Medicare Advantage-Prescription Drug (MA-PD) plans with zero-dollar member premiums are incredibly popular among Medicare beneficiaries. February 2025 enrollment data indicates that more than 75% of MA-PD enrollees elected a zero-dollar premium plan in 2025, a slight increase from 74% in 2024.1 Many Medicare beneficiaries, especially healthier individuals with limited expected medical costs, are attracted to zero-dollar premium plans that require no monthly financial commitment outside of the Part B premium. In return, beneficiaries are willing to accept the higher member cost sharing (i.e., maximum out-of-pocket (MOOP), copays, and coinsurance) that generally accompanies these plans. Zero-dollar premium plans routinely perform well during the annual enrollment period (AEP) as it relates to member retention and growth.
In a 2019 paper analyzing plans from 2016 through 2019, we found when zero-dollar plans added a premium, they typically lost enrollment.2 MA market dynamics and pressures have changed in recent years; does this historical pattern still hold true? Is maintaining a zero-dollar MA-PD premium plan still worth the effort, even in the face of mounting financial pressure? This paper analyzes the options a general enrollment zero-dollar premium plan may consider (adding a premium or reducing benefits) in response to headwinds impacting the MA market, and how each option may impact enrollment growth. We utilize the Milliman Medicare Advantage Competitive Value Added Tool (Milliman MACVAT®), where each MA plan’s benefit offerings and premium are evaluated to create an associated “value added” (Milliman’s proprietary measurement of plan value) to measure the impact of benefit changes on enrollment when premium is added to a zero-dollar premium plan.
Zero-dollar plans adding a premium in 2025 experienced marginal enrollment loss
Our previous analysis2 showed zero-dollar premium plans adding a premium experienced enrollment losses of 13%, 14%, and 20% on average in the years 2017, 2018, and 2019, respectively. We performed the same analysis for plans from 2023 to 2025, summarized in Figure 1.
Figure 1: Average enrollment change for zero-dollar MA-PD plans adding premium
| Year | Plan Count | Enrollment Change |
|---|---|---|
| 2023 to 2024 | 14 | -13.4% |
| 2024 to 2025 | 42 | -0.3% |
The enrollment change observed from 2023 to 2024 is similar to the change observed from 2017 through 2019; adding premium to a zero-dollar premium plan resulted in an average enrollment loss of 13%. The results from 2024 to 2025, however, diverge from this historical trend, showing that zero-dollar premium plans adding a premium experienced a small enrollment loss of 0.3%. Figure 2 examines how the magnitude of the premium added to the zero-dollar premium plan impacted the enrollment change from 2024 to 2025.3
Figure 2: Magnitude of premium increase and associated enrollment change for zero-dollar MA-PD plans adding premium from 2024 to 2025
| Premium Increase | Plan Count | Enrollment Change |
|---|---|---|
| Up to $10 | 7 | 2.7% |
| $10 to $20 | 15 | 7.3% |
| Over $20 | 20 | -2.6% |
| Total | 42 | -0.3% |
We note the number of zero-dollar plans that added a premium in 2025 is small, and Figure 2 further segments these plans into smaller categories. However, Figure 2 shows zero-dollar plans adding premiums up to $20, on average, experienced enrollment growth from 2024 to 2025. Plans adding premiums over $20 experienced an enrollment decline. These results are nationwide impacts, and the impact of adding a premium could vary significantly depending on the market dynamics in the plan’s area. The availability and benefit richness of other zero-dollar premium plans, organization name recognition, and migration patterns of beneficiaries in the area are all important factors.
Plans maintaining a zero-dollar premium in 2025 experienced 10% enrollment growth
While Figures 1 and 2 seem to suggest zero-dollar premium plans can add premiums up to a certain point without concern, these results should be considered relative to enrollment growth for zero-dollar premium plans that did not add a premium. This is displayed in Figure 3.
Figure 3: Premium change and enrollment change for zero-dollar MA-PD plans from 2024 to 2025
| Premium Change | Plan Count | Enrollment Change |
|---|---|---|
| Added premium | 42 | -0.3% |
| Maintained $0 premium | 2,030 | 9.9% |
Zero-dollar premium plans that did not add a premium from 2024 to 2025 experienced average enrollment growth of nearly 10%, relative to 0.3% enrollment decline for zero-dollar premium plans that added a premium in 2025. Thus, a zero-dollar premium plan could expect less enrollment growth if they added a premium than if they did not.
Members in zero-dollar premium plans were more sensitive to increases in premium than reductions in benefits
While most zero-dollar premium plans chose not to add a premium in 2025, benefit changes were common. In 2025, for the first time in recent years, the average value added of general enrollment MA-PD plans decreased.4 Zero-dollar premium plans that did not add a premium reduced their value added through benefit reductions by an average of about $18.60 from 2024 to 2025. Despite decreases in plan value added, zero-dollar premium plans that did not add a premium experienced 10% average enrollment growth, as summarized in Figure 3, but the magnitude of the enrollment growth varies based on the magnitude of the value added change. This is displayed in Figure 4. Since these plans maintained a zero-dollar premium in 2024 and 2025, value added changes are entirely attributable to benefit changes. While enrollment changes are not influenced by value added alone, a strong correlation exists.
Figure 4: Value added and enrollment change for zero-dollar premium MA-PD plans not adding premium from 2024 to 2025
| Value Added Change | Plan Count | Enrollment Change |
|---|---|---|
| Under -$100 | 20 | -49% |
| -$100 to -$80 | 18 | -18% |
| -$80 to -$60 | 79 | -14% |
| -$60 to -$40 | 239 | -5% |
| -$40 to -$30 | 262 | 4% |
| -$30 to -$20 | 370 | 9% |
| -$20 to -$10 | 325 | 16% |
| -$10 to $0 | 305 | 14% |
| $0 to $10 | 211 | 16% |
| $10 to $20 | 107 | 29% |
| $20 to $40 | 77 | 31% |
| Over $40 | 17 | 133% |
| Total | 2,030 | 10% |
Plans that increased their value added in 2025 experienced significant enrollment growth. As zero-dollar premium plans made larger benefit reductions, enrollment growth shrank. Interestingly, zero-dollar premium plans that reduced their value added by up to $40 through benefit reductions still experienced, on average, enrollment growth from 2024 to 2025. This differs from Figure 2, which showed zero-dollar premium plans adding more than $20 in premium experienced a decrease in enrollment from 2024 to 2025. Thus, in 2025, members in zero-dollar premium plans were more sensitive to increases in premium than reductions in benefits.
Developing zero-dollar premium plan strategy in 2026
Many of the headwinds impacting the MA market in 2025 (Star Rating changes, risk score model changes, the Inflation Reduction Act (IRA), and high utilization trends, to name a few) will persist to 2026, meaning zero-dollar plans may again be considering ways to increase revenues and reduce costs. Enrollment shifts from 2024 to 2025 suggest adding a premium to a zero-dollar premium plan may not lead to enrollment loss. Reducing benefits, however, may allow for larger reductions in cost before enrollment loss occurs. But not all benefit reductions are created equal in the eyes of a beneficiary. Plans should carefully consider which benefits drive enrollment and which benefits do not, as a targeted benefit strategy is essential for retaining and attracting enrollment to an MA-PD plan. The wealth of competitive intelligence in the Milliman MACVAT can assist with developing an effective benefit and premium strategy. Contact us at [email protected] to learn more.
Data sources and methodology
To perform these analyses, we relied on detailed information on MA-PD benefits, premiums, and enrollment as released by CMS. We used enrollment from February of each year. This analysis excludes SNP, PDP, MSA, MMP, PACE, Part B only, and Cost plans. We excluded all U.S. territories from these results.
The estimated value of the Part C and Part D benefits is evaluated using Milliman’s internal pricing models, including the Milliman MACVAT, which is available for external license, calibrated to county-specific 2025 FFS costs with consistent medical management and population base assumptions for each county. The 2022 through 2025 benefits within the 2025 Milliman MACVAT are evaluated on a consistent basis, without adjustment for year-over-year healthcare trends, such that the only difference between the years presented are the benefits and premiums offered by a plan in each year. This information is used in conjunction with plan-specific benefits, premiums, and benchmark revenue by county released by CMS to determine the value added for each plan.
We accounted for plan crosswalks by evaluating premium and enrollment changes as if the crosswalked plan and the surviving plan were the same. This allowed us to capture premium changes from the beneficiary’s perspective.
We excluded the following situations from our analysis, which are rare:
- The only zero-dollar premium plan(s) in the county added a premium, resulting in no zero-dollar premium plans to choose from in the county.
- Plans crosswalked and at least one plan involved (but not all plans) had zero-dollar premiums, meaning members experienced differing premium changes.
Caveats, limitations, and qualifications
The information in this paper is intended to describe changes and trends in the Medicare general enrollment market. It may not be appropriate and should not be used for other purposes.
We relied on publicly available enrollment and premium data from the Centers for Medicare and Medicaid Services and the Milliman MACVAT to support the data presented in this paper. If this information is incomplete or inaccurate, our observations and comments may not be appropriate. We reviewed the data for reasonability but did not audit the data.
Milliman has developed certain models to estimate the values included in this paper. The intent of the models was to estimate the value added of services above traditional Medicare for 2025 MA-PD plans, as well as summarizing all benefits offered in the MA-PD market from 2022 through 2025. Milliman has reviewed the models, including their inputs, calculations, and outputs, for consistency, reasonableness, and appropriateness to the intended purpose and in compliance with generally accepted actuarial practice and relevant actuarial standards of practice (ASOP).
Mary Yeh and Chandler Bentley are members of the American Academy of Actuaries, and meet the qualification standards of the American Academy of Actuaries to render the actuarial opinion contained herein.
1 See the Data Sources and Methodology section for an explanation of plans and premium situations included in all figures and calculations.
2 Piper, B. & Yeh, M. (April 8, 2019). Hang on tight! Why maintaining a zero-dollar MA-PD premium plan is worth the effort. Milliman. Retrieved on April 20, 2025 from https://www.milliman.com/en/insight/hang-on-tight-why-maintaining-a-zerodollar-mapd-premium-plan-is-worth-the-effort.
3 Figure 2 does not consider benefit changes made by zero-dollar premium plans choosing to add a premium from 2024 to 2025. These plans made both benefit enhancements and benefit reductions from 2024 to 2025.
4 Friedman, J., Cates, J., & Phillips, E. (December 15, 2024). State of the 2025 Medicare Advantage industry: General enrollment plan valuation and selected benefit offerings. Milliman. Retrieved on April 20, 2025, from https://www.milliman.com/en/insight/state-of-medicare-advantage-general-enrollment-2025.