Medigap Monday: What’s Up With Policy Fees
Some questions I have been getting lately are, “What is up with application fees, or policy fees?” “Do I have to pay just to apply?” “Do I pay that fee if I’m declined coverage?” “How would I pay that if I’m approved?” “Do all Medicare Supplement carriers charge an application fee?” All very good questions. First, lets start with what application fees (policy fees) are and how they work.
Application fees are simply a specified amount of money required to even enter the underwriting process. Most insurance carriers charge an application fee, not all of them, but most of them do. They run anywhere from $7.00 to $25.00. You would only have to pay the application fee if you are approved of the policy. If you are not approved for the policy, you will not have to pay the application fee. If you are just starting Medicare, you will be automatically approved for a Medicare Supplement policy so you would have to pay the application fee.
For example: If you are switching from a Medicare Supplement Plan F to the Medicare Supplement Plan G to save on premiums, when you apply you will have to go through the underwriting process. If your carrier includes an application fee, you will only be charged that fee if you are approved for the policy and it will be tacked on to your first month’s premium. You will not receive any additional policy fees after.
If you are just starting Medicare for the first time, you will be in what’s called your Open Enrollment period which means you will be automatically approved for any Medicare Supplement without having to go through medical underwriting. Because of this, if your carrier has an application fee, you will be charged that fee automatically on your first month’s premium but not after.
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