How Can I Reduce My Medicare Premiums?

How Can I Reduce My Medicare Premiums?
Medicare premiums

The truth is that Medicare premiums can sometimes come as a shocker to new Medicare beneficiaries. Most of them tend to believe that Medicare is 100% free, which isn’t the case.  Even though the federal government has been deducting Medicare taxes from your paychecks for years, the deductions are only meant to cover your Medicare Part A premiums and social security checks.

The deductions don’t cover your Medicare Part B and D premiums. A significant number of new Medicare beneficiaries are never prepared to pay even the base premium of $170.10 in 2022, let alone higher premiums.

Fortunately, there are several things you can do to save on your Medicare premiums. So, if you have been having trouble paying your Medicare premiums, you came to the right place.

In this post, we discuss some of the things you can do to reduce your premiums. So, let us get started.

1. Enroll on Time

Many people are automatically enrolled in Original Medicare when they turn 65. However, others need to sign up manually. The first time you can enroll in Medicare is during your Initial Enrollment Period that starts three months to your 65th birthday, includes your birthday month, and extends three months after your birthday month.

That provides you with a seven-month window to enroll in Medicare. You need to act before this period expires because some parts of Medicare attract late enrollment penalties. It means that you will be forced to pay extra for your monthly premium if you don’t enroll at the right time.

For Medicare Part A, your monthly premium can increase by up to 10% if you enroll late. It means that you will pay the increased premium for twice the number of years you could have enrolled in Medicare Part A but failed to do so.

For Medicare Part B, your monthly premium can also increase by up to 10% for each 12-month period that you are eligible to enroll in Part B but choose not to. You will pay the increased premium the entire time you have Part B.

You may also pay additional costs for Medicare Part D premiums if you go for at least 63 days after your initial enrollment period without some creditable prescription drug coverage.

2. File a Medicare IRMAA Appeal

If your income makes you pay more for Medicare Part B and D, you can appeal that and start paying relatively low premiums. Typically, Social Security uses your adjusted gross income from the past two years to determine your Medicare Premiums.

So, how is this done?  Currently, if your IRS tax return from two years ago shows that you earned more than $88,000 as an individual or $176,000 as a household, then you will be required to pay a relatively higher premium.

This is referred to as Income-Related Monthly Adjustment Amount (IRMAA), and Medicare premiums for high-income people who are fully assessed an IRMAA can cost a bundle.

Medicare Premiums

One of the top reasons you may still be categorized as a high-income individual or household is that you recently retired. It means your income from two years ago when you were still working is higher than now when you are retired.

If that is the case, you can easily file a reconsideration request to appeal your current Medicare IRMAA. Social Security will only ask you for proof of higher-income then versus now. If you can prove that your current income is lower, your Medicare premiums will be lowered to reflect your current income.

3. Find Out If You Are Eligible for Premium-Free Part A

Knowing if you will be required to pay a monthly premium for Medicare Part A can help you plan which type of Medicare to join. While most people don’t pay a monthly premium for Medicare Part A because they have already paid Medicare taxes during their working years, others are required to pay a premium.

Typically, if you did not pay Medicare taxes for at least 40 quarters (ten years), you will be expected to pay a premium for your Part A coverage. In 2021, the average cost of Part A premium is between $259 and $471 per month.

If you are not eligible for premium-free Part A, you may be better off enrolling in Medicare Advantage to save some money.

4. Don’t Go Too Long without Part D Coverage

Just as you will be penalized for going too long without Medicare Part B coverage, so too can the same thing happen if you go for 63 days or more without creditable prescription drug coverage.

The penalty you will face in this case is 1% of the national base beneficiary premium times the number of full months you stayed without creditable prescription drug coverage.

For instance, if the national base beneficiary premium is $100, you will be charged $10 multiplied by the number of months you stayed without coverage.  If you went 20 months without coverage, you would be expected to pay a penalty of $200.

5. Pay Medicare Premiums with HSA

If you are like most American seniors, then you probably have some money saved in your health savings account by the time you enter retirement. Many employers offer high-deductible health insurance plans that enable their employees to open and contribute to a health savings account.

You need to keep in mind that any money you save in your health savings account is your money forever. Any funds you contribute go tax-free and come out tax-free whenever you use the funds for qualified expenses.

Medicare Premiums

One of the qualified expenses that you can use your HSA to settle is Medicare premiums. You can use the savings to pay your Medicare Parts A, B, and C premiums. However, you cannot use the savings to pay for your Medigap premiums.

Since you never paid any tax on the money, you are technically reducing what you pay on your Medicare premiums.

6. Consider Medicare Advantage

Medicare Advantage plans are sold by private insurance companies. These plans usually cover everything under Original Medicare but include additional benefits such as vision care, dental care, and hearing aids.

Most Medicare Advantage plans usually offer relatively lower monthly premiums. As such, they may be an excellent option for individuals looking for relatively lower premium costs.

These plans will save you a big time if you are not eligible for premium-free Part A, need to pay late enrollment penalties for Medicare Parts A and B, or have to pay an IRMAA for your Medicare Part B plan.

7. Get Help Paying Medicare Premiums

If you are genuinely struggling to pay your Medicare premiums, you should consider applying for the Medicare Savings Program (MSP). These programs are specifically designed to assist with paying your Medicare Part B and D premiums.

Medicare premiums

You can apply for assistance through the Medicaid office at the Department of Health and Human Services (HHS) in your state.

If you qualify for assistance due to low income, the federal government will step in and start paying your Part B and D premiums. Typically, you may qualify to get some or all of your Medicare premiums covered.

8. Get Medicare Extra Help

Extra Help is another program specifically designed to help individuals with limited income or no income at all pay for the costs associated with Medicare prescription drug plans.  It covers monthly premiums, copays, and deductibles.

It is estimated that the assistance provided by Extra Help is worth approximately $5,000 every year. Furthermore, if you use Extra Help, you won’t be subjected to a late enrollment penalty for Part D plans.

However, to qualify for Extra Help, you must meet specific limits on your income and resources. You can find out if you qualify by applying for the program or visit SSA’s Extra Help Official site.

Some people qualify automatically for Extra Help. They include those with full Medicaid coverage, those who receive help from Medicare Savings Program, and those getting supplemental security income benefits from Social Security.


The truth is that the cost of Medicare premiums can add up pretty quickly. However, there are lots of things you can do to help bring down the costs.

Do you still have any questions about how you can reduce your Medicare premiums? Feel free to contact us today to speak with one of our experienced and licensed insurance agents.