Key Takeaways
- You can lower Medicare premium costs by enrolling as soon as possible to avoid late enrollment penalties. These penalties can increase monthly premiums.
- If your income has decreased, reporting this change to the Social Security Administration (SSA) may reduce or remove surcharges on your monthly premiums.
- Some Medicare Advantage plans have no monthly premiums and may include extra benefits like dental and vision coverage, but pay close attention to other out-of-pocket costs like deductibles, copayments, and coinsurance.
Depending on which Medicare plan you choose, your monthly premiums can vary greatly. According to a 2022 report, people with Medicare pay an average of 13.6% of their total household spending on healthcare expenses, while non-Medicare households spend only 6.5%.
There are several ways you may be able to save on your Medicare premiums, and we will look at some of these below.
Knowing if you must pay a monthly premium for Part A can help you decide which type of Medicare plan to enroll in.
Most people don’t pay a monthly premium for Part A. This is because they’ve worked and paid Medicare taxes for 40 quarters (10 years) or more.
People who haven’t paid the qualifying amount of Medicare taxes to be eligible for premium-free coverage will pay amonthly premium for Part A.
In 2025, your premium will be $285 if you have worked and paid Medicare taxes for between 30 and 40 quarters, and $518 per month if you have worked for less than 30 quarters.
Many people are automatically enrolled in Original Medicare (Part A and Part B). However, others must enroll themselves.
You can enroll in Medicare for the first time during your initial enrollment period (IEP). This seven-month period begins three months before your 65th birthday, continues throughout your birthday month, and ends three months after.
Late enrollment penalties
Some parts of Medicare have late enrollment penalties that mean you may have to pay extra for your monthly premiums if you don’t enroll when you’re first eligible.
Here are the late enrollment penalties as they apply to different parts of Medicare:
| Medicare Part | Late enrollment penalty rules |
|---|---|
| Part A | If you are not eligible for premium-free Part A, your monthly premiums vary depending on your working history. The amount also typically increases each year. In 2025, the Part A premium is $285 if you have worked for between 30 and 40 quarters over your lifetime. If you have worked for less than 30 quarters over your lifetime, your premium would be $518. If you must pay a premium and do not enroll when you are first able, your premium can increase by 10% for twice the number of years you could have enrolled in Part A but chose not to. For example, if you did not enroll for 2 years, you would pay an additional 10% for 4 years. The 10% penalty would apply to whichever premium amount you must pay according to your working history. |
| Part B | Your monthly premium will increase by 10% of the standard Part B premium in the year in which you enroll. In 2025, the standard Part B premium is $185, but this amount can increase depending on your income. The penalty would be 10% of whatever your Part B premium is. The penalty will apply for each 12-month period that you could have enrolled in Part B but chose not to. For example, if you did not enroll for 2 years, your penalty would be 10% times 2 years, equaling 20%. You’ll pay this penalty for the entire time you have Part B. |
| Part D | You may pay additional costs for Part D premiums if you went 63 days or longer after your initial enrollment period without some form of creditable drug coverage. In 2025, the Part D national base beneficiary premium is $36.78, but this amount may also increase depending on your income. The penalty is 1% for each month you did not have creditable drug coverage and chose not to enroll in a Part D plan. For example, if you chose not to enroll for 12 months, your penalty would be 12% of your Part D premium. |
Some Medicare parts are associated with an income-related monthly adjustment amount (IRMAA). An IRMAA is an additional surcharge that can be applied to monthly premiums for Medicare Part B and Part D prescription drug plans in households with higher incomes. This is determined based on income tax return information from 2 years ago.
If you’re currently paying a surcharge on your monthly premiums due to IRMAA, you can report a change in income due to something like a divorce, the death of a spouse, or a reduction in work.
You can do this by calling the SSA, completing a life changing event form, and providing the relevant documents.
The SSA can use this information to potentially reduce or remove the surcharge.
Medicare Advantage (Part C) plans are administered by private insurance companies. These plans include everything that’s covered under Original Medicare and may also include additional benefits like dental and vision coverage.
Medicare Advantage plans often have lower monthly premiums. In fact, it’s estimated that more than half of the available Medicare Advantage plans have no monthly premium, not including the Part B premium. Although some 2025 Medicare Advantage plans offer lower Part B premiums through a giveback benefit.
When considering a Medicare Advantage plan, pay close attention to other fees like deductibles, copayments, and coinsurance, as having no premium may not save you money if the other fees are higher.
Private insurance companies administer:
- Medicare Advantage (Part C) plans
- Part D prescription drug plans
- Medigap plans (Medicare supplement insurance)
The monthly premiums for these plans are set by the companies administering them, and the amount you’ll pay can vary widely by specific plan, the company offering it, and your location.
Because of this, it’s a good idea to compare multiple plans offered in your area before choosing one. Medicare’s website has a helpful comparison tool for Medicare Advantage, Part D, and Medigap plans.
Medicaid is a joint federal and state program that can help people with lower incomes and limited resources pay for their healthcare costs.
It can also help to cover services that aren’t normally covered by Medicare, such as long-term care.
Medicaid programs can vary from state to state. To find out more about Medicaid programs available in your state and to see if you qualify, contact your state’s Medicaid office.
Medicare savings programs (MSPs) can help you pay for the costs of your Medicare premiums. You may qualify for an MSP if you:
- are eligible for Part A
- have an income at or below a specified limit, depending on the MSP type
- have limited resources, such as money in a checking or savings account, stocks, or bonds
There are four MSP types, including:
- Qualified Medicare Beneficiary (QMB) plans that help pay for Part A premiums, and Part B premiums, deductibles, copayments, and coinsurance.
- Specified Low-Income Medicare Beneficiary (SLMB) plans that help pay for Part B premiums only.
- Qualifying Individual (QI) plans that help pay for Part B premiums only.
- Qualified Disabled and Working Individuals (QDWI) plans that help pay for Part A premiums only.
To see if you qualify for an MSP, contact Medicare or your state’s Medicaid office.
Extra Help is a program that can help people with limited income and resources pay for the costs associated with Medicare prescription drug plans.
Monthly premiums, deductibles, and copayments are examples of costs covered by Extra Help. As of 2025, the assistance provided by Extra Help is estimated to be worth around $6,200 per year. Additionally, people who use Extra Help won’t need to pay the late enrollment penalty for Part D plans.
To qualify for Extra Help, you must meet specific income and resource limits. To find out if you qualify for Extra Help and to apply for the program, visit the SSA’s Extra Help site. Some people may automatically qualify for Extra Help. These groups include:
- people with full Medicaid coverage
- those who receive help from an MSP, specifically a QMB, SLMB, or QI program
- people getting Supplemental Security Income (SSI) benefits from the SSA
Some states may have a State Pharmaceutical Assistance Program (SPAP).
These programs can help with the cost of prescription drugs and may also help cover Part D premiums.
Not all states have SPAPs, and coverage and eligibility requirements can vary by state. Medicare has a useful search toolto help you determine whether your state has an SPAP and what that program covers.
In addition to all of the cost-saving methods we’ve mentioned, certain states may have additional programs that can help you save on your Medicare premiums.
You can contact your local State Health Insurance Assistance Program (SHIP) office, which can help you locate local assistance programs.
The costs of Medicare premiums can add up. However, there are some ways to decrease costs.
Cost-lowering options include enrolling for Medicare when you first become eligible, reporting changes to income, and considering all Medicare plan options.
Programs exist to help people with limited incomes and resources pay for the cost of healthcare, including premiums. These include Medicaid, MSPs, and Extra Help.
Additionally, your state may have other programs in place to help lower healthcare costs. Be sure to contact your state’s State Health Insurance Assistance Program for additional information.