The short answer
A Medicare Cost Plan is a type of Medicare health plan that's become rare. It's a bit of a hybrid: you get plan coverage when you use in-network providers, but unlike a Medicare Advantage plan, you can also use Original Medicare for care outside the network, with Original Medicare picking up its normal share.
They only exist in certain areas and have been phased out in many places, so most people will never encounter one. But if you have one — or your parent does — it helps to understand how it differs from the plans you see advertised.
How a Cost Plan differs from Medicare Advantage
The key difference is flexibility. With a Medicare Advantage plan, going out of network usually means paying much more or getting no coverage at all. With a Cost Plan, if you go outside the network, you're simply covered under Original Medicare instead — so you keep that fallback.
That flexibility is why some people liked them. But because the plan type has been shrinking, availability is limited and many Cost Plans have converted to or been replaced by Medicare Advantage plans. Our Medicare Advantage overview explains how the more common plan type works.
What to do if your Cost Plan is ending
When a Cost Plan leaves an area, you get a special opportunity to choose new coverage — typically a chance to move to a Medicare Advantage plan or to go with Original Medicare plus a Medigap supplement and a Part D drug plan. Which path fits depends on the same freedom-versus-cost tradeoff every Medicare decision involves.
If you're in this situation, don't just let coverage lapse or default to whatever's easiest. It's a genuine fork in the road, and it's worth reviewing your options. If plan terms have you confused, our glossary of Medicare terms can help decode the paperwork.
Frequently Asked Questions
Are Medicare Cost Plans still available?
Only in limited areas. The plan type has been phased out in many regions, and many Cost Plans have converted to Medicare Advantage. Most people today choose between Original Medicare and Medicare Advantage instead.
How is a Cost Plan different from Medicare Advantage?
With a Cost Plan, care outside the network is covered under Original Medicare, so you keep that fallback. With Medicare Advantage, going out of network usually means much higher costs or no coverage.
What happens if my Cost Plan is discontinued?
You get a special enrollment opportunity to choose new coverage — typically a Medicare Advantage plan or Original Medicare with a Medigap plan and a Part D drug plan. Review both before your coverage ends.
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