11 Ways to Save on Medicare Premiums With the Medicare Savings Program, Extra Help, and More
Key takeaways:
If you enroll in Medicare, you may have to pay premiums for Parts A, B, C, and D. But you can shop around and compare Medicare plans each year during open enrollment to save money.
You can also check to see if you qualify for help paying premiums through a Medicare Savings Program (MSP) or Extra Help.
You may also be able to use premium tax deductions, a health savings account (HSA), or a Medicare Advantage plan to lower your premiums.
Table of contents
With Medicare premiums increasing, you may feel squeezed by the growing costs. However, there are ways that you can ease the hit to your wallet and minimize your expenses. By knowing where to look, you can take advantage of various opportunities to save on your Medicare coverage.
What are Medicare premiums?
Medicare is a federal health insurance program primarily for people over 65, as well as some younger people with disabilities or end-stage renal disease.
A Medicare premium is the monthly amount you pay for your health insurance coverage. Premiums are separate from other healthcare expenses, such as deductibles and coinsurance. Medicare has several parts that help cover specific services and come with different costs.
Search and compare options
What are the best ways to save on Medicare premiums?
There are options that can help you cut your Medicare premium expenses. Below are 11 ways to save.
1. Enroll when eligible to avoid a penalty
The best time to sign up for Medicare is during your initial enrollment period. This 7-month period starts 3 months before your 65th birthday and ends 3 months after. If you don't sign up during your initial enrollment period, you can enroll between January 1 and March 31 each year.
But if you don’t enroll in Medicare when you’re first eligible, and you don’t have creditable coverage — for example, health insurance through your employer — you’ll pay a 10% penalty on your Medicare premium. This penalty continues for the rest of your life. Signing up for Medicare when you first qualify helps you avoid extra penalties.
2. Select the right plan
Choosing the right Medicare plan is important for keeping your costs down. During Medicare open enrollment, take the time to compare plans to find one with affordable premiums and coverage that works for you.
You can use this Medicare plan finder tool to assist in your research. Once you answer a few questions about your health, prescription medications, and coverage preferences, the tool will provide you with a list of Medicare plans in your state that may be good options for you. You can then compare costs for different Medicare plans side-by-side to see which one best fits your healthcare needs and budget. You can also look up the pricing for your prescription medications under each plan.
3. Check eligibility for a Medicare Savings Program
A Medicare Savings Program (MSP) can help people who have an income below the federal threshold pay for their Medicare costs.
Want to lower your out-of-pocket expenses for prescription medications under Medicare Part D? See if you qualify for Medicare Extra Help.
Is Medicare Part A free? Your eligibility for premium-free Medicare Part A depends on your work and tax histories.
Surprising Medicare-covered items: Beyond the extensive list of common services and supplies that are covered by Medicare, there are some, such as acupuncture and nutrition therapy services, that may surprise you.
There are four types of assistance:
Qualified Medicare Beneficiary (QMB)
Specified Low-Income Medicare Beneficiary (SLMB)
Qualifying Individual (QI)
Qualified Disabled and Working Individual (QDWI)
Each level has different income limits to qualify, and the eligibility rules vary by state. You can contact your state Medicaid office to see if you're eligible and apply for an MSP. An MSP can help pay for more than your premiums. It might also help you with Part A and Part B deductibles, coinsurance, and copayments.
Read more like this
Explore these related articles, suggested for readers like you.
4. Apply for the Extra Help program
The Extra Help, or Low-Income Subsidy (LIS), program is a Medicare initiative that helps people with lower incomes pay for prescription medication coverage under Medicare Part D. If you qualify, Extra Help may pay for your Part D premiums, deductibles, and coinsurance costs each month.
If you qualify for Extra Help, you also won't have to pay a Part D late penalty. This penalty gets added to your premium if you wait too long to sign up for Part D.
Some people automatically qualify for Extra Help if they:
Have full Medicaid coverage
Receive help from their state to pay their Part B premiums through an MSP
Receive Supplemental Security Income (SSI) benefits from Social Security
If you don’t automatically qualify, you must apply for Extra Help to see if you qualify based on your income and resources.
5. Use HSA funds
If you have money in a health savings account (HSA), you can use it to pay for qualified premiums not covered by Medicare. This includes premiums for Part A, Part B, Part C (Medicare Advantage), and Part D prescription medication coverage. But premiums for a Medicare supplement insurance policy (Medigap) are not eligible HSA expenses.
The benefit of using your HSA funds to pay for premiums is that you save on taxes. You can't contribute to an HSA once you've enrolled in Medicare, but you can use what's already in the account to pay for qualified Medicare costs.
6. Take advantage of Medicare premium tax deductions
You may be wondering if Medicare premiums are tax deductible. The answer is yes. Most people must itemize deductions on their federal tax return to receive the benefit. If you itemize your deductions, you can only claim medical expenses that exceed 7.5% of your adjusted gross income (AGI). But, if you are self-employed, the rules are different. You may be able to deduct up to 100% of qualifying Medicare premiums even if you don’t itemize.
You can also deduct any coinsurance costs and deductibles you paid for Medicare-covered services. If you paid for services that Medicare didn't cover, such as dental care and eye care, those expenses are also tax deductible if they’re medically necessary.
7. Shop for Medicare Part D plans annually
Private insurers offer different Part D (prescription medication coverage) plans. And the premiums and drug formularies for these plans can change each year.
It's important to shop around and compare Part D plans every year during Medicare open enrollment, from October 15 to December 7. Comparing premiums and coverage details on an annual basis allows you to get the best deal.
8. File an IRMAA appeal
Some people who have Medicare pay an income-related monthly adjustment amount (IRMAA). This amount is added to your Part B and Part D premiums if your income exceeds the annual threshold. The U.S. Social Security Administration (SSA) decides if you owe an IRMAA based on your tax return from 2 years ago. That means the agency uses your 2023 tax return to determine whether you have an IRMAA in 2025.
If your income has changed due to retirement, divorce, or the death of a spouse, you can file an IRMAA appeal. When you file the appeal, you’re asking the SSA to review your case again.
To appeal, you fill out a life-changing event form explaining your situation and attach supporting documents showing the reason for your change in income. If the SSA approves your appeal, your premiums will be adjusted. If the SSA denies your appeal, you can request further reviews from Medicare and the courts. Keep in mind that the IRMAA appeal process takes time.
But appealing an incorrectly applied IRMAA premium may save you in Medicare premiums, and it's still worth a try despite the time the process takes.
9. Look into Medicare Advantage
Not everyone realizes that Medicare Advantage plans can offer savings on monthly insurance premiums. These plans, which are provided by private insurers, bundle Medicare Part A, Part B, and usually Part D as an alternative to original Medicare.
Many Medicare Advantage plans include extra benefits that are not offered by original Medicare, such as dental or vision coverage. Some plans also have zero premiums beyond the cost of Part B. The extra benefits and zero premiums can mean that you pay less than you would with original Medicare and a separate Part D plan.
10. Consider a special needs plan
Special needs plans (SNPs) are a type of Medicare Advantage plan. These plans serve three groups: people with specific health conditions, people with Medicare and Medicaid, and people who live in nursing homes or other qualified facilities.
SNPs must cover all the services that original Medicare covers. But they also offer extra benefits tailored to their members' special needs. Some SNPs also help pay for Medicare Part B premiums based on financial need.
If you qualify for and are considering enrolling in an SNP, check if the plan offers assistance with premiums and other added perks. You may be able to access additional coverage at little to no extra cost that can add up to savings.
11. Find out if your employer offers a qualified small employer HRA
If you have Medicare but are still working, ask your employer if they offer a qualified small employer health reimbursement arrangement (QSEHRA). A QSEHRA allows small employers, such as nonprofits and small businesses, to provide tax-free money to employees to help cover qualifying medical expenses. This includes premiums for health plans such as Medicare.
It’s worth asking about a QSEHRA, as it may lower your out-of-pocket costs.
Can you avoid paying a Medicare premium?
In some cases, yes. Not everyone who has Medicare pays a premium. But most people pay premiums for at least part of their Medicare coverage. Depending on your income, work history, and insurance plan, you may have to pay a premium for:
Medicare Part C (Medicare Advantage)
The bottom line
With Medicare premium costs increasing, it's important to look at all the ways you may be able to lower your expenses. This includes taking time each year to review and choose the best coverage for you. You can also see if you qualify for help with premiums and consider using tax-free accounts and tax deductions to maximize savings. With a few strategies, you can keep your Medicare premiums under control and make your healthcare dollars go further.
Why trust our experts?
References
HealthCare.gov. (n.d.). Qualified small employer HRAs (QSEHRAs).
Medicare.gov. (n.d.). Help with drug costs.
Medicare.gov. (n.d.). Medicare Savings Programs.
U.S. Social Security Administration. (2023). Form SSA-44: Medicare income-related monthly adjustment amount - Life-changing event.
U.S. Social Security Administration. (2024). HI 01140.001 - Overview of the appeals process for the income-related monthly adjustment amount.
