At the time you join a Medicare Supplement Plan, a Medicare Advantage Plan or a Part D Prescription Drug Plan, you will have a few payment choices to make on how to pay for the plan’s premium. Depending on the rules of the plan you are enrolled in, you generally may be able to pay your premiums in the following ways:

 

Electronic transfer from a bank account

Monthly deduction from your Social Security benefit payment

Personal check to the insurance company (you’ll receive a coupon book with twelve coupons for the year)

Credit or debit card (not all plans offer this option)

 

We recommend you make premium payments by bank account wire transfer through an electronic payment method. This ensures that your premium is never late thus preventing the plan from dropping your Medicare health coverage. If you choose to make payments through personal check via the coupon book the insurance company sends you, your check will need to be timely. Many people will take the year’s worth of coupon stubs and pay with one check at the beginning of the year. In the event that you miss a payment and the grace period ends, your insurance coverage will be dropped (and in some cases you may not qualify for future coverage).

 

My recommendation to clients is to avoid making the premium payment from your Social Security monthly check for a variety of reasons. First, it can take two months or more for the premium payment deduction to be made by Social Security. Once payment starts, multiple monthly premiums can be taken out of one month’s Social Security check to ‘catch up’ the payments.

 

Perhaps the biggest challenge with this form of payment is when you later enroll in another plan. Once you contact the Social Security Administration to stop the payment, they may continue deducting the plan premiums from your check for a few more months before the process catches up and the deduction stops. Your premium deductions from your Social Security check will not automatically continue with the new plan. You will need to ‘re-elect’ a payment choice with the new insurance company. If you choose to make payments from your Social Security check for the new plan, you will face the same two-month plus delay in payment as described. This choice involves a lot of legwork and the potential for problems.

 

Whatever payment choice you make, you will generally need to stay with that option for the rest of the calendar year. If you need to change to another payment method, or experience other problems with payments, you can call your plan can to discuss the situation.