Medicare cost plans are private plans offering more benefits along with Original Medicare coverage. They allow more flexibility in choosing a Part D plan and using out-of-network providers but are limited to certain areas and require Part B coverage.
You may know that Medicare is made up of several different parts. Some of these parts, such as Medicare Advantage and Part D plans, are available through private insurance companies. Another type is a Medicare cost plan.
A Medicare cost plan blends parts of Original Medicare and Medicare Advantage. These plans complement your Original Medicare coverage while providing additional benefits and flexibility.
Medicare cost plans are very similar to Medicare Advantage plans. However, there are some key differences between the two.
Medicare cost plans are offered through private insurance companies that Medicare approves. These plans work with Original Medicare (parts A and B) and includeadditional benefits.
Medicare cost plans appeal to many people because they combine Original Medicare and Medicare Advantage (Part C) benefits.
Medicare cost plans are only available in certain areas of the country. Additionally, changes in federal laws have led to their discontinuation in many areas.
When you enroll in a Medicare cost plan, you gain access to the plan’s network of healthcare providers. You can either choose a provider within this network or an out-of-network provider. When you go out of network, it’s covered by Original Medicare.
There’s also additional flexibility in switching plans. If you’re unhappy with your Medicare cost plan, you can switch back to Original Medicare anytime without waiting for the open enrollment period.
Private companies offer Medicare Advantage plans, which include at least the same level of coverage as Original Medicare. These plans effectively replace Original Medicare while providing additional benefits like dental, vision, and hearing care.
Like Medicare Advantage plans, Medicare cost plans are offered by private companies and may also include extra coverage. However, unlike Medicare Advantage plans, a Medicare cost plan doesn’t replace your Original Medicare coverage. Instead, it offers other benefits in addition to those of Original Medicare.
Medicare cost plans also give increased flexibility to use out-of-network healthcare professionals. Many Medicare Advantage plans require you to see in-network doctors or allow the use of out-of-network doctors at a higher cost.
The table below summarizes the differences between the two types of plans:
| Medicare Advantage | Medicare cost plan | |
|---|---|---|
| How it works | used instead of Original Medicare | works together with Original Medicare |
| Monthly premium | sometimes, although | yes, although it’s often low |
| Out-of-network providers allowed | depends on the plan type, but usually comes at a higher cost | yes, covered under Original Medicare if you have Medicare Part A and Part B |
To enroll in a Medicare cost plan, you must meet the following eligibility requirements:
- be enrolled in Medicare Part B
- live in an area where Medicare cost plans are offered
- find a Medicare cost plan that’s accepting new members
- complete an application during the plan’s enrollment period
- agree to all cost plan rules that are disclosed during the enrollment process
It’s possible that you could be denied enrollment in a Medicare cost plan. This can happen if:
- you don’t meet the requirements listed above
- the Centers for Medicare & Medicaid Services (CMS) has issued a waiver or limitation for a plan’s open enrollment period, restricting who can enroll
Are Medicare cost plans going away?
Beginning in 2019, federal law changes led to the discontinuation of Medicare cost plans in some counties. This change restricts the offering of Medicare cost plans in areas with at least two or more competing Medicare Advantage plans.
If a Medicare cost plan isn’t available in your area, you still have several options for coverage, including:
- using Original Medicare
- enrolling in a Medicare Advantage plan
- buying a Medicare supplemental insurance (Medigap) plan
That said, to improve the quality and accessibility of available plans, in 2024, the Centers for Medicare & Medicaid Services (CMS) made revisions to several programs, including cost plans.
These changes include enhancements such as increased availability of behavioral health providers, mid-year notification of supplemental benefits, and stricter criteria for supplemental benefits for individuals with chronic illnesses, among other updates.
Below, we’ll explain the steps to enroll in a Medicare cost plan.
Medicare Part B eligibility and enrollment
To enroll in a Medicare cost plan, you must first be enrolled in Medicare Part B. To be eligible for Part B, you must meet one of the following criteria:
- be age 65 or older
- have a disability and receive Social Security Disability Insurance
- have ESRD or amyotrophic lateral sclerosis (ALS)
People who receive retirement or disability benefits from the Social Security Administration (SSA) or the Railroad Retirement Board are automatically enrolled in Original Medicare when they become eligible. Others must apply through the SSA.
Medicare cost plan enrollment
Once enrolled in Part B, you can enroll in a Medicare cost plan. Remember that you can only enroll in a Medicare cost plan in your area that’s accepting new members.
To find a Medicare cost plan near you, use Medicare’s plan comparison tool. You can also contact your local State Health Insurance Assistance Program (SHIP) for help.
Companies that offer Medicare cost plans must provide Medicare beneficiaries with an open enrollment period of at least 30 days. You’ll submit an application to the plan’s provider to enroll during this time.
Enrollment details may differ depending on the company offering the cost plan. Be sure to check with the plan’s provider for specific details on enrollment periods and application materials.
Medicare Part D enrollment
Some Medicare cost plans include prescription drug coverage under Medicare Part D. However, others offer medical benefits only.
If your plan doesn’t include prescription drug coverage, you can enroll in a separate Part D plan during specific periods.
Do Medicare cost plans cover prescription drugs?
Some Medicare cost plans include Part D prescription drug coverage. If your plan doesn’t, you can enroll in a separate Part D plan that best suits your needs.
Are Medicare cost plans the same as Medigap?
Medigap differs from Medicare cost plans. Medigap plans are intended to help you pay off any out-of-pocket costs associated with Medicare coverage.
When can I enroll in a Medicare cost plan?
You can enroll at any time as long as the plan you’re interested in is accepting new members. If you decide to leave the plan later, you can switch back to Original Medicare whenever you choose.
Medicare cost plans work alongside your Original Medicare coverage to provide further benefits and flexibility. They can be purchased through private insurance companies.
These plans offer many of the extra benefits that come with Medicare Advantage plans, such as dental, vision, and hearing care. However, unlike Medicare Advantage plans, people with Medicare cost plans have more flexibility to use out-of-network doctors and to choose a separate Part D plan.
To enroll in a Medicare cost plan, you need to be enrolled in Part B and have a plan in your area that’s accepting new members.