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Medicare cost plan

What is a Medicare cost plan?

Medicare cost plan is similar to a Medicare Advantage plan in that enrollees have access to a network of doctors and hospitals, and may have additional benefits beyond what’s provided by Original Medicare. But unlike Medicare Advantage plans, a cost plan offers policyholders the option of receiving coverage outside of the network, in which case the Medicare-covered services are paid for through Original Medicare. Some cost plans may include prescription drug coverage. Enrollees can join a Medicare cost plan when it’s accepting new members, but may decide to return to Original Medicare at any time, since a cost plan works in tandem with (as opposed to a replacement for) Original Medicare.

The Medicare Prescription Drug, Improvement, and Modernization Act of 2003 (which rebranded Medicare+Choice as Medicare Advantage) created a competition clause that banned Medicare Cost plans from operating in areas where they faced substantial competition from Medicare Advantage plans. The implementation of the competition clause was delayed, but legislation enacted in 2015 (MACRA) required the competition clause to be implemented as of 2019.

As of 2018, there were about 625,000 people enrolled in Medicare cost plans nationwide. And two-thirds of them were in Minnesota (the rest are spread across Arizona, California, Colorado, District of Columbia, Florida, Iowa, Maryland, North Dakota, Nebraska, New York, South Dakota, Texas, Virginia, and Wisconsin; most states do not have Medicare cost plans available).

But there will be far fewer Medicare cost plan enrollees as of 2019, due to the implementation of the Medicare Advantage competition clause. 320,000 people in Minnesota will have to pick new coverage for 2019 (either Medicare Advantage or Original Medicare — with the option to supplement the Original Medicare with a Part D plan and/or a Medigap plan). People who still have Medicare cost plans available in their area can still enroll, but the number of people who will have access to such plans in 2019 will be much smaller.

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