How to Reduce Medicare Premiums

In this article...
  • Find out more about how to reduce your monthly Medicare premium payments, how IRMAA charges work, how to file an appeal and other ways to cut Medicare costs.

While Medicare is designed to make healthcare more affordable for retired adults and those with disabilities, it's not completely free. You may be paying some Medicare premiums, especially if you have Part B coverage or opted for a Medicare Advantage plan. While those premiums tend to be much less expensive than premiums for other types of healthcare, they can still be a hit to your budget.  If you've recently had a change in income and are struggling to pay your Medicare premium, here's a look at some things you can do to help lower your monthly payment.

How to Reduce Your Monthly Medicare Premium

How IRMAA Affects Your Premium Amount

As of 2022, the standard monthly premium for Medicare Part B was $170.10. However, some Medicare beneficiaries actually pay more than the standard Part B and Part D premiums due to IRMAA (Income Related Monthly Adjustment Amount).

Essentially, Medicare utilizes IRMAA to evaluate your modified adjusted gross income from 2 years ago. If it finds you earned over a certain threshold (which typically varies from year to year), you may automatically be subject a higher premium for Medicare Parts B and D. 

Fortunately, if you've recently had a change in income due to losing your job or working fewer hours, you can appeal these IRMAA charges. 

Filing an IRMAA Appeal

One way you can request that IRMAA increases to your monthly premium be reduced or reversed is by filling out and submitting an IRMAA Appeals Form. Typically, the best practice is to personally bring the form to your local SSA (Social Security Administration) office after completing it. However, you can also mail it if necessary.

Be sure to include supporting documentation if you can, such as a termination notice from your employer or pay stubs that prove your income has changed drastically since 2 years ago. As long as you meet just one of the qualifying events listed on the Appeals Form, there's a good chance you'll have a lower premium approved. 

Medicare Savings Programs

There are also certain circumstances in which you may qualify for assistance from the state to help all or some of your Medicare Part B monthly premium — as well as deductibles, copays, and co-insurance — through Medicare Savings Programs. Generally speaking, these programs have an income limit of $1,080 per month. These plans often vary from state to state, and if you feel you may qualify for one, you should consider contacting your state Medicaid department. 

Shopping Medigap Rates

If you have a Medicare Supplement plan, one way to lower your total costs for health insurance is to shop plan rates for that supplemental coverage. Many people assume they must wait until Medicare enrollment season every fall to shop Medicare Supplement plans, but this is not the case. In fact, Medicare Supplement plans are not subject to the fall election-oriented period; you may be able to choose a new plan anytime in the year.

If you've had your Medicare Supplement plan for a year or more, you may have received some rate increases already. You may be able to find the same plan for a lower price in your local area with a bit of shopping around. 

Other Ways to Cut Down Premium Costs

  1. Get a Medicare Advantage Part B premium reduction. Some Medicare Advantage plans have a built-in premium reduction, reducing the total costs you pay for bundled Medicare coverage.
  2. Get a low-income subsidy. Medicaid enrollees automatically qualify for the Extra Help subsidy. Even if you don't qualify for Medicaid, you may still be eligible for Extra Help. 
  3. Deduct Medicare premiums from your taxes. Deductible medical expenses include Medicare Advantage, Part B, and Part D premiums. This does, however, come with a few limitations: you can only deduct medical expenses once you pay more than 10% of your income annually for medical needs.
  4. Use your HSA (health savings account) to pay your Medicare Advantage, Part B, or Part D premiums. You cannot, however, use HSA funds to make premium payments on a Medigap plan. 

Pre-Enrollment Tips on How To Keep Premiums Low

If you're a new enrollee, there are plenty of steps you can take to preemptively keep your Part B and D premiums low. The overall goal with each of these steps is to maximize cash flow without increasing your taxable income. 

1. Maximize Contributions to HSAs

As mentioned above, you can use your personal HSA funds to pay your Medicare Advantage, Part B, or Part D premiums. Making contributions to an HSA with those potential expenses in mind can help you reduce how much you have to come up with each month because you've already saved the money for those purposes.

2. Consider a Home Equity Conversion Mortgage

A home equity conversion mortgage (HECM) is a type of reverse mortgage that's directly insured by the federal government. An HECM can allow potential enrollees to turn their home's equity into tax-free cash flow, and you can use some of that money to cover your healthcare costs. 

3. Life Insurance Policy Cash Value Withdrawals

If you own a whole or permanent life insurance policy, you're probably aware that these types of life insurance policies have a cash value. You may be able to borrow against your policy's accumulated value to fund some living expenses, thus avoiding an increase in your modified adjusted gross income (MAGI), from which your premium costs will be directly determined. 

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