Medicare Advantage plans can be very cost-effective, and in fact, there are plans with $0 premiums. So how is that possible? To understand how $0 premium plans are possible, you must understand how Medicare Advantage plans are paid. There are two parts to how Medicare Advantage plans get paid. The first is the premium members pay; the premium depends on the benefits of the plan you purchase. It can be as low as $0, or in other cases, it can be higher. The Second Part is the money Medicare pays the insurance company. Since Medicare Advantage Plans completely replace Original Medicare, Medicare pays the Medicare Advantage insurance company an amount per member based on location, health, and many other factors. It is then the Medicare Advantage insurance companies responsibility to pay for all the health care needed by that Medicare Advantage member. The payment from Medicare makes up the majority of the money the insurance company gets for each member. They then manage their members’ healthcare, negotiate lower physician and hospital costs and drug prices, and many other aspects of healthcare costs. This allows them to provide additional benefits and lower the premiums they can charge even to having $0 premium plans. In addition to the premium for your Medicare Advantage plan, if it is not a $o premium plan, you will still have to pay your Medicare Part B premium and Part A premium if applicable.