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During the annual Medicare open enrollment period, you’ll likely see commercials for a “giveback” or “premium reduction” rebate that will reduce the amount you have to pay for Medicare Part B. Here’s what you need to know about how this works:
Most Medicare beneficiaries qualify for premium-free Medicare Part A, based on their work history or their spouse’s work history. But Medicare Part B has a monthly premium, which is $174.70/month for most beneficiaries in 2024.
If you choose to enroll in a Medicare Advantage plan, you pay the premium for Medicare Part B plus the premium for the Medicare Advantage plan. As of 2023, two-thirds of all Advantage plans have $0 premiums, which means their enrollees just pay the Medicare Part B premium.
But some plans go a step further, offering “giveback” rebates that pay a portion of their enrollees’ Medicare Part B premiums. This benefit, also referred to as a Medicare Part B premium reduction, has been available since 2003. And although most Advantage plans do not offer a giveback rebate, the benefit has become more popular and widespread in recent years, and is increasingly marketed as a stand-out benefit by Medicare Advantage plans that do offer it.
The specifics of the giveback rebate rules are outlined in federal regulations that have been applicable since Medicare+Choice plans were rebranded as Medicare Advantage. Medicare Advantage plans receive payments from the federal government (which cost the government more per person than it spends on Original Medicare). But the plan can opt to receive a reduced payment and use the payment reduction to offset some of the Medicare Part B premium for its enrollees.
For plans that take this option, the Part B premium reduction can be as little as 10 cents, or as much as the full Part B premium, which is $174.70/month in 2023. However, the Centers for Medicare and Medicaid Services (CMS) have noted that it’s fairly rare to see premium reductions that are equal to or even close to the full amount of the Medicare part B premium. The Medicare Part B premium reduction has to be provided uniformly to a plan’s enrollees, so everyone in the plan gets the same premium reduction benefit.
For most Medicare beneficiaries, the cost of Medicare Part B is deducted from their Social Security checks. Beneficiaries who don’t receive Social Security retirement benefits are invoiced directly for their Medicare Part B premiums.
The giveback rebate can be used by people in either scenario: If you’re receiving Social Security retirement benefits and you enroll in an Medicare Advantage plan with a giveback rebate, the amount that’s deducted from your Social Security check to cover the cost of Medicare Part B will be lower. And if you pay your premiums directly to Medicare, you’ll be invoiced a smaller amount.
Medicare Advantage plans that offer a premium reduction benefit are available in most, but not all, areas. According to a KFF analysis, 19% of Medicare Advantage plans offer a Medicare Part B premium reduction benefit as of 2024. So although most areas of the country do have at least one available Medicare Advantage plan that offers this benefit, the majority of plans do not offer it.
Assuming there are Medicare Advantage plans in your area that offer a giveback rebate, it’s important to evaluate all of the available plans based on how they’ll serve your overall needs. If a plan has a $50 giveback rebate but will end up costing you an extra $60 every month at the pharmacy, or doesn’t include your doctors in its network, it’s probably not going to be your best option.
CMS has been looking into the marketing around giveback rebates, and addressed it in proposed rulemaking that was issued in late 2022 and finalized in mid-2023. CMS notes that the nationwide marketing of giveback rebates equal to or near the full amount of the Part B premium is a “misleading tactic that is more likely designed to attract a beneficiary’s attention so that the beneficiary will call the number and then be subject to additional marketing and potentially switched to a plan that is not well suited to meet the beneficiary’s health care needs.” Specifically:
To address these issues, CMS has finalized a rule (added as section (b)(8) in CFR § 422.2263) clarifying that Medicare Advantage and Part D insurers are not allowed to “advertise benefits that are not available to beneficiaries in the service area(s) where the marketing appears, unless the advertisement is in local media that serves the service area(s) where the benefits are available and reaching beneficiaries who reside in other service areas is unavoidable.”
If you are seeing advertisements for giveback rebates, be sure you analyze the available plans based on overall benefits. The plan(s) offering giveback rebates may or may not be the option that works best for your particular needs.
When you’re comparing plans on the Medicare Plan Finder tool, you can click on “plan details” to see more information about each plan. An overview page will appear, and the section at the top is all about premiums. The fourth line is labeled “Part B premium reduction” and it will either say “yes” or “no” depending on whether the plan offers a Part B giveback rebate. You can also call the Medicare Advantage insurers in your state to ask them directly about whether they offer this benefit, and if so, how much the premium reduction will be.
The total monthly premium is just one aspect of your coverage, and there are numerous other features that you’re going to want to take into consideration when you’re making a plan selection. For example:
So is a Medicare Advantage plan with a giveback rebate a good choice for you? Maybe. But it will depend on the other features of the plan, and it’s important to base your decision on how the plan will serve you overall, rather than just the heavily marketed features.
Louise Norris is an individual health insurance broker who has been writing about health insurance and health reform since 2006. She has written dozens of opinions and educational pieces about the Affordable Care Act for healthinsurance.org. Her state health exchange updates are regularly cited by media who cover health reform and by other health insurance experts.