When purchasing Medigap, often customers are confused about when their bank account will be charged for their first Medicare supplemental insurance payment. While filling out the application for a Medicare supplement insurance plan the application will ask when you would like to have your payments come out of your bank account. So many customers believe that the first payment will come out on this date that they requested. With few exceptions this is not the case. Most insurance companies, as a part of the application process, will draft the first payment before approval or upon approval of the application. Drafting the customers account is part of the application process and lets the insurance company know that they have the ability to draft and will be able to continue to provide service to the customer. Customer also need to realize that just because their bank account has been drafted for the first payment does not mean that their Medicare supplement application has been approved. If a person has to be underwritten sometime the first payment will be drafted before the application is completely approved. If this happens and the customer is disqualified then the insurance company will of course return the first months premium minus any application fees that some companies charge. The typical application fee is around $20.
The good news is that aside from the initial payment all other Medicare supplement payments will be on the date you requested on the Medigap application. So basicallymake sure you have the cash in your bank account for the first month before you apply for your Medicare supplement. The second and all additional months you just need to have the cash in your account before the draft date that you asked for.