While Medicare Part A – which covers hospital care – is free for most enrollees, Part B – which covers doctor visits, diagnostics, and preventive care – charges participants a premium. Those premiums are a burden for many seniors, but here’s how you can pay less for them.
1. Sign up for Part B on time
Your initial window to enroll in Medicare begins three months before the month of your 65th birthday, and ends three months after that month. If you don’t sign up during that seven-month period, you can enroll during Medicare’s General Enrollment Period (January 1 through March 31) each year.
But for each 12-month period you go without Medicare coverage despite being eligible, you’ll be hit with a penalty that raises your Part B premium cost by 10 percent. Worse yet, that penalty will remain in effect for the rest of your life. The takeaway? If you want to save money, don’t be late. (You can safely delay Part B, without a penalty, if you’re covered under a current employer’s plan.)
2. Defer income to avoid a premium surcharge
The standard premium for Medicare Part B is $170.10 per month in 2022 – but that assumes you’re not a higher earner. Those with higher income levels are subject to higher premium costs. For 2022 (based on your income in 2020, which is the most recent tax return that was filed before the 2022 plan year began) here’s what you’re looking at:
|2022 Medicare Part B premium costs by income level|
|Income level: individual tax filer||Income level: joint tax filer||Total monthly premium|
|Over $91,000 to under $114,000||Over $1826,000 up to $228,000||$238.10|
|Over $114,000 up to $142,000||Over $228,000 up to $284,000||$340.20|
|Over $142,000 up to $170,000||Over $284,000 up to $340,000||$442.30|
|Over $170,000 and less than $500,000||Over $340,000 and less than $750,000||$544.30|
|$500,000 and above||$750,000 and above||$578.30|
If you’re able to defer income strategically to future tax years so that you can report a lower total on your tax return, you might save yourself a higher premium charge for at least a year, since those surcharges are based on previous tax returns. For example, your 2020 tax return will determine whether you pay a surcharge in 2022 (if you experience a life change that reduces your income, you can appeal the income-related surcharge).
3. Pay your premiums directly from your Social Security benefits
Seniors who are enrolled in Medicare and Social Security simultaneously have their Part B premiums deducted directly from their Social Security benefits. Doing so isn’t just a convenience, though; in some cases, it can save you from rising premium costs thanks to Medicare’s hold-harmless provision.
This provision (which kicked in for many beneficiaries in 2016 and 2017) protects you from losing out on Social Security income when Part B premium increases surpass the cost-of-living adjustments (COLA) that are applied to benefits each year. This means that if Part B increases by $30 a month in a given year, but your COLA only raises your monthly benefits by $24, you save yourself the extra $6 by not having to pay it. (Note that this protection is not applicable if you’re paying a high-income surcharge for your Part B coverage, described above.)
In recent years, the COLA has been more than adequate to cover the full cost of the standard Part B increases, so the “hold harmless” provision hasn’t been applicable. But it’s always there, just in case the Part B premium increase is more than a beneficiary’s COLA for a given year.
4. Get help from a Medicare Savings Program
Medicare Savings Programs, or MSPs, are special programs designed to help low-income seniors pay their Medicare expenses – Part B premiums included. These programs are funded via Medicaid, so they’re run at the state level (each state has its own Medicaid program, which is jointly funded by the state and federal government).
To qualify, your monthly income can’t exceed a certain limit. (The exact amount of which will depend on your tax filing status and your state of residence.) Also, your personal resources (such as savings and investments) must fall within a specific limit. But if you’re deemed eligible for assistance via an MSP, you could lower your Part B premium costs.
To apply for one of these programs, you’ll need to visit or call your local Medicaid office.
Maurie Backman has been writing professionally for well over a decade, and her coverage area runs the gamut from healthcare to personal finance to career advice. Much of her writing these days revolves around retirement and its various components and challenges, including healthcare, Medicare, Social Security, and money management.