Medicare Cost Plans are a type of Medicare health plan available in certain limited areas of the country—including parts of Minnesota.

A Medicare Cost Plan combines some features of a private Medicare health plan with the flexibility of Original Medicare.

When you receive covered services through the Cost Plan’s network, the plan generally provides your Medicare-covered services according to its rules. If you receive Medicare-covered services outside the plan’s network from a provider who accepts Medicare, Original Medicare generally covers those services and Original Medicare cost sharing applies.

That makes a Medicare Cost Plan different from both Original Medicare by itself and a Medicare Advantage plan.

For Minnesota residents who live where Cost Plans are available, understanding that difference is important when comparing Medicare coverage.

Learn First. Decide With Confidence.

What Is a Medicare Cost Plan?

A Medicare Cost Plan is a Medicare health plan offered by a private organization under a contract with Medicare.

Medicare Cost Plans are authorized under Section 1876 of the Social Security Act.

Unlike Medicare Advantage, Medicare Cost Plans allow members to receive Medicare-covered services outside the plan’s network through Original Medicare.

Generally:

You can use the Cost Plan’s network of providers.
You may have lower costs when using the plan’s network.
You can also use providers outside the network who accept Medicare.
When you receive Medicare-covered services outside the Cost Plan’s network, Original Medicare generally covers those services and Original Medicare deductibles and coinsurance apply.

Medicare Cost Plans are available only in certain geographic areas.

Is a Medicare Cost Plan the Same as Medicare Advantage?

No.

Medicare Cost Plans and Medicare Advantage plans are both private Medicare health-plan options, but they work differently.

With a Medicare Advantage plan, the private plan generally administers your Medicare Part A and Part B benefits according to Medicare requirements and the plan’s rules.

With a Medicare Cost Plan, you can generally receive covered care through the plan’s network or go outside the network and use Original Medicare for Medicare-covered services.

That out-of-network Original Medicare option is one of the most important differences between a Medicare Cost Plan and many Medicare Advantage plans.

How Does a Medicare Cost Plan Work?

A Cost Plan essentially gives you two ways to receive Medicare-covered health services.

When You Use the Cost Plan’s Network

When you use participating providers, the Cost Plan administers the covered services according to the plan’s benefits, cost sharing and rules.

Your costs depend on the particular plan.

When You Go Outside the Cost Plan’s Network

If you have Medicare Part A and Part B and receive Medicare-covered services outside the Cost Plan’s network from a provider who accepts Medicare, Original Medicare generally covers those services.

You then pay the applicable Original Medicare deductibles and coinsurance.

This flexibility can be particularly important to someone who:

Travels frequently
Spends part of the year outside Minnesota
Wants access to providers outside a local network
Wants a health-plan network while retaining access to Original Medicare outside that network

Whether that flexibility is valuable depends on your individual health care needs.

What Does a Medicare Cost Plan Cover?

A full Medicare Cost Plan provides Medicare-covered benefits.

Depending on the plan and your Medicare eligibility, covered services can include:

Inpatient hospital care
Doctors and specialists
Outpatient services
Preventive services
Diagnostic testing
Skilled nursing facility care when Medicare coverage requirements are met
Certain home health services
Durable medical equipment
Mental health services
Emergency and urgently needed care

Specific benefits, copayments, coinsurance and plan rules vary by Cost Plan.

Always review the individual plan’s current Evidence of Coverage and Summary of Benefits.

Do Medicare Cost Plans Include Prescription Drug Coverage?

Prescription drug coverage works differently with Cost Plans than with many Medicare Advantage plans.

With a Medicare Cost Plan, you may be able to:

Get Part D prescription drug coverage through the Cost Plan if the plan offers it, or
Join a separate standalone Medicare Part D prescription drug plan.

Even if your Cost Plan offers Part D coverage, Medicare allows you to choose a separate Medicare drug plan instead.

However, Medicare drug coverage can generally only be added or dropped during applicable Medicare enrollment periods.

Your prescription coverage should be evaluated separately using your actual:

Medications
Dosages
Formulary
Drug tiers
Preferred pharmacies
Deductible
Copayments and coinsurance
Prior authorization requirements
Step therapy requirements
Quantity limits

Do not assume that the medical portion of a Cost Plan and its available drug coverage will automatically be the best combination for your prescriptions.

Do Medicare Cost Plans Have Provider Networks?

Yes.

Medicare Cost Plans generally have networks of participating health care providers.

Using network providers may result in different—and often lower—cost sharing under the Cost Plan.

The important difference is what happens when you go outside that network.

If you have Part A and Part B, you can generally receive Medicare-covered services from an out-of-network provider who accepts Medicare. Original Medicare then covers the Medicare-covered service, and Original Medicare cost-sharing rules apply.

Before enrolling, check:

Primary care physician
Specialists
Preferred hospital
Health system
Pharmacy
Durable medical equipment suppliers
Other providers you regularly use

Provider participation can change.

Always verify current provider status with the plan.

Can You Use a Medicare Cost Plan Outside Minnesota?

Potentially, yes.

If you have Medicare Part A and Part B and receive Medicare-covered services from a provider outside your Cost Plan’s network who accepts Medicare, Original Medicare can generally cover those services.

That is different from simply saying that the Cost Plan itself has a nationwide network.

It may not.

The important distinction is that Original Medicare can provide the coverage outside the Cost Plan’s network for Medicare-covered services.

You would generally be responsible for the applicable Original Medicare deductibles and coinsurance.

For someone who spends significant time outside Minnesota, this is an important feature to compare with other Medicare coverage options.

How Much Does a Medicare Cost Plan Cost?

There is no single price for a Medicare Cost Plan.

Depending on the particular plan and coverage selected, your costs can include:

Your Medicare Part B premium
A Cost Plan premium
Deductibles
Copayments
Coinsurance
Prescription drug costs
Original Medicare deductibles and coinsurance when receiving covered services outside the Cost Plan network

Premiums and cost sharing vary by plan and can change from year to year.

A low monthly premium does not necessarily mean the lowest total annual cost.

When comparing Cost Plans, consider both the premium and the costs you could incur when you actually receive health care.

Medicare Cost Plan vs. Medicare Advantage

Medicare Cost Plans and Medicare Advantage plans can both use provider networks, but the rules for receiving care outside those networks are different.

Medicare Cost Plan

With a Cost Plan:

You can use the plan’s network.
You may receive Medicare-covered services outside the network through Original Medicare if you have Part A and Part B.
Original Medicare cost sharing generally applies to those out-of-network Medicare-covered services.
You may be able to use a standalone Part D plan.
You can generally leave the Cost Plan and return to Original Medicare at any time.

Medicare Advantage

With Medicare Advantage:

A private Medicare-approved plan administers your Part A and Part B benefits.
Many plans use provider networks.
Out-of-network coverage depends on the type of Medicare Advantage plan and its rules.
Most Medicare Advantage plans include Part D.
In most Medicare Advantage HMOs and PPOs, you cannot simply add a separate standalone Part D plan.
Medicare Advantage enrollment and disenrollment are generally governed by specific Medicare election periods.

Neither type of coverage is automatically better.

The better fit depends on your providers, prescriptions, costs, travel and preferences for receiving health care.

Medicare Cost Plan vs. Original Medicare

A Cost Plan can provide a network-based way of receiving Medicare-covered services while retaining access to Original Medicare outside the network.

With Original Medicare alone:

Medicare administers your Part A and Part B coverage.
You can generally use any doctor or hospital in the United States that accepts Medicare.
You can add a standalone Part D prescription drug plan.
You may purchase Minnesota Medicare Supplement insurance if you meet applicable requirements.
Original Medicare by itself has no annual maximum out-of-pocket limit for Part A and Part B services.

With a Medicare Cost Plan:

You have access to the Cost Plan’s provider network and plan benefits.
You can generally use Original Medicare for Medicare-covered services received outside the plan’s network if you have Part A and Part B.
You may have different cost sharing when using the Cost Plan’s network.
Prescription drug coverage may be available through the Cost Plan or through a separate Part D plan.

Medicare Cost Plan vs. Medicare Supplement

A Medicare Cost Plan and Medicare Supplement insurance are not the same thing.

Medicare Cost Plan

A Medicare Cost Plan is a Medicare health plan.

It can have:

A provider network
Plan-specific benefits
Plan premiums
Copayments and coinsurance
Optional prescription drug coverage, depending on the plan

Medicare Supplement

Medicare Supplement insurance—also called Medigap—is private insurance that works with Original Medicare to help pay certain Original Medicare out-of-pocket costs.

Minnesota standardizes Medicare Supplement coverage differently from most states.

Minnesota insurers selling Medicare Supplement coverage are required to offer:

Basic
Basic with Optional Rider(s)
Extended Basic

Some insurers may offer additional Minnesota-approved policy designs.

Do not assume that national descriptions of lettered Medigap plans accurately describe the Medicare Supplement choices available to Minnesota residents.

Can You Have a Medicare Cost Plan and Medicare Supplement?

This requires careful comparison.

Because Medicare Cost Plans can involve both plan-network coverage and Original Medicare coverage outside the network, the interaction with other coverage can be more complicated than simply comparing two premiums.

Do not assume that Medicare Supplement coverage will pay every Cost Plan copayment or other plan-specific charge.

Before maintaining, purchasing, dropping or changing Medicare Supplement coverage while considering a Medicare Cost Plan, verify how the policies interact and what Minnesota Medicare Supplement rights apply to your situation.

Who Can Join a Medicare Cost Plan?

Medicare says that, generally, you can join a Medicare Cost Plan when:

The plan is accepting new members, and
You meet the plan’s eligibility and service-area requirements.

Unlike Medicare Advantage, Medicare says you may generally be able to join a Medicare Cost Plan even if you only have Medicare Part B.

However, having both Part A and Part B matters if you want Original Medicare to cover both Part A and Part B services when you receive care outside the Cost Plan’s network.

Always verify the specific Cost Plan’s eligibility requirements before enrolling.

When Can You Join a Medicare Cost Plan?

Cost Plans have different enrollment rules from Medicare Advantage.

Medicare says you can generally join a Medicare Cost Plan whenever the plan is accepting new members.

That means the Medicare Advantage October 15–December 7 enrollment period should not automatically be treated as the only time someone can enroll in a Cost Plan.

However, prescription drug coverage has separate enrollment rules.

If you are adding, dropping or changing Medicare Part D coverage, Medicare’s applicable Part D enrollment periods and rules still matter.

Always verify both the medical coverage and prescription drug coverage effective dates before making a change.

Can You Leave a Medicare Cost Plan?

Generally, yes.

Medicare says you can leave a Medicare Cost Plan at any time and return to Original Medicare.

This is an important difference from Medicare Advantage, where voluntary disenrollment is generally tied to Medicare’s applicable election periods.

However, leaving a Cost Plan raises another important question:

What coverage will you have after you leave?

Returning to Original Medicare does not automatically give you Medicare Supplement insurance.

Minnesota Medicare Supplement enrollment and guaranteed-issue rights are governed by separate Minnesota and federal rules.

If you are considering leaving a Cost Plan and want Medicare Supplement coverage, verify your Medigap rights before ending your existing coverage.

Prescription drug coverage should also be coordinated carefully so that you don’t unintentionally create a gap in creditable drug coverage.

Are Medicare Cost Plans Available Everywhere in Minnesota?

No.

Medicare Cost Plans are available only in certain limited geographic areas.

For 2026, Minnesota Department of Commerce information shows Medicare Cost Plan products available in portions of Minnesota, with availability varying by product and county.

Do not assume that a Cost Plan available in one Minnesota county is available in another.

Before comparing a Cost Plan, verify current availability for your:

County
ZIP code
Medicare eligibility
Desired coverage

Plan availability can change from year to year.

Why Aren’t Medicare Cost Plans Available Everywhere?

Medicare Cost Plans are an older form of Medicare health plan authorized under Section 1876 of the Social Security Act.

Federal law and CMS regulations contain competition requirements affecting where Cost Plans can continue operating.

CMS generally must non-renew Cost Plan contracts—or portions of their service areas—when specified levels of competing Medicare Advantage coverage and enrollment exist.

CMS also no longer accepts new Section 1876 Cost Plan contracts.

As a result, Cost Plans are available only in limited areas of the country.

Minnesota remains one of the states where Cost Plan coverage continues to be available in certain areas.

Can a Medicare Cost Plan Change From Year to Year?

Yes.

The specific Cost Plan available to you, its service area, premium, cost sharing, provider network, drug coverage and other plan provisions can change.

A Cost Plan can also stop serving an area.

Review the plan’s current materials each year rather than assuming next year’s coverage will be identical to this year’s coverage.

What Should You Compare Before Choosing a Medicare Cost Plan?

Consider the entire coverage arrangement—not simply the monthly premium.

Providers

Check whether your:

Doctors
Specialists
Hospitals
Health systems
Other important providers

participate in the Cost Plan’s network.

Out-of-Network Use

Understand when Original Medicare will cover services outside the Cost Plan network and what Original Medicare cost sharing you would pay.

Prescription Drugs

Compare:

Medications
Formulary
Drug tiers
Pharmacy network
Drug deductible
Copayments and coinsurance
Prior authorization and other restrictions

Premiums and Cost Sharing

Compare:

Cost Plan premium
Medicare Part B premium
Deductibles
Copayments
Coinsurance
Prescription costs
Potential Original Medicare cost sharing outside the network

Travel

If you spend significant time outside Minnesota, understand both the Cost Plan’s network and your ability to use Original Medicare outside that network.

Other Coverage

If you have Medicare Supplement, employer, retiree or other insurance, determine how that coverage interacts with the Cost Plan before making changes.

Medicare Cost Plans in Minnesota: Frequently Asked Questions

Is a Medicare Cost Plan a Medicare Advantage plan?

No. A Medicare Cost Plan is a different type of Medicare health plan operating under Section 1876 of the Social Security Act.

Can I go outside a Medicare Cost Plan’s network?

Generally, yes. If you have Medicare Part A and Part B, Medicare-covered services received outside the Cost Plan’s network can generally be covered by Original Medicare when you use providers who accept Medicare. Original Medicare cost sharing applies.

Do I need both Medicare Part A and Part B to join a Cost Plan?

Not necessarily. Medicare says you can generally join a Medicare Cost Plan even if you only have Part B. Check the specific plan’s eligibility requirements.

Can I have a separate Part D plan with a Medicare Cost Plan?

Yes. Medicare permits someone in a Medicare Cost Plan to obtain Part D coverage from the Cost Plan if offered or to join a separate Medicare drug plan.

Can I leave a Medicare Cost Plan whenever I want?

Medicare says you can generally leave a Medicare Cost Plan at any time and return to Original Medicare.

Does leaving a Cost Plan guarantee that I can buy any Minnesota Medicare Supplement policy?

No. Medicare Supplement eligibility and guaranteed-issue rights are separate issues governed by federal and Minnesota law. Verify your applicable Minnesota Medigap rights before leaving coverage if Medicare Supplement insurance is part of your plan.

Are Medicare Cost Plans available throughout Minnesota?

No. Cost Plan availability is limited and varies geographically. Check current availability for your county and ZIP code.

Are Medicare Cost Plans still available in Minnesota in 2026?

Yes, in certain Minnesota service areas. Availability is plan- and county-specific and should be verified using current Medicare and plan information.

Medicare Guidance for Minnesotans

Medicare Cost Plans can provide an unusual combination:

A private Medicare health-plan network plus the ability to use Original Medicare for Medicare-covered services outside that network.

That flexibility can make a Cost Plan worth considering for some Minnesota residents.

But it does not automatically make a Cost Plan the right choice.

Before enrolling, compare:

Your doctors and hospitals
Prescription drugs
Premiums
Copayments and coinsurance
Out-of-network Original Medicare costs
Travel
Other insurance coverage
Current plan availability in your county

At YourMedicareMN, our focus is education first.

Understanding the differences between Original Medicare, Medicare Advantage, Medicare Cost Plans and Medicare Supplement coverage can make it easier to evaluate which approach fits your individual healthcare needs.

Medicare doesn’t have to be one-size-fits-all.

Visit Contact Us to schedule a personalized Medicare review and get answers tailored to your situation.

For official Medicare information, visit the Medicare.gov website.

YourMedicareMN is not connected with or endorsed by the U.S. government or the federal Medicare program. Plan availability and benefits vary by location and plan. Contact the plan or Medicare for complete plan information.

Learn first. Decide With Confidence.