There’s a wide range of Medicare health insurance plans available to adults age 65 and older (and some younger individuals with qualifying disabilities), and it can be confusing trying to decide which option is best for your unique situation.
Two options you may be considering are Medicare Advantage plans and Medicare cost plans. While there are similarities to these offerings, they’re different in some important ways.
Here, we’ll unpack everything you need to know about these two types of plans so you can make an informed decision about which best meets your needs, preferences and budget.
Medicare Advantage vs. Medicare Cost Plan Comparison
[READ: Medicare Mistakes to Avoid.]
What Are Medicare Advantage Plans?
Medicare Advantage plans, also known as Medicare Part C, offer recipients an alternate way to receive Medicare Part A (hospital insurance) and Part B (medical insurance) coverage, according to Dee Chaudhary, a Minnesota-based principal with Clarivate Commercial Strategy Consulting, a life sciences and health care consulting services firm headquartered in London.
These plans are provided by private health insurance companies that have been approved by the Centers for Medicare & Medicaid Services to offer these policies, and they must adhere to rules set by Medicare.
Most Medicare Advantage plans also include Medicare Part D, which is prescription drug coverage, and many offer additional benefits that aren’t covered by original Medicare, such as:
— Dental
— Vision
— Hearing care
— Health club memberships, such as SilverSneakers
Because of these extra benefits, Medicare Advantage plans can be an attractive option for beneficiaries who want a more managed care approach and are looking for cost-effective options within a specific network.
[READ: Medicare vs. Medicare Advantage: How to Choose.]
What Is a Medicare Cost Plan?
A Medicare cost plan is a type of health insurance plan that combines aspects of original Medicare (Part A and Part B) with additional benefits from a private insurance company.
“They’re similar to Medicare Advantage plans but offer more flexibility in choosing doctors and pharmacies,” says John Mastronardi, executive director of The Nathaniel Witherell, a long-term skilled nursing care facility in Greenwich, Connecticut.
How do Medicare cost plans work?
Medicare cost plans work a lot like Medicare Advantage plans, with some key differences.
“Both are offered by private health insurance companies, (can) help cover out-of-pocket costs for medical expenses and may provide additional benefits, such as prescription, vision, dental and hearing coverage, beyond what’s typically included in original Medicare,” explains Whitney Stidom, vice president of consumer enablement with eHealth Inc., a health insurance broker and online resource provider headquartered in Santa Clara, California.
But the key difference between the two is that Medicare Advantage replaces original Medicare for administering your benefits, while Medicare cost plans work alongside original Medicare and can offer flexibility for going out of network.
For example, if you’re on a Medicare Advantage plan and see a provider who isn’t in your network, then that visit is going to cost you more out of pocket than if you saw an in-network provider.
But, if you’re on a Medicare cost plan and visit that out-of-network provider, you’ll be covered by original Medicare as long as the provider accepts Medicare. In other words, as long as they accept Medicare payments, the cost to you to see the out-of-network provider will be the same for the in-network provider.
It may seem complicated, but the bottom line is that Medicare cost plans offer more flexibility in terms of which providers you can see.
Limitations of Medicare cost plans
Medicare cost plans, however, have some potential downsides. For example, “these plans are only available in limited areas, and some may not accept new patients,” Stidom says.
In addition, Medicare cost plans are largely being phased out in favor of Medicare Advantage plans, Stidom adds, because Medicare Advantage plans tend to be more attractive to many beneficiaries.
“However, in places where people have few Medicare Advantage plans to pick from, Medicare cost plans can provide similar benefits, plus additional flexibility,” she notes.
In addition, “you may still need to pay deductibles, copays and coinsurance, similar to original Medicare,” Mastronardi adds. These refer to:
— Deductible: A set amount of money you must pay before insurance coverage kicks in. This amount varies from plan to plan.
— Copayment: A fixed amount, often $10 or $20, you must pay each time you see your doctor.
— Coinsurance: A percentage, often 20%, you must pay out of pocket to cover the cost of services.
[READ: What Is Medicare-Medicaid Dual Eligibility?]
Who Offers Medicare Advantage and Medicare Cost Plans?
Both Medicare Advantage and Medicare cost plans are administered by private health insurance companies.
Medicare Advantage plan providers
The largest insurers who offer Medicare Advantage plans include:
— UnitedHealthcare, which Chaudhary says is known for its extensive provider network and nationwide coverage
— Humana, which has a wide range of offerings across most U.S. states
— Aetna, which provides strong local support and a variety of options
— Blue Cross Blue Shield, which is highly regarded for its comprehensive benefits and consumer reputation
— HealthSpring (formerly known as Cigna), which stands out for offering additional benefits and high overall CMS ratings, Chaudhary says
Medicare cost plan providers
Medicare cost plans are currently only available in a handful of mostly Midwestern states and, in some cases, are limited to specific counties where there are few or no Medicare Advantage plans available.
“Even where available, Medicare cost plans may not be accepting new members, so it’s important to contact the insurer or work with a licensed insurance agency to find out for sure,” Stidom adds.
The companies you’ll most likely see offering these plans include:
— Medica
— Blue Cross Blue Shield
When Can I Enroll in Medicare Advantage or Medicare Cost Plans?
Medicare Advantage plans are available during three specific enrollment periods:
— Your initial enrollment period, when you first become eligible for Medicare
— The annual enrollment period, from October 15 to December 7
— The annual Medicare Advantage open enrollment period, from January 1 to March 31
CMS reports that generally, you can join a Medicare cost plan whenever it’s accepting new members, even if you have only Part B. You’re also free to leave a Medicare cost plan and return to original Medicare whenever you want.
Medicare Advantage vs. Medicare Cost Plans
If you’re comparing Medicare Advantage and Medicare cost plans, there are key similarities and differences that may help you determine which one is right for you.
Flexibility
Medicare Advantage: Medicare Advantage plans typically have smaller networks that can be restrictive for some beneficiaries.
Medicare cost: Medicare cost plans allow enrollees to receive care both in and out of the plan’s network.
“Unlike with Medicare Advantage plans, you’re not limited to a specific network of doctors and hospitals. You can see any provider who accepts Medicare,” Mastronardi emphasizes.
This could mean cost savings if you’re able to find affordable providers, he adds.
Network and out-of-pocket costs
Medicare Advantage: These plans have a maximum out-of-pocket limit that protects enrollees from high medical costs. For 2026, the out-of-pocket limit for in-network services is capped at $9,250.
“These limits help ensure that medical expenses do not exceed a certain amount within a calendar year, providing enrollees a sense of financial security,” Chaudhary explains.
Medicare cost: Medicare cost plans usually offer more predictable out-of-pocket costs, “especially if the individual needs out-of-network care,” Chaudhary says.
If you receive care outside the plan’s network, those services are covered under original Medicare, rather than the Medicare cost plan itself. This can be a big benefit for people who travel frequently or live in an area with limited network providers.
Medicare cost plans also “often have an annual out-of-pocket maximum, which can range from $3,000 to $7,500, Chaudhary adds. “Like a Medicare Advantage plan, this limit helps protect individuals from excessive medical expenses by capping the annual out-of-pocket amount.”
Premiums
Medicare Advantage: Medicare Advantage plans typically have fixed monthly premiums, which may be lower than those with original Medicare. In some cases, Medicare Advantage plans may have a $0 premium.
However, you may have higher out-of-pocket costs, such as copays and deductibles for specific services, Mastronardi says.
Medicare cost: There’s little uniformity in the out-of-pocket and premium costs for Medicare cost plans.
“The monthly premiums for Medicare cost plans can range widely due to plan type and geography, but on average, they tend to be higher than those for Medicare Advantage plans,” Chaudhary says.
In fact, she notes, you can expect to pay anywhere from $50 to $200 per month, depending on the specific plan, plus you’ll need to continue to pay the Medicare Part B premium ($202.90 per month in 2026).
Some Medicare cost plans also have annual deductibles that can range from $0 to $500 on up.
“These costs vary by plan but typically include copayments for doctor visits, hospitalization and other services, such as a $50 copayment for a specialist visit or a percentage of a hospital charge,” Chaudhary says.
Prescription drug coverage
Medicare Advantage: The list of prescription drugs available under a Medicare Advantage plan may be limited due to formulary restrictions. (A formulary is a list of prescription drugs a plan covers.)
“Each Medicare Advantage plan has its own formulary, which categorizes drugs into different tiers,” Chaudhary notes.
It typically includes both brand-name and generic drugs.
“These tiers determine the cost of the drugs, with lower-tier drugs generally costing less than higher-tier drugs,” Chaudhary adds.
Because these formularies can change from year to year, it’s important for that you review a plan’s formulary to ensure that your medications are covered and that you understand the associated out-of-pocket costs.
Medicare cost: These plans also typically have prescription drug formularies, which include both generic and brand-name medications and are designed to cover a wide range of prescription drugs that people with Medicare commonly use.
Again, however, “each plan’s formulary can vary, so it’s important that enrollees review the specific list of covered medications,” Chaudhary says.
Medicare Advantage vs. Medicare Cost Plans: Which One Is Better?
Both Medicare Advantage and Medicare cost plans have pros and cons.
“The best plan for any Medicare beneficiary, whether that’s a Medicare cost plan, a Medicare supplement plan or a Medicare Advantage plan, will be the one that does the best job of covering the services they value at a price they can afford,” Stidom explains.
For example, if you have chronic health conditions or require frequent medical care, a Medicare Advantage plan with a strong network of specialists might be a better fit for your needs.
Stidom recommends comparing your available coverage options and looking closely at:
— Monthly premiums
— Out-of-pocket costs
— Prescription drug coverage
— Medical provider networks
“It’s always a good idea to work with a licensed insurance agent to compare plans from competing insurers. This type of support doesn’t cost extra, and it can help beneficiaries get recommendations and answers to their specific questions,” she says.
Mastronardi also recommends talking with a health care professional or Medicare counselor to get personalized advice for your specific situation. You can start by reaching out to your local State Health Insurance Assistance Program for free advice and guidance about all things Medicare.
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Medicare Advantage vs. Medicare Cost Plans: What?s the Difference? originally appeared on usnews.com
Update 12/12/25: This story was previously published at an earlier date and has been updated with new information.
