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How to Reduce Medicare Premiums and Save Money

March 24, 2022

How to Reduce Medicare Premiums and Save Money

While Medicare Part A is premium-free to most Medicare beneficiaries, Medicare Part B has a monthly premium. Even if you choose a Medicare Advantage plan you’ll be paying at least your Medicare Part B premium to get coverage, which is $170.10 in 2022.

That can be a lot of money if you’re retired, disabled, or struggling with significant health concerns. Are you wondering how to reduce Medicare premiums? There are ways to save money on your Part B premium.

This guide will show you some simple ways to save money on Medicare premiums so you’ll be better able to manage your budget.

1. Sign Up When First Eligible

The first step to keeping your Part B premiums affordable is to sign up when you’re first eligible. If you don’t, you’ll pay a late enrollment fee when you decide to sign up for Part B later on.

Your premium will go up 10% for each 12-month timeframe that you didn’t have Part B, and you’ll pay this higher premium every month. This really adds up, so make sure you enroll in Part B or Medicare Advantage during your initial enrollment period.

There is one exception — if you have qualifying coverage from a group health insurance plan, you can delay getting Part B without the penalty. This usually happens if you’re still working after your 65th birthday and have insurance through work. However, when that coverage ends you’ll be given a special enrollment period to start your Medicare coverage. If you delay enrollment at that time, you’ll start building up a penalty.

Understand Medicare Enrollment Periods

When can you enroll in Medicare?

Your initial enrollment period starts three months before you turn 65, includes your birthday month, and extends three months afterward. You’ll want to review the available plans in your area, including Medicare Supplement (Medigap) plans, during this seven-month period so that you end up with the coverage you need.

After your initial enrollment period, if you want to enroll in Part A or Part B, you can only do that during the General Enrollment Period, which occurs January - March of every year. If you enroll in Medicare Part A or B during the GEP, your coverage will be effective July 1st of that year.

For your overall Medicare plan options, you can make updates to your Medicare coverage during annual enrollment each fall. Annual enrollment goes from October 15 to December 7 of each year, and you can make changes to both Original Medicare and Medicare Advantage plans. For example, if you have Original Medicare, you can join an Medicare Advantage plan during the AEP; or, say you were enroll in a Medicare Advantage plan, you could choose to go to Original Medicare coverage along with a stand-alone Part D plan. Again, the AEP is the time everyone in Medicare gets to change their Medicare options.

Finally, if you have a Medicare Advantage plan, you can make changes to your plan during the Medicare Advantage Open Enrollment period between January 1 and March 31 each year.

2. Sign Up For A Medicare Savings Program (MSP)

Another option as you look at how to reduce the Medicare Part B premium (or Part A premium, if you pay one) is to sign up for a Medicare Savings Program (MSP), which are based on your assets and income.

There are four kinds of Medicare savings programs:

  • The Qualified Medicare Beneficiary Program (QMB) is the most comprehensive and has the strictest requirements. If you qualify, the QMB program will pay all of your premiums along with your deductibles, coinsurance, and copayments for Medicare-covered care and items.
  • The Specified Low-Income Medicare Beneficiary (SLMB) program pays only Part B premiums, and for those who can earn more and have more resources that those eligible for QMB.
  • The Qualifying Individual (QI) program also pays Part B premiums for those with limited income and resources. You have to reapply every year, and QI doesn’t apply to those with Medicaid.
  • Finally, if you’re disabled but working, the Qualified Disabled and Working Individuals (QDWI) program helps pay Part A premiums for those that lost their disability benefits and premium-free Part A due to returning to work.

3. Defer Your Income

If you have a higher income, you may have noticed that your Part B premium is higher than the standard amount. Understanding how to lower the Medicare Part B premium is important for higher-income Americans.

Deferring income to future tax years can help you keep your Part B premium lower than it would otherwise be. Your premium is based on your tax return from two years earlier, so your 2022 costs are due to your 2020 tax return.

Do Medicare Premiums Decrease With Income?

Your Medicare premiums are set at the standard amount unless you are higher income or you qualify for an MSP. If you make more than the high-income threshold, the more you make the more you will pay. For example, for 2022, an individual that made more than $91,000 in 2020 will pay a higher premium. If you made over $114,000 in 2020HSA , you’ll pay more than someone who makes $100,000.

Lowering your income below the higher-income threshold will help keep your premiums lower, and if you are already lower-income, consider applying for an MSP to take care of your Medicare premium for you.

4. Deduct Premiums From Your Taxes

Another way to save money on Medicare is to use specific medical expenses as tax writeoffs. This includes deducting your Part B, Part D, and/or Medicare Advantage premiums from your taxes up to a specific limit.

You can only deduct medical expenses that you paid out-of-pocket that exceed 10% of your Adjusted Gross Income (AGI). You also have to itemize deductions instead of taking the standard deduction.

Learn More About How to Save on Medicare Premiums

Through this guide, we’ve provided some answers to the question, “How can I reduce my Medicare premiums?” Taking these steps can make a big difference in how much you pay for Medicare over the course of your life.

If you have other questions about Medicare premiums or are interested in talking to a licensed agent about your plan options, we’re here to help. Contact us today!

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