How Can You Save on Your Medicare Premiums?

Medicare premiums are the recurring costs individuals pay for their healthcare coverage. This federal health insurance program is divided into several parts: Part A (Hospital Insurance), Part B (Medical Insurance), Part C (Medicare Advantage), and Part D (Prescription Drug Coverage). While most individuals receive Part A without a premium, premiums are typically associated with Parts B, C (if applicable), and D. Understanding how these premiums are determined and exploring available strategies can help individuals potentially lower their Medicare costs.

Understanding Premium Determination

Medicare Part A, which covers hospital insurance, generally has no monthly premium for most individuals. This applies if you or your spouse paid Medicare taxes for at least 10 years. Individuals who do not meet this requirement may need to pay a premium, which can be up to $518 per month in 2025 for those with fewer than 30 quarters of coverage.

Medicare Part B, covering medical insurance, carries a standard monthly premium. For 2025, the standard Part B premium is $185.00. This amount can increase based on an individual’s income, known as the Income-Related Monthly Adjustment Amount (IRMAA). IRMAA is an additional charge for higher-income beneficiaries.

The Social Security Administration (SSA) determines IRMAA based on your Modified Adjusted Gross Income (MAGI) from tax returns filed two years prior. For instance, your 2025 Medicare premiums are based on your 2023 MAGI. For 2025, IRMAA applies if a single individual’s MAGI exceeds $106,000, or $212,000 for those married filing jointly. Medicare Part D premiums vary by plan. Many Medicare Advantage (Part C) plans offer a $0 monthly premium, though beneficiaries must still pay their Part B premium.

Strategies for High-Income Earners

Individuals with higher incomes can implement specific strategies to potentially reduce or avoid IRMAA. Since IRMAA is directly tied to Modified Adjusted Gross Income (MAGI), managing taxable income becomes a central focus. Strategic tax planning can effectively lower your MAGI. This may involve tactics such as tax-loss harvesting, which uses investment losses to offset capital gains and ordinary income.

Qualified Charitable Distributions (QCDs) from Individual Retirement Accounts (IRAs) can also be beneficial for those aged 70½ or older, as these distributions are excluded from taxable income and thus reduce MAGI. Optimizing withdrawal strategies from retirement accounts, such as performing Roth conversions during years of lower income, can help manage future taxable income and potentially keep MAGI below IRMAA thresholds.

Life-changing events can also provide an opportunity to request a new IRMAA determination. If a significant event has substantially reduced your income, such as marriage, divorce, death of a spouse, work stoppage or reduction, or loss of income-producing property, you can appeal your IRMAA decision. Consulting with a financial advisor or tax professional is advisable for personalized guidance on these complex income management and tax planning strategies.

Saving Through Plan Selection

Choosing the appropriate Medicare plan can significantly impact monthly premiums and overall healthcare costs. Medicare Advantage (Part C) plans, offered by private insurance companies, often provide a $0 monthly premium beyond the required Medicare Part B premium. These plans bundle Part A and Part B coverage, and frequently include prescription drug coverage and additional benefits not covered by Original Medicare, such as vision, dental, and hearing services. While a $0 premium can be appealing, it is important to consider that these plans typically have network restrictions and different cost-sharing structures, including deductibles, copayments, and coinsurance. Comparing plans based on total out-of-pocket costs, not just the premium, is therefore important.

Medicare Part D plans, which provide prescription drug coverage, have premiums that vary substantially among different plans. Beneficiaries should use the Medicare Plan Finder tool to compare plans based on their specific prescription drug needs. This comparison should account for both the monthly premium and potential out-of-pocket drug costs, including deductibles and co-payments, as a higher premium plan might offer better overall value if it covers specific expensive medications more favorably.

Medigap, or Medicare Supplement Insurance, helps cover out-of-pocket costs not covered by Original Medicare (Parts A and B), such as deductibles, copayments, and coinsurance. Medigap plans have their own monthly premiums, which vary by plan type, insurance provider, and geographic location. All Medigap plans of the same letter (e.g., Plan G) offer the same standardized benefits, regardless of the insurance company selling them. However, the premiums charged for these identical plans can differ significantly between companies. Comparing various Medigap plans and providers is essential to find the most cost-effective option that aligns with desired coverage levels.

Assistance Programs for Lower Incomes

Several government programs exist to assist individuals with lower incomes in managing their Medicare premiums and other healthcare costs. Medicare Savings Programs (MSPs) help eligible beneficiaries pay for some or all of their Medicare Part A and/or Part B premiums, deductibles, coinsurance, and copayments. There are four main types of MSPs:

• The Qualified Medicare Beneficiary (QMB) Program
• The Specified Low-Income Medicare Beneficiary (SLMB) Program
• The Qualified Individual (QI) Program
• The Qualified Disabled and Working Individual (QDWI) Program

The QMB Program assists with Part A premiums, Part B premiums, deductibles, coinsurance, and copayments for Medicare-covered services. The SLMB and QI Programs specifically help pay for Medicare Part B premiums. Eligibility for MSPs is determined based on income and resource limits, which are subject to annual adjustments and can vary by program. Individuals can typically apply for these programs through their state Medicaid offices.

The Low-Income Subsidy (LIS), also known as “Extra Help,” is another federal program designed to assist with Medicare Part D prescription drug plan costs. LIS helps cover Part D premiums, deductibles, and co-payments. Eligibility for Extra Help is based on specific income and resource limits. For example, in 2025, individuals with monthly income up to $1,976 and couples with up to $2,664 may be eligible, provided they meet asset limits. Applications for Extra Help can be submitted through the Social Security Administration, either online, by phone, or in person. These assistance programs can substantially reduce or even eliminate Medicare premiums for those who qualify. It is often beneficial for individuals to check their eligibility, as income and resource thresholds can be higher than commonly assumed.

Coordination with Other Health Coverage

Having other health coverage can influence Medicare enrollment decisions and premium payments. If an individual is still employed, or is covered through a spouse’s current employer or union group health plan, they may be able to delay enrolling in Medicare Part B without incurring a late enrollment penalty. This is generally permissible if the employer has 20 or more employees, as the employer plan typically acts as the primary payer in such cases. Delaying Part B enrollment can result in significant savings on monthly premiums during the period of continued employer coverage.

Once employer coverage ends, or employment ceases, individuals typically qualify for a Special Enrollment Period (SEP) to sign up for Part B without penalty. This SEP usually lasts for eight months from the date employment ends or the group health plan coverage terminates, whichever occurs first. It is important to note that COBRA, retiree health benefits, or severance packages generally do not qualify as “current employment-based health coverage” for the purpose of delaying Part B without penalty.

Certain other types of health coverage, such as TRICARE, Veterans Affairs (VA) benefits, and Federal Employee Health Benefits (FEHB), also interact with Medicare. Individuals with VA benefits may choose to rely on them for their healthcare needs, potentially avoiding the need for Medicare Part B premiums. However, for services received outside of VA facilities, Medicare Part A is usually necessary for VA benefits to cover them. Federal employees enrolled in FEHB can coordinate their coverage with Medicare, and while they are not required to enroll in Medicare Part B, doing so can provide more comprehensive coverage and reduce out-of-pocket costs. For active federal employees, FEHB is typically primary, and Medicare is secondary; for annuitants, Medicare is usually primary. Understanding these coordination rules is essential to make informed decisions about Medicare enrollment and premium payments.