The Problem with $0 Medicare Advantage Plans

A $0 Medicare Advantage plan simply means there is no additional monthly premium for the plan itself. To be enrolled in a Medicare Advantage plan, you must be enrolled in Medicare A and B. The Medicare Advantage plans do not replace your Medicare Part B premium, which everyone continues to pay.

The Medicare Advantage plans also do not eliminate costs when you receive care. Office visits, testing, hospital stays, procedures, etc. all come with their own costs-copays or coinsurance.

What this $0 really means is instead of paying more each month for broader coverage, the cost is shifted to the point when care is used. Medicare Advantage Plans are offered through private insurers, and while they may decrease upfront costs, you may be exposed to a higher maximum out of pocket. 

For some people, that risk feels manageable, especially if they are healthy and don’t expect to use many services. The risk here is the unknown. What many don’t take into consideration is that insurance, by definition, is to protect you from unexpected, high-cost financial losses.

Like home and auto insurance, you pay for medical coverage hoping never to use it, but in the event of a medical event, it acts as a safety net for your financial security.  So when looking at Medicare Advantage plans it is important to do the math.

When I help people plan for Medicare spending, one of the first things I look at is the maximum out-of-pocket amount.

That number represents the most someone could spend in a year on covered medical services before the plan pays in full. Depending on the plan, that number can fall in the range of several thousand dollars.

It is not uncommon to see:

• HMO plans with limits in the mid-thousands ($3,000-$8,000 annually) 
• PPO plans with higher limits, especially when care is received outside the network (could be up to $12,000 annually) 

That range matters. It gives context to what a difficult health year could look like financially, and it often tells a more complete story than the monthly premium alone.

The most important number to look at with all plans is the out-of-pocket maximum you would be responsible for paying. A $0 monthly premium is only $0 if you have no medical needs. Once you need care/treatment, math enters the equation.

For example, if you have a plan with a $10,000 deductible, should you have a medical incident, surgery, need ongoing care, you will be responsible for meeting that $10,000 deductible before the plan covers you in full, meaning you have no more out of pocket costs. 

Deductibles are based on the calendar year, regardless of when you enroll. If you enroll in June, get diagnosed with cancer in August, undergo Chemo in September, you may hit that $10K deductible by November and then come January, it starts at $0 again. In the matter of a few months, you may need to pay $20K.

One of the most important differences between Medicare Advantage and traditional Medicare with a supplement is your access to care. Understanding network restrictions is critical to understanding your plan and your care options. 

With Medicare Advantage, your care is built around a network. When a doctor or facility ‘joins’ a network, this is based on a contract with the insurance provider. Contracts are renegotiated yearly, however, there are also clauses in them that allow a facility to terminate at any time. This is important to know as you research your plan options. 

That means the plan has a defined group of doctors, hospitals, and specialists that you are expected to use. If you’re in an HMO, you typically need to stay within that network entirely, and you may also need referrals to see specialists.

PPO plans offer a little more flexibility, but even then, going outside the network often comes with higher costs or limited coverage.

Original Medicare works very differently, and these networks do not have the same limitations. 

With Original Medicare you can see any doctor or specialist in the country who accepts Original Medicare. Approximately 98% of doctors and practitioners accept Original Medicare. About 46% of doctors accept certain Medicare Advantage plans, which have more limited networks.

With Original Medicare there are no referrals required, and you don’t have to think through whether a hospital or specialist is “in-network” before making an appointment.

When a Medicare supplement (also called Medigap) is added to Original Medicare, it doesn’t change your access to care. It simply helps cover the out-of-pocket costs that Medicare leaves behind. The freedom to choose providers remains the same.

For many people, this difference does not feel significant until they need care. It tends to show up in moments when flexibility matters like seeking out a specialist, getting a second opinion, or receiving treatment while traveling or living in more than one place during the year.

One benefit to Traditional Medicare is its stability. Medicare Advantage plans? Not so much. 

Across the country, more Medicare Advantage plans are being discontinued or restructured. For 2026, an estimated 2.6 to 2.9 million enrollees are losing their current plans due to terminations or carriers exiting certain markets.

That’s a noticeable increase from prior years. Companies terminate Medicare Advantage (MA) plans primarily due to financial unprofitability and high operational costs.

When a plan terminates, it sets off a chain reaction. You are no longer able to stay where you are, even if everything was working well. You must choose a new plan, which means reviewing a new network of doctors, a new set of costs, and a new structure for how care is managed. Sometimes the differences are small. Other times, they are significant.

Another piece that often comes as a surprise is how care is approved.

Medicare Advantage plans include processes like prior authorization, where certain services need approval before they are covered. There are also situations where claims are initially denied and must go through an appeal.

Recent data shows that around 17 percent of claims are denied on the first pass. That doesn’t mean care won’t ultimately be covered, but it does mean there can be an extra layer of review between your doctor’s recommendation and the plan’s approval.

For some people, that’s not a frequent issue. For others, especially those who need more involved or ongoing care, it becomes a more regular part of the experience.

The third pattern I talk through with clients is what happens over the longer term, particularly for individuals whose health needs change.

Nearly half of Medicare Advantage enrollees leave their plan within five years. A portion of that movement is simply people exploring different options, but a consistent trend is that those with more complex or ongoing health needs are more likely to want to leave.

The challenge is that leaving a Medicare Advantage plan is not always an option, especially for those most vulnerable. Why? Often, switching to a Medicare supplement plan requires medical underwriting. This means insurers look at your health history as a barrier to entry and can (and do) deny coverage based on your condition(s).

We all know the popular saying, ‘there is no such thing as a free lunch”. Like the saying, what sounds too good to be true usually is too good to be true.  The best decisions are informed decisions. The Medicare plan you chose directly affects your future health and wealth and should not be taken lightly.  

If you have more questions about Medicare Advantage plans, or original Medicare, I would be more than happy to guide you through the process. Reach out to me and we will talk.