How Do I Pay Premiums for My Medicare Supplement?

Payment for your Medicare Supplement is a common concern for many Medicare users.

Today, we’re going to look at some of the most popular questions we receive about Medicare Supplement payments and shed some light to help you make the most informed payment decision.

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What are the options for paying my Medicare Supplement premiums?

There are several Medicare Supplement premium payment options available depending on how often you want to pay or what method you wish to use.  

If you want to pay monthly, you can only use an automatic payment. That means the premium amount automatically come out of your checking account at the same time every month.

If you want to pay quarterly, semiannually or even annually, you have more options. You can do direct billing and pay with a paper check, or you can have it come out of your checking account via auto draft. But you cannot pay via a paper check if you want to pay monthly.

Is there any advantage to paying annually instead of monthly or quarterly?

Yes, there is an advantage to paying annually. By opting for annual payment, you will avoid any mid-year rate increases.

If a company has an age-attained increase and a company increase in the same year, you’ll avoid it because you’ve already paid for the year. Those rate increases wouldn’t affect you until the following year.  

Can I pay my Medicare Supplement premiums with a credit card?

You cannot pay for Medicare Supplements with a credit card. Some carriers used to let you, but today, we don’t know of any that allow this.

Is there any advantage to paying via a bank draft vs. a paper check?

Sometimes, Medicare Supplement carriers will offer a slightly lower premium to you if you select bank auto-draft instead of sending a paper check.  

Here's why: the biggest lapse ratio for a company is a quarterly direct bill. When you opt to write four checks a year, there’s a higher risk that you’ll miss a payment. You could forget to send it in or it could get lost in the mail — there’s a lot of variables with paying by check.

That’s why companies offer slight discounts for bank draft payments — to incentivize using the safer option.

How do I set up the bank draft option?

Bank draft payment is an easy option available to you as you apply for your supplement. When you apply for a supplement, we only need your routing number and account number so the insurance company knows which account to draft out of.

You can choose to pay any day of the month between the 1st and the 28th.  

If you are wanting to switch your payment method on an existing plan, feel free to reach out to a licensed Medicare agent to get assistance on payment changes, or contact your plan holder to see their rules on payment changes.

What happens if I do bank draft and don’t have enough money in my bank account?

If your bank offers overdraft protection on your account, your premium payment may go through, but your bank may likely charge an overdraft fee.

If not, you may risk losing coverage if your premium payment isn't received. In either case, it is best to prepare for payments and be aware of when those bank drafts happen to ensure you have sufficient funds in your account.

If I sign up a couple months before my Medicare Supplement is effective, when should I expect the first payment to come out of my bank?

Some carriers will allow you to pay your first premium on your issue date or your effective date. Other carriers only offer issue date premium payment.  

• Issue date: the day you are approved for your Medicare Supplement policy.
• Effective date: the day your Medicare Supplement coverage begins.

Let’s say you send in your application on February 1 and your plan has an April 1 effective date. Some carriers will charge your bank on February 1 — on your issue date — for your first month's premium and your application fee.  

If you choose to pay on your effective date, your first bill would come on April 1. But again, that’s not always an option.

Our recommendation is to always review your plan’s payment information and options to ensure you are aware of what options are available in your individual circumstances.

How much is the Medicare Supplement application fee and when is it due?

Medicare Supplement application fees vary by carrier. Typically, you can expect a one-time fee of approximately $25 which will be due at the same time as your first payment.  

For example, if your bill is $100 per month, the application fee will make your first bill $125. After that first payment, future payments will go back down to $100.  

Conclusion

There are several ways to find flexibility in your Medicare Supplement premium payments. The most important thing you can do is be aware of your plan and what options are available. As you learn more about your plan, you’ll be able to customize your payment plan to better fit your individual circumstances.  

Want to learn more about Medicare? Check out our Medicare 101 email course that will give you all the information you need about Medicare in an easy and stress-free way.  

You can also call our office at 833-801-7999 to schedule an appointment and get help with Medicare from a licensed sales agent.