt your healthcare coverage to better suit your evolving needs.

Richard Chan

Richard is the Founder of CoverRight and based in New York. He is passionate about empowering consumers to take control of their health and finances. Prior to starting CoverRight, Richard had extensive experience working in financial services with over 8 years' experience in consumer lending and investment banking.

Latest from Blog