You might wonder how people decide what Medicare program to choose. Reasons vary, person to person, but they revolve around priorities like easy access to care, national coverage, low out-of-pocket for services and low premiums.
Focusing on low monthly premiums alone can have some negative consequences. For example, with Medicare Advantage, a $0 premium might mean a high deductible, which is the amount you have to spend on health care before your plan kicks in. Or if you choose Original Medicare, which has no premium of its own, and you don’t buy a Supplemental Insurance (Medigap) plan, you will face paying the 20% of all Medicare-approved services that Original Medicare does not cover.
With health care, everywhere you look, you will find premiums to pay: Part B (medical insurance), Part C (Medicare Advantage), Part D (prescription drugs), Medigap, and insurances for vision, dental and hearing coverage.
But there are ways to lower your overall premium burden, including some financial assistance. So let’s look at five ways to save you some money.
How bundling your services can help
If you choose a Medicare Advantage plan, also called Part C, you will still have to pay all or part of your Part B premium. But most Medicare Advantage plans provide prescription drug coverage (Part D), plus other coverage such as dental, vision, hearing and more with no additional premiums. But it’s up to you to look at different plans to see what those services include.
Takeaway action step: When you research plans on the Medicare.gov website, and have identified a few interesting ones, look to see what extra benefits are included. Ideally, you should also contact the insurance company or your broker to ask precisely what each benefit covers.
Medicare Savings Programs and how they can help
If you have limited income and resources, your state can help you access the federally funded Medicare Savings Programs. Medicare Savings Programs offer four different versions (QMB, SLMB, QI and QDWI), each with distinct qualifications and benefits. You may qualify for help with Medicare Part A and Part B premiums, plus other out-of-pocket costs. These programs are accessed through your state’s Medicaid office, and if you qualify, you will also be eligible for Extra Help for prescription drugs (see below).
Takeaway action step: Contact your State Medicaid Program if you think you might qualify for assistance. Then, fill out an application to find what you are eligible for, even if you think your income or resources might be too high.
Extra Help for Part D premiums
If you have Original Medicare (or a Medicare Advantage without prescription drug coverage), you may look to a private Part D prescription drug plan to help cover those costs. You should select a Part D plan based on your existing medications: does the plan’s “formulary” list include them, and at what cost? But if premiums are a concern, you also want to compare the monthly premiums of similar plans.
Extra Help helps lower the cost of prescription drugs, including plan premiums. You qualify if you have full Medicaid coverage, receive Supplemental Security Income (SSI) benefits or get help from a Medicare Savings Program (MSP) in paying your Medicare Part B premium.
Takeaway action step: You can apply for the Extra Help program through the Social Security Administration.
Another way to lower your Part B premium
Virtually everyone has to pay the Part B premium. (In fact, it is deducted from your Social Security check if you’ve already claimed your Social Security retirement benefits.) In 2022, that means at least $170.10 is taken out of your check each month. But multiple Zip codes across 48 states offer Medicare Advantage plans that pay part of your Part B premium.
These are called “give backs” or premium reductions. You (and not a state or local program) must be paying your own Part B premium, and you will receive the benefit through Social Security.
Takeaway action step: Working with an insurance broker may be the best way to know if your Zip code gives you access to any plans with a premium reduction. If you find such a plan, be sure that higher cost-sharing (such as copays and coinsurance) doesn’t wipe out the benefit of the reduction.
Avoiding or reversing an IRMAA increase in premiums
Medicare premiums are calculated based on your IRS tax return from two years ago. If you earned more than $88,000 singly or $176,000 filing jointly, your Part B and Part D premiums can increase considerably. (For example, the standard $170.10 Part B premium can go all the way up to $578.30 a month.) This increase is called an Income-Related Monthly Adjustment Amount (IRMAA).
Suppose your income has dropped in the past two years through retirement or loss of a spouse, for example. In that case, you can file a reconsideration request with Social Security, appealing your Medicare IRMAA. Your premiums might be reduced through IRMAA cancellation or reduction by showing how your income is lower.
Takeaway action step: Check the IRMAA chart to see how your income can affect your premiums. If they are affected, contact Social Security to initiate the appeals process.