Medicare Cost Plans

Medicare cost plans share characteristics of both Original Medicare (Part A and Part B) and Medicare Advantage (Pact C).

Like Medicare Advantage, cost plans offer a narrow network of providers. They may also offer additional benefits such as dental and vision.

Unlike Medicare Advantage, you get to keep Original Medicare, and this coverage kicks in when you go outside your plan’s network.

This flexibility helps reduce your out-of-pocket costs.

Medicare cost plans can be convenient for people who travel across the U.S. during retirement because enrollees can seek care outside their local service area.

A Medicare cost plan that is accepting new enrollees must maintain an annual open enrollment window of at least 30 days. You can sign up any time a plan is accepting new applications.

You can leave a cost plan anytime and return to Original Medicare.

Historically, cost plans offered a managed care option in rural areas of the country where few Medicare Advantage options existed.

In 2018, about 600,050 Americans in 14 states and the District of Columbia were enrolled in Medicare cost plans, according to the Kaiser Family Foundation.

While cost plans have offered a kind of “best of both worlds” hybrid option to beneficiaries, the plans are now being phased out by the federal government.

Since Medicare Advantage launched in the late 1990s, its reach has expanded significantly, nearly doubling from 10.5 million enrollees in 2009 to 22 million enrollees in 2019.

On Jan. 1, 2019, the U.S. government eliminated Medicare cost plans in counties where two or more Medicare Advantage plans competed the prior year.

By 2019, the number of Americans enrolled in cost plans had dropped to just 200,000.

The sunsetting of Medicare cost plans has significantly impacted some communities more than others.

According to a Minnesota Star Tribune report, Minnesotans accounted for more than half of all cost plan membership in 2018 — about 400,000 out of 630,587 people that year.

North Dakota and South Dakota are now the two states with the most cost plan beneficiaries in 2019, according to the Kaiser Family Foundation.

If you live in a county where Medicare cost plans are being eliminated, you have two options.

You will also need to join either a Medicare Advantage plan with prescription drug coverage, or a stand-alone Medicare Part D plan if you choose to stay with Original Medicare.

You will likely be eligible to purchase a Medicare Supplement plan, or Medigap, policy during a special enrollment period to help cover your costs.

If you are losing your Medicare cost plan, it’s important to find a new plan that covers your doctor visits and prescription drugs.

There are resources available to help you find new health care coverage.