Strategy 53 of 107
65 and over with limited income: let a Medicare Savings Program pay the premiums
What it is
Apply through your state Medicaid office for a Medicare Savings Program; it can pay Part B premiums and sometimes deductibles and copays.
Steps
- Apply through your state Medicaid office for a Medicare Savings Program; it can pay Part B premiums and sometimes deductibles and copays.
- Apply for Extra Help with drug plan costs at the same time.
- The premium no longer taken from Social Security goes to principal.
Repeat: Renew as the state requires.
Measure: Monthly premiums no longer paid.
Try it in the calculator Enter its amount in "Monthly non-income amount to principal". Add a payoff goal of 5 years to see what is still needed.
Risks
- Income and resource limits apply and differ by state.
Who it fits
Grandmas and grandpas (62 and over)
Needs
65 or older; Limited income
How predictable
Most predictable: once in place, the payoff date is arithmetic
A worked example (hypothetical, not guaranteed)
Picture a hypothetical household (grandmas and grandpas (62 and over)). They owe $300,000 at 6.5% with 30 years left. The required payment is $1,896 a month, and that payment, which comes from income, never changes in this example.
They follow the steps: apply through your state Medicaid office for a Medicare Savings Program; it can pay Part B premiums and sometimes deductibles and copays.
Suppose it brings $600 a month on principal from this strategy, not from the paycheck. The loan would be paid off in 16 years 3 months instead of 30 years, saving about $196,219 in interest. To finish in five years, they would still need about $3,374 a month more from other strategies. That is why the five-year sequences stack several at once.
The amount above is chosen only to show the arithmetic. It is not an estimate of what this strategy will produce for anyone. Put real numbers from the fact finder into the calculator.
Sequences that use it
- Bill-cutting stack for 65 and over: Programs built for limited incomes, applied for together. The bills that shrink become principal payments.
Sources and more information
- Medicare.gov: Medicare Savings Programs medicare.gov
- Medicare.gov: Help with drug costs (Extra Help) medicare.gov
Where to get help
- CFPB: Find a HUD-approved housing counselor (free or low cost) consumerfinance.gov
- USA.gov: Government benefits usa.gov
- Eldercare Locator (U.S. Administration for Community Living) eldercare.acl.gov
- CFPB: Submit a complaint about a lender or servicer consumerfinance.gov
Related strategies
- 54. Energy bill help through LIHEAP
- 55. Phone or internet discount through Lifeline
- 56. Raise insurance deductibles once a reserve covers them
- 57. Re-shop auto insurance and send the savings to principal
- 60. Claim your state's property tax credit or circuit breaker
- 66. Audit the servicer: make sure every extra dollar hit principal