Most Medicare Advantage plans are free upfront. You still might not be able to afford one.

By Beth Pinsker

With copays and high out-of-pocket-maximums, a zero-premium plan can end up being very expensive if you get sick

In the world of bargains, there's a difference between "free" and "free upfront." Free with no strings attached is good. Zero money down always means the potential for balloon payments on the back end. Apply that to the world of Medicare, and you have a potential for paying nothing when you sign up for a Medicare Advantage plan at 65 and then high costs later in life, when you all but invariably get sick. Eventually, that free plan may cost more than the alternative you initially thought was too expensive, and it could be too late to switch.

There's a tipping point for Medicare Advantage that many people do not recognize when they first sign up, thinking that having no monthly premium, or a really low one, represents significant savings. But Medicare Advantage is designed to have fixed copays like $30 for a specialist visit and 20% coinsurance for procedures. There are also other charges that can eventually make overall out-of-pocket costs more expensive than the competition, which is a Medicare supplement plan, also known as a Medigap plan.

It all depends on what care you end up needing, and the shift can happen quickly. If you have one very bad day with a fall, or a diagnosis of a chronic illness like cancer or kidney disease, your costs will skyrocket on Medicare Advantage, according to experts.

In the decades since they were introduced in 1997, Medicare Advantage plans have shifted the landscape of healthcare for American seniors. Heavily marketed by a few large insurance companies, Medicare Advantage plans now make up 54% of the nation's Medicare marketplace, according to health-policy group KFF. Some 76% of Medicare Advantage plans that carry prescription-drug coverage are zero-premium, KFF says, meaning enrollees pay nothing upfront except for premiums associated with Medicare Part B (currently $185 a month), which cover doctors' visits and other outpatient services that don't require hospital admission. The implications of Medicare Advantage's sweeping success across America have been hard for seniors and policymakers to fully understand.

On the surface, a Medicare Advantage plan that charges no monthly premium seems like a better deal than original Medicare with a Medigap and Part D drug plan, which have monthly premiums but typically have no other charges (except a $2,000 maximum for prescription drugs that applies across the board to all Medicare users).

For the most part, Medicare Advantage customers pay almost $3,500 less out of pocket in a year than those with Medigap insurance, according to an analysis by ATI Advisory, a healthcare consulting firm. But that includes the many healthy people not using significant healthcare.

In an emergency scenario, it's certainly within the realm of possibility that you could rack up the equivalent of an entire year's worth of Medigap premiums in one fell swoop.

"Medicare Advantage is a great deal if you're healthy, not such a great deal if you're out of pocket a lot," said David Grabowski, a professor of healthcare policy at Harvard Medical School.

Calculating the costs

Taylor Langlois, an insurance broker in Wichita, Kan., has a client in a rural area who recently suffered a fall and experienced the kind of medical emergency that could result in several copay charges. He was driven to a local medical center, Langlois said, then went by ambulance to a bigger hospital, and was eventually taken by helicopter to a trauma center.

In the Wichita area, the most popular Medigap plans are running about $150 a month, plus about $50 for a Part D drug plan, according to Langlois, for a total annual cost of about $2,400 per year.

Here's how just that one bad day would add up on a typical Medicare Advantage plan in the Wichita area, such as a Blue Medicare Advantage Choice, a preferred provider organization, or PPO, plan, which has a zero-dollar monthly premium and no deductible. Blue Cross Blue Shield of Kansas did not respond to a request for comment.

-- Ambulance ride: $300 copay

-- Helicopter ambulance: $300 copay

-- Emergency visit: $150 copay

-- Hospital stay: $350 copay per day

-- MRI: $250 copay

-- CT scan: $250 copay

That's $1,600, according to an analysis of the information provided on the Blue Cross and Blue Shield of Kansas website. These expenses are in-network and before any other ancillary hospital co-insurance for procedures, lab work, drug costs and whatever else is charged. The out-of-pocket maximum for in-network charges on this plan is $3,700, or $5,700 for out-of-network services, plus the $2,000 max for drug coverage. A person would just keep racking up charges until hitting those caps, then everything would be covered 100%.

Your costs can also climb to the out-of-pocket maximum over time, $20 or $40 at a pop, endlessly. This especially goes for expensive conditions like cancer and kidney failure, because every chemotherapy or dialysis session has multiple elements that get billed at 20% per line item.

'Medicare Advantage is a great deal if you're healthy, not such a great deal if you're out of pocket a lot.'David Grabowski, Harvard Medical School

The big question is somewhat unknowable - 20% of what? The costs for Medicare Advantage plans vary widely. The national cap for in-network services is set at $9,350 for 2025, according to KFF, but individual plans can choose lower amounts. The average is $4,882 for in-network services, says KFF, and $8,707 for both in-network and out-of-network services, with a PPO plan.

But one thing you can count on: It'll be a lot. "If their plan charges 20% for chemo, their out of pocket on that plan for that year will likely be [the maximum]," said Danielle Roberts, founding partner at Boomer Benefits, an online Medicare broker. One client with cancer has a Medicare Advantage plan with a $4,900 maximum for in-network services. "She was diagnosed early this year and already reached her out-of-pocket maximum for in-network services months ago," Roberts said. Luckily, the woman had a separate insurance policy for cancer illness and was able to use that to pay some of the excess bills.

MarketWatch examined multiple years' worth of explanations of benefits for an 88-year-old Pennsylvania woman on Medicare Advantage who had a stroke in 2022. She had a long hospital stay, then rehab and has been in assisted living since she was discharged. She asked to remain anonymous because of the sensitive nature of medical information. Her plan charges no monthly premium and has an out-of-pocket maximum of $7,000 for both in-network and out-of-network services. She easily hit that in 2022, and got to about $3,500 in 2023, including $196 a day for her last days in rehab and $300 for her trip by ambulance back to her assisted-living facility.

Now that she is more settled, her out-of-network charges through Sept. 30, 2025, were $1,369, mostly consisting of regular $40 charges for physical therapy, $50 for recurring nebulizer treatments and $30 for in-network specialist visits.

In comparison, a typical Medigap supplement plus a Part D drug plan for a woman that age in her county would cost between $2,500 and $3,700 a year, according to eHealth, an online insurance marketplace. One of these options would cover almost all medical charges.

It's fairly simple to see which plan is better in hindsight, but new Medicare enrollees have to guess blindly what they might need in the future. The reason this is such an important choice at age 65 is that, once you choose a Medicare Advantage plan at sign-up, it may be cost-prohibitive to switch later on to a Medigap plan. Medicare enrollees can't go back and forth at will. If you don't meet certain conditions - like a plan being canceled or a state law allowing you to switch - you could face medical underwriting and higher costs that make the Medigap plans untenable. You could also get outright rejected, if you are outside of the six-month initial enrollment period and are not in a state that protects the right to get a policy, as New York does.

It's difficult at the outset, though, to make a side-by-side comparison of the optimal plan of each type, Medicare Advantage or Medigap, and then do that basic math to calculate whether the monthly premium outweighs the maximum out-of-pocket cost.

Plan offerings differ by county, and then plan specifics within each locale will range so widely that what's best for you will be different from what's best for your neighbor. The best plan for you will depend on your age, gender, medical conditions, prescriptions, existing relationships with doctors, how often you travel away from home and your overall financial health, to name just a few parameters you'd need to consider.

"It's not clear what people understand about their benefits before they sign up for their plans," said Gretchen Jacobson, vice president of Medicare at the Commonwealth Fund, a nonprofit research foundation. "It's really difficult to compare benefits. People usually have an average choice among about 40 plans. That's a lot of very different plans to compare across."

To people facing a choice like this, Langlois, the Wichita insurance broker, will say, "On the one hand, with the supplement, I can guarantee what you're paying. If I contrast that with Medicare Advantage, you might be liable for around $4,000." Or perhaps more, depending on your out-of-pocket maximum. And the risk is all your own.

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10-29-25 1455ET