What actually lowers your Medicare premium

You cannot avoid paying Medicare premiums entirely — Part B (doctor visits) and Part D (prescription drugs) have mandatory premiums for most people. But you may pay less than the standard amount, or nothing at all, depending on your income. The federal government reduces premiums for people whose income falls below certain thresholds, and some states add their own programs on top.

The key is understanding which premiums can be reduced (Part B and Part D), which ones cannot (Part A hospital insurance is free for most people), and what income level triggers a reduction. Your actual savings depend on your Modified Adjusted Gross Income (MAGI) from two years ago — not your current income — so a recent drop in earnings may lower what you pay starting several months from now.

Key Takeaways

  • Part B and Part D premiums drop automatically if your income falls below the federal threshold, which varies by filing status and changes yearly.
  • Your premium is based on your Modified Adjusted Gross Income from two years prior, so a recent retirement or job loss may reduce your payment with a delay.
  • You can request a review if your income dropped this year due to retirement, death of a spouse, or loss of income, and Medicare may lower your premium when ready.
  • Some states run their own programs to pay Part B premiums for low-income seniors, separate from the federal reduction.
  • Part A (hospital insurance) is free for most people and has no premium to reduce.

Income-based reductions for Part B premiums

Medicare automatically lowers your Part B premium if your income is below a certain level. In 2024, the threshold is $97,000 for a single filer and $194,000 for married filing jointly. If you fall below these amounts, your premium drops on a sliding scale — the lower your income, the lower your payment. You pay nothing if your income is below roughly $20,000 (single) or $40,000 (married).

The catch is timing. Medicare uses your income from two years ago to set your current premium. If you retired this year, your 2024 premium is based on your 2022 earnings. This means you may overpay for several months before the reduction takes effect. You can request an when ready review if your income dropped due to retirement, death of a spouse, or loss of employment — Medicare calls this a "life-changing event" — and they may adjust your premium right away.

To request a review, contact Social Security at 1-800-772-1213 or visit your local Social Security office with proof of the income change (a termination letter, pension statement, or tax return showing lower earnings). Bring your Medicare card and documents showing your current income.

Income-based reductions for Part D (prescription drug) premiums

Part D premiums also drop if your income is below the federal threshold. The reduction works the same way as Part B: it is based on your income from two years prior, and you can request an when ready review if your circumstances changed this year. Your Part D plan sends you a notice each year if you may have access to for a reduction.

Some people may have access to for the Low-Income Subsidy (LIS), which covers most or all of your Part D premium and reduces your out-of-pocket costs for medications. To check whether you may have access to, contact your state Medicaid office or call 1-800-MEDICARE. The income threshold for LIS is lower than the general Part B reduction — roughly $20,000 for a single person and $40,000 for a married couple — but if you may have access to, the savings are much larger.

State pharmaceutical information programs

Many states run their own programs to help seniors pay for prescription drugs and Part D premiums. These programs are separate from Medicare and have their own income limits, which are often higher than the federal LIS threshold. Some states cover the Part D premium itself; others cover copayments and deductibles instead.

Each state program has a different name and different rules. Pennsylvania calls theirs PACE (Pharmaceutical information Contract for the Elderly). New York runs EPIC (Elderly Pharmaceutical Insurance Coverage). California has HICAP (Health Insurance Counseling and Advocacy Program). To find your state's program, call 1-800-MEDICARE and ask for the name and phone number, or visit your state health department website and search for "pharmaceutical information" or "senior drug information".

Medicaid and dual coverage

If your income and assets are low enough, you may may have access to for Medicaid, which covers your Part B premium and often your Part D premium as well. Medicaid income limits vary by state — some are as low as $1,000 per month for a single person, others are higher. You must explore through your state Medicaid office, not Medicare.

People who have both Medicare and Medicaid are called "dual may be able to access." Medicaid pays your Medicare premiums and often covers costs Medicare does not, like long-term care and dental work. If you think you might may have access to, contact your state Medicaid office or call 211 to be referred to a local benefits counselor who can help you explore.

What happens if you cannot pay your premium

If you fall behind on your Part B or Part D premium, Medicare will not drop your coverage when ready. However, unpaid premiums accumulate, and Medicare may eventually withhold future payments (such as Social Security benefits) to collect the debt. If you are having trouble paying, contact Medicare at 1-800-MEDICARE before you miss a payment.

Medicare has hardship provisions that may allow you to delay payment or set up a payment plan. You must request this in writing and explain your situation. Send your request to the address on your Medicare bill. Keep a copy for your records and follow up if you do not hear back within 30 days.

Requesting a life-changing event review

If your income dropped this year due to retirement, job loss, death of a spouse, or divorce, you can ask Medicare to review your premium based on your current income instead of waiting two years. This is called a life-changing event review. Medicare will ask for proof — a termination letter, pension statement, divorce decree, or death certificate.

Contact Social Security at 1-800-772-1213 to request the review. You can also visit your local Social Security office in person. The review usually takes two to four weeks. If approved, your new premium takes effect the month after Medicare processes your request. Ask the representative for a case number so you can follow up if you do not see the change on your next bill.

Frequently Asked Questions

Does Medicare Part A have a premium I can reduce?

No. Part A (hospital insurance) is free for most people because you paid into it through payroll taxes while working. If you did not work long enough to may have access to for free Part A, you can buy it, but there is no income-based reduction. Part B and Part D are the premiums you can lower based on income.

What if I got married or divorced this year?

Marriage and divorce are life-changing events. If your household income changed because of either, contact Social Security to request an when ready premium review. Bring your marriage certificate or divorce decree and proof of your current household income. The review may take two to four weeks.

Can I appeal if Medicare denies my life-changing event request?

Yes. If Social Security denies your request, ask for an explanation in writing. You have the right to appeal. Contact 1-800-MEDICARE to learn how to file an appeal and what documents strengthen your case. Appeals usually take 30 to 60 days.

Will my premium reduction affect my Social Security benefits?

No. A premium reduction is based on income, not on benefits. Your Social Security payment stays the same. However, if you owe back premiums, Medicare may withhold future Social Security payments to collect the debt, so it is important to stay current or set up a payment plan if you fall behind.

How do I know if I may have access to for the Low-Income Subsidy?

Call 1-800-MEDICARE and ask them to check your income against the current LIS threshold. You can also contact your state Medicaid office. Bring recent tax returns or pay stubs showing your current income. If you may have access to, the subsidy covers most of your Part D premium and reduces your drug copayments.