If you are a senior on Medicare, there are a few strategies you can use to minimize your out-of-pocket costs especially when it comes to paying premiums. Here are some ways that you can save money on Medicare’s Part B premium:

  1. Apply for Medicare during your Initial Eligibility Period

You are eligible for Medicare when you turn 65. If you do not apply during your initial eligibility period, you may end up paying higher premiums for the rest of the time that you are on Medicare. So it makes sense to enroll in Medicare during the 7-month enrollment period in which you first become eligible. Your initial enrollment period starts on the first day of the month, 3 months before your 65th birthday. It ends on the last day of the month, 3 months after your birthday month. 

The late payment penalty for deferring your enrollment in Medicare Part B is 10 percent for each 12-month period in which you could have applied. Those penalties can add up quickly so be sure to apply as soon as you reach your initial enrollment window – even if you are still working. 

It can surprise Medicare recipients who retire at age 65 to find their Medicare Part B premium is higher than expected because it’s based on an income year when they were still working. Why is that? 

When you initially apply for Medicare, your monthly premium will be determined by your income from 2 years prior until the year that you apply for Medicare. 

For instance, if your yearly income in 2019 was $88,000 or less for an individual, or $176,000 or less if you filed jointly, then your 2021 monthly premium would be $148.50. If your income is above this level, then the monthly premium jumps to $207.90 for the next income tier. In order to keep your premium costs down, be mindful of the time frame used to determine how much your premium will be. If possible, try to defer some of your income to future periods. 

  1. Enroll in a Medicare Advantage Plan with a Giveback Program

One of the benefits of enrolling in a Medicare Advantage Plan (Part C Medicare) is many plans now offer extra funds to cover a beneficiary’s Medicare Part B Premium. This program is called the Medicare Part B Premium Giveback Program or Part B Premium-Reduction Benefit. The carriers offering Medicare Advantage plans created Part B Premium Giveback programs to make Medicare Advantage plans more affordable and appealing. 

How does a Giveback Plan Work?

When you enroll in select Medicare Advantage plans, the private insurance carrier that manages the plan will include an option for paying down some or all of your monthly Medicare Part B premium. This payment is made directly to CMS and the Social Security Administration so you must be paying your Medicare premiums through Social Security to receive the benefit. 

Who is Eligible for a Medicare Giveback Plan?

Not everyone is eligible for the Part B Premium Giveback plan. You won’t qualify if you’re currently receiving financial assistance from a Medicare Savings Plan or Medicaid. Essentially, the premium reduction program is only available to enrollees who pay their Part B premium on their own without government financial help.

It’s important to note that Medicare Advantage plans with Giveback programs are not available everywhere. Medicare Advantage plans are offered regionally by private insurance carriers. Advantage plans with Giveback programs are currently available in 48 states. Most regions should have at least one Advantage plan available per zip code that includes a premium reduction benefit.

How Does the Giveback Program Reduce my Medicare Premium?

The Giveback premium amount could be anywhere from 10 cents per month to $148.50 per month depending on which Medicare Advantage plan you enroll in. The amount that is paid down is never sent to you directly. This benefit is managed between the Social Security Administration and the private insurance carrier that handles your plan. 

The Giveback benefit will either be a credit on your Part B premium statement or it will show up as an increase in your Social Security check. When you enroll in a plan with the premium reduction benefit, it may take a few months for the benefit to show up. If this is the case, you will see an accumulated lump sum.

  1. Apply for a Medicare Savings Plan

Another way to reduce your Medicare premium expenses is to apply for a Medicare Savings Plan. Medicare Savings plans are funded through Medicaid. They were created to help seniors on fixed incomes reduce out-of-pocket expenses for Medicare. 

These programs are managed at the state level. Each state sets income requirements and a personal assets threshold to determine who qualifies. There are 3 types of Medicare Savings Plans that help pay your Medicare Part B premium:

  • Qualified Medicare Beneficiary Program (QMB)
  • Specified Low-Income Medicare Beneficiary (SLMB)
  • Qualifying Individual Program (QI)

Each of these programs has different income requirements. You can check with your local Medicaid office for more details about your state’s program.

The Takeaway

Medical expenses are a major concern for aging seniors. There are many ways to minimize out-of-pocket medical expenses if you are a Medicare recipient.

Make sure to apply for Medicare during your initial eligibility period. If possible, defer any extra income to a future period preferably after you have retired. Doing so will help keep your Medicare premiums low. 

Medicare Savings Programs are available at the state level, helping low-income seniors offset costs of many out-of-pocket medical expenses. Your local Medicaid office can help you determine if you qualify. 

Medicare Advantage plans with Part B Giveback programs are available in most zip codes and are growing in popularity. These monthly premium reduction plans are another benefit of the comprehensive coverage Medicare Advantage offers to Medicare Recipients.