18 Ways To Lower Your Medicare Premiums and Out of Pocket Expenses

Whether or not you have an income during retirement, there are ways to save money on out-of-pocket expenses that Medicare does not cover. Medicare Supplements can greatly reduce premiums, coinsurance and copays. For individuals who are struggling financially, there are several programs, including Medicaid and other Medicare Savings Programs, for which they may be eligible. An alternative to original Medicare, called Medicare Advantage, may just be the key to huge savings and more comprehensive coverage.

The following is the most comprehensive list of ways people can lower their health care costs while on Medicare.

1. Medicare Supplements

Adding a Medicare Supplement to original Medicare can alleviate some financial burdens, especially if you’re someone who regularly sees providers. There may be a small premium for each plan, but you may cut hundreds of dollars each year from out-of-pocket expenses for emergency care while traveling abroad, medical equipment, skilled nursing care and more. There is also an out-of-pocket limit, after which all your costs are covered.

Each year that Medicare Open rolls around in October, you can buy or switch Medicare Supplements, also called Medigap. There are as many as 10 Medicare Supplements plans you can choose from, so see what each Medigap plan offers before you call Medicare.

You can buy more than one supplement, and are only unable to buy a plan if you have a Medicare Advantage plan (see below). Do not confuse Plan D Prescription Drug plan (see #11 below) with Medigap policies.

2. Switching to Medicare Advantage

Medicare Advantage is also called Part C because it replaces original Medicare Part A and B by providing both hospital and medical insurance.

You can compare Medicare Advantage plans for free. Some will have no premiums at all but that should not be the only deciding factor. It’s important to find a plan that includes dental and vision, preferably hearing too, none of which is covered with original Medicare. Also, you’ll want a plan that has a prescription drug plan, which most do include.

Medicare and Medigap are entirely different, and you can’t buy both. Note also that Medicare Advantage has an out-of-pocket limit, which original Medicare does not. There are HMO and PPO Medicare Advantage (MA) plan options, and each plan has a network of doctors, much like regular health insurance, which means you pay less when you see a provider in-network.

3. Supplemental Security Program

Supplemental security income (SSI) is available to low-income individuals, based on income thresholds. You may be eligible if you have little or no resources or income. You will also be considered based on your assets, such as money in a checking, savings, or retirement account, stocks and bonds.

Supplemental security income is different from social security income If you’ve worked in the past, you may receive social security income when you retire. This amount does not depend on where you live.

You may, however, be eligible for SSI if your social security income is below the threshold, based on where you live, according to Federal and State laws.

4. Medicaid

Medicaid is a state and federal-funded health insurance option for low-income individuals.Each state runs its own program, so eligibility requirements and benefits vary per state. Unlike Medicare, Medicaid covers nursing home care and personal care services. There are no monthly premiums, but there may be a copay when services are rendered by physicians or other providers.⁽¹⁾ You can be dually eligible for Medicare and Medicaid.⁽²⁾ To find out if you’re eligible, contact your county or state’s Medicaid or state assistance program.

5. Medicare Savings Programs

Some Medicare beneficiaries are eligible for Medicare Savings Programs that lower Part A and Part B of a Medicare policy. For some, they may also get coverage for their deductible, copayment and coinsurance. Each state has its own set of programs, so you’ll have to apply through your state. If you’re unsure, it’s worth applying.

6. Qualified Medicare Beneficiary (QMB) Program

Do you need help paying Part A and Part B premiums for hospital and medical coverage? How about copays, coinsurance and meeting your deductible? Here’s how to get assistance. Income limits are the same for all states when it comes to the Qualified Medicare Beneficiary (OMB) Program, but income limits are higher in Alaska and Hawaii.⁽³⁾

*Resources Counting Towards a Limit

• Checking account balance
• Savings account balance
• 401K
• IRA
• Stocks
• Bonds
• Multiple cars

Your home and a single car will not count. Burial plots and expenses as well as household belongings do not count either.

7. Specified Low-Income Medicare Beneficiary (SLMB) Program

The Specified Low Income Medicare Beneficiary Program (SLMB) helps eligible Medicare recipients save on Part B premiums, but only if they have both Part A (hospital) and Part B (health insurance) Medicare plans.⁽³⁾

As an SLMB, you’ll also get help paying for prescription medications, which will max out at $11.20 per drug (see #8 below for more on “Extra Help”). Again, income limits are higher for Alaska and Hawaii residents.

8. Qualifying Individual (QI) Program

The Qualifying Individual Program (QI) also helps pay for Medicare Part B (health insurance) for Medicare members who have both Part A and Part B.

People in Alaska and Hawaii have higher income limits. Some people over the income and resources limits still gain eligibility for the program, so apply even if yours exceeds the limit. This is because it’s a state-run program that elects participants on a first-come-first-served basis with priorities given to QI beneficiaries enrolled the year prior.⁽³⁾

If you’re eligible, you must reapply each year.

You’ll also get help paying for prescription medications, which will max out at $11.20 per drug (see #8 below for more on “Extra Help”).

You cannot be in the QI Program if you’re eligible for Medicaid.

9. Qualified Disabled & Working Individual (QDWI) Program

The Qualified Disabled & Worker Individual Program (QDWI) is for disabled individuals who work and have therefore lost free Part A Medicare coverage. QDWI helps pay for Part A coverage only.⁽³⁾

Income requirements are higher for Alaska and Hawaii residents and some other states may have less strict requirements so it’s worth it to apply regardless.

10. What's ‘Extra Help’ With Medicare?

Extra Help is a Medicare program designed to help pay for Medicare Part D prescription drug plan costs including premiums, copays, deductibles and coinsurance. To be eligible, the Medicare recipient must meet certain income and resource requirements. Some people are automatically enrolled while others have to apply.

Those who automatically get Extra Help are on Medicaid or have assistance paying for Part B through one of the aforementioned Medicare Savings Programs or are on Social Security Income (SSI). While on Extra Help, the recipient will not have to pay a penalty for late enrollment in Medicare Part B, if there is one. If the individual or couple’s income increases, they will still get Extra Help until the end of the calendar year.⁽⁴⁾

*Income limits are higher in Hawaii and Alaska

11. Prescription Drug Plan D

All Medicare recipients can buy Plan D coverage for prescription drugs, including those who have a Medical Savings Account plan. Like Part B, there is a late enrollment fee if you do not sign up for Part D and decide to enroll later, when you take more medications. It’s better to enroll right away to avoid this fee. Or, if you’re eligible for the Extra Help program, the late penalty will be waived.

You cannot buy Part D if you have Medicare Advantage, the private version of original Medicare, which already includes a drug plan.

How To Join a Part D Drug Plan

• Have your Medicare card or Medicare Advantage card ready.
• Enroll in a Part D plan by visiting here, or
• Complete a paper enrollment form, or
• Call 1-800-MEDICARE (1-800-633-4227). TTY: 1-877-486-2048 to get the form sent to you, or
• Call the Medicare Advantage plan, if you’re an MA recipient

12. Appeal Your Medicare Income-Based Monthly Adjustment Amount

Many Medicare enrollees pay a surcharge called IRMAA, which stands for Medicare income-related monthly adjustment amount. Higher income Medicare and Medicare Advantage enrollees have to pay this fee. The surcharge is applied to Part B and Part D. If your circumstances have changed or you feel you should not be surcharged, you may appeal the decision.⁽⁶⁾ Here is what the surcharge looks like, based on income:

IRMAA and Part B

IRMAA and Part D

13. Sign Up for Medicare B and D as Soon as You’re Eligible To Avoid Penalty Fee

Both of these parts of Medicare are penalized for late enrollment. The only time the penalty is waived is if the Medicare recipient is low-income and qualifies for the “Extra Help” Program.

14. Use Your Health Savings Account

You can’t continue to contribute to your health savings account once you’re on Medicare but you can use the contributions you saved up in that account for paying copays, coinsurance, premiums and deductibles!

15. Take a Medicare Tax Deduction

If you itemize your tax deductions on your tax returns, you can deduct Medicare premiums from your taxable income but only if it exceeds 7.5% of your adjusted gross income (AGI).

16. Look into a Medicare Special Needs Program (SNP)

People with severe or chronic health problems and those who also qualify for Medicaid should see if they qualify for a Medicare Special Needs Program (SNP). SNPs are available as HMO and PPO plans, and they cover Medicare Part A, Part B and Part D (prescription drugs), but also provide additional services specific to one’s condition.

In order to apply, you must first have Medicare Part A and Part B. There must also be an SNP in your area. These are the three types of SNPs available:

1. Dual Eligible SNP (D-SNP)
2. Chronic Condition SNP (C-SNP)
3. Institutional SNP (I-SNP)

An SNP can help you save money and coordinate benefits between Medicaid and Medicare. There may be a premium with an SNP.⁽⁷⁾

17. Switch to Generic Drugs

If your provider is not automatically prescribing you generic versions of the drugs you take, speak with that doctor to see if it’s okay to switch to a generic. You can save hundreds of dollars a year in doing so.

18. Use In-Network Providers

If your Medicare plan has a network of providers, avoid seeing doctors who are not in the plan. You’ll save hundreds of dollars a year by sticking to in-network providers. You’ll still have to pay a copay and coinsurance, which varies per plan.