The “Hybrid” Medicare Plan You’ve Never Heard Of: The Medicare Cost Plan.
The Best of Both Worlds, If You Can Find It.
I was lucky enough to live in a county that offered a Medicare Cost Plan. It was a revelation. The plan operates like a hybrid of Medicare Advantage and Medigap. I have a local network of doctors with low, predictable HMO-style copays. But the plan also has a secret superpower: if I want to see a doctor who is out-of-network, I can. The plan simply reverts to paying as Original Medicare would, and I’m responsible for the deductibles and coinsurance. It’s an incredible, flexible structure.
How a Cost Plan Lets You Use a Network (Like Advantage) OR Go Outside of It (Like Original Medicare).
You Get to Choose, at the Point of Service.
A Medicare Cost Plan gives you a choice every single time you need care. If you want to use the plan’s network of doctors and hospitals, you get the benefit of low, fixed copayments, just like an HMO or PPO. But if you decide you want to see a specialist who isn’t in the network, you are free to do so. In that case, the Cost Plan steps aside, and your Original Medicare Parts A and B act as your primary insurance. This freedom to move in and out of the network is unique.
The Disappearing Act: Why Medicare Cost Plans Are Only Available in a Few States.
A Relic of a Bygone Era That’s Being Phased Out.
Medicare Cost Plans are a type of “demonstration” plan that has been around for decades but is being slowly phased out by Medicare. They are only available in a few specific states and, in some cases, only in certain counties within those states. The number of areas with Cost Plans has been shrinking year after year as they are replaced by Medicare Advantage plans. If you live in an area that still offers one, you are one of the lucky few with access to this unique and flexible option.
Cost Plan vs. Advantage Plan: The Crucial Difference in Out-of-Network Flexibility.
One Has a Back Door. The Other is a Locked Room.
This is the key difference. A Medicare Advantage plan (especially an HMO or EPO) is a locked room. If you go out-of-network, your plan pays nothing. A Medicare Cost Plan is a room with a back door. You are encouraged to stay in the room where your costs are lowest, but if you need to leave, you can open the back door and use your Original Medicare benefits. That back door, that out-of-network freedom, is the crucial feature that sets a Cost Plan apart.
Can You Pair a Cost Plan with a Part D Drug Plan? Yes.
Unbundling Your Coverage for More Choice.
Just like with Original Medicare, if you enroll in a Medicare Cost Plan, you will need to get your prescription drug coverage separately. This means you will also need to enroll in a standalone Medicare Part D prescription drug plan. This is actually a benefit. It allows you to choose the Cost Plan that has the best medical network for you, and then separately choose the Part D plan that has the best formulary and costs for your specific medications.
Why a Cost Plan Can Be the “Best of Both Worlds” If You’re Lucky Enough to Have Access.
The Goldilocks of Medicare Plans.
A Cost Plan truly offers the best of both worlds. You get the low costs and coordinated care of a managed care network for your routine, in-network needs. And you get the freedom and flexibility of Original Medicare to see any doctor in the country for your out-of-network needs. You don’t have to choose between the restrictive, low-cost HMO and the free-for-all of Original Medicare. You get to have both, which is why it’s considered the “Goldilocks” plan for those who can get it.
The Rules for Joining and Leaving a Cost Plan vs. an Advantage Plan.
More Flexibility to Change Your Mind.
Cost Plans offer more flexibility when it comes to enrollment. Unlike Medicare Advantage plans, which have a strict annual election period, you can often disenroll from a Cost Plan and return to Original Medicare on a month-to-month basis. This gives you a level of freedom and control to change your mind that is not available with a Medicare Advantage plan, which typically locks you in for the entire calendar year.
How a Cost Plan Interacts with Original Medicare Parts A & B.
A Unique Partnership.
A Medicare Cost Plan doesn’t replace your Original Medicare like an Advantage plan does. It works in partnership with it. You must remain enrolled in both Medicare Part A and Part B. For your in-network care, the Cost Plan takes the lead. For any out-of-network care you choose to receive, your Original Medicare takes the lead. It’s a unique contractual relationship that provides two distinct pathways for you to access your healthcare.
If You Live in One of These 11 States, You Need to Know About Cost Plans.
A Rare Gem in the Medicare Landscape.
While the list can change, Medicare Cost Plans are generally found in specific parts of states like Minnesota, Wisconsin, Iowa, North Dakota, South Dakota, and a handful of others. They are not a nationwide option. If you live in one of the areas where Cost Plans are still available, it is absolutely essential that you investigate them during your Medicare enrollment process. They are a rare gem that offers a combination of benefits and flexibility that no other type of Medicare plan can match.
The Niche Plan That Offers Incredible Flexibility (If You Can Find It).
The Hunt for the Medicare Unicorn.
The Medicare Cost Plan is like a unicorn in the world of Medicare. It’s a rare, almost mythical creature that many people have never heard of. It offers a unique and powerful combination of low in-network costs and out-of-network freedom that seems too good to be true. It is a niche plan, available only to a lucky few. But for those who can find it, it represents one of the most attractive and flexible ways to receive their Medicare benefits.