What Is a Medicare Cost Plan? - NerdWallet (2024)

Medicare Cost plans are health plans offered by private insurers that contract through the federal government. They’re attractive plans, as beneficiaries maintain their Original Medicare coverage and are able to visit out-of-network health care providers.

However, they are being phased out and are available in only a handful of states.

Where are Medicare Cost plans available?

This might be the most important thing to know about Medicare Cost plans: They are no longer available in most states.

In 2019, the federal government began discontinuing Medicare Cost plans in counties where two or more Medicare Advantage plans are available.

Today, Medicare Cost plans are offered in only a handful of states and have largely been phased out in most parts of the country. According to March 2022 data from the Centers for Medicare & Medicaid Services, individuals were enrolled in Medicare Cost plans in these states:

Additionally, these states have confirmed they offer Medicare Cost plans in certain counties for qualifying individuals:

If you don't see your state listed here, you can use Medicare’s plan finding tool to see if Medicare Cost plans are available in your area.

How do Medicare Cost plans work?

Medicare Cost plans are offered by private insurance companies that have contracts with the federal government. They’re authorized under Section 1876 of the Social Security Act and give beneficiaries additional coverage and benefits on top of what’s already covered under Original Medicare.

With these plans, beneficiaries keep their Medicare Part A (hospital insurance) and/or Medicare Part B (medical insurance) coverage. And if you visit an out-of-network doctor under a Medicare Cost plan, unless it's for an emergency or urgently needed services, Original Medicare will cover any remaining costs once you pay your Part A or Part B deductible and coinsurance.

Medicare Cost plans share a lot of similarities with Medicare Advantage plans. They are both offered by private insurance companies and provide at least the same benefits as Original Medicare. Both plan types typically provide additional benefits that aren’t covered under Original Medicare, like dental and vision benefits.

How do Medicare Cost plans differ from Medicare Advantage plans?

While Medicare Cost plans and Medicare Advantage plans share many similarities, the biggest differences are maintaining Original Medicare and the network of providers.

Under a Medicare Cost plan, beneficiaries can visit doctors outside their network and still have the costs covered through Original Medicare, so long as that doctor accepts Medicare. For example, if you have a Medicare Cost plan and you visit an out-of-network doctor who accepts Medicare, Original Medicare would cover anything that isn’t covered by your Medicare Cost plan. (You would be responsible for paying the Part A and Part B deductibles and coinsurance unless your visit was for urgent or emergency services.)

That wouldn’t happen for someone with a Medicare Advantage plan, since that plan effectively replaces any Original Medicare coverage. Instead, they get most of those same benefits through private insurance companies, but they don’t have the option to go out of network for care.

What does a Medicare Cost plan cover?

Under a Medicare Cost plan, beneficiaries keep their Medicare Part A and/or Medicare Part B coverage but also have access to a network of providers through the Cost plan.

What’s covered under your Medicare Cost plan largely depends on your county and state, as benefits can vary largely between them. For example, in certain counties in Minnesota, some plans offer acupuncture coverage and an eyewear allowance. Meanwhile, in Iowa, one of the handful of plans available includes a fitness membership that gives access to more than 20,000 gyms across the country.

Some other benefits that may be covered by a Medicare Cost plan include:

Am I eligible for a Medicare Cost plan?

If you meet the following criteria, as defined by the Centers for Medicare & Medicaid Services, you should qualify for a Medicare Cost plan:

You may be denied coverage through a Medicare Cost plan if you have end-stage renal disease before you enroll in the Cost plan.

How do I enroll in a Medicare Cost plan?

Since Medicare Cost plans vary county by county, you’ll first need to verify that you live in a county that offers Cost plans. You can use Medicare’s plan finding tool to see if Medicare Cost plans are available in your area and compare information among available plans. You can also shop directly on the private insurers’ websites by entering your ZIP code.