Many folks new to Medicare are surprised when they find out that Medicare is not free. That’s right! Most people pay no monthly premium for Medicare Part A because it’s part of your Medicare payroll tax. Unfortunately, the same is not true for Part B, so you will have to pay the monthly Part B premium.
If you receive Social Security benefits for at least four months before Medicare eligibility, you will be auto enrolled in Part A and Part B at 65. In this case, your Part B premium will be automatically deducted from your Social Security benefits monthly payment. However, if you aren’t receiving Social Security while enrolled in Medicare, you will be billed quarterly for your Part B premium.
If you’re able to pay your quarterly Part B premium all at once (which could be around $435 in 2020), and you’re prepared for the delays of snail mail, mailing a check may be a fine option for you. On the other hand, paying your Medicare premiums online or via electronic funds transfer may be a more safe and sustainable option.
While you have several options to pay your Medicare premiums, there is one specific way that allows you to set it and forget it. We’ll discuss each of the ways you can pay Medicare premiums below.
Medicare Easy Pay
Medicare Easy Pay is the best way to pay your Medicare Part B premium if you want to have your Part B premium automatically drafted from your bank account each month.
Paying your Part B premium this way allows you to set it and forget it. You will never have to worry about forgetting to pay your Part B premium and having your coverage lapse as a result. If you receive monthly or quarterly bills for your Part B premium, then you are eligible to sign up for Medicare Easy Pay.
Signing up for Medicare Easy Pay
Signing up for Medicare Easy Pay is quite simple. First, fill out CMS’s Authorization Agreement for Preauthorized Payments form online. Then simply print out the completed form mail it to the following address:
Boomer Tip: Be sure always to make copies of documents you mail to Medicare and Social Security, including this form.
After Medicare has received your authorization form, it may take about six to eight weeks to set up your Medicare Easy Pay automatic draft. Mark your calendar with the date you mailed in your form and put a star on the date eight weeks from that date. If your Medicare Easy Pay isn’t set up by then, give Medicare a call to check on the progress.
While you’re waiting for your Medicare Easy Pay to be set up, continue to pay your Medicare Part B premiums as you usually do. They will apply your first Medicare Easy Pay payment to your next monthly premium. If, for any reason they are unable to process your form, they will mail it back to you along with an explanation letter.
Once they have processed your enrollment, you will start receiving a Medicare Premium Bill each month. But note, this “bill” is not a bill. It will clearly state in the top right corner, “This is not a bill.” They continue to send this to you to remind you of the amount they will be deducting. They typically process your auto payment on the 20th of each month. You should see auto drafts listed as “Automated Clearing House” on your bank statement.
Other ways to pay Medicare premiums online
Although Medicare Easy Pay is the recommended way to pay your Medicare premiums, there are a few other ways you can pay them online. However, these ways require you to login online each month and manually process your payment, rather than having it automatically deducted.
Here at Boomer Benefits, we recommend that all our clients create a mymedicare.gov account. With this account, you can check the progress of your Medicare claims, review the balance of your Part B deductible, and even pay your Medicare premiums by credit or debit card. Setting your Myedicare.gov account up is easy, all you will need is your Medicare ID number.
Your bank’s bill payment service
Most banks today offer a bill payment service to their clients. Depending on your bank, you may even be able to set up automatic bill payments. For example, Chase allows you to pay bills directly from their online portal and app. You will need to supply your bank with some information so they can set this service up for you.
Your bank will need your Medicare ID number, the amount of your payment, payee name, and payee address. The payee information is as follows:
Payee name: CMS Medicare Insurance
Payee address: Medicare Premium Collection Center, PO Box 790355, St. Louis, MO 63179-0355
Although this can be a convenient way to pay your Medicare premiums, there are some disadvantages For example, if your Medicare Part B premium increases, which it typically does each year, it’s up to you to update your payment amount with your bank. Also, depending on your bank, there may be a fee to use the bill payment service. Be sure to check your bank’s policies so you aren’t unpleasantly surprised.
Another potential disadvantage to this method is how your bank processes these payments. Most banks send these payments to Medicare electronically. However, some banks may pay by check. If your bank pays by check, you’ll want to have your payment processed a week or two before the due date to make sure Medicare receives payment on time.
Ways to pay your Medicare Part D, Medicare Advantage, and Medicare Supplement plan premiums
How you can pay your Medicare plan premiums depends on the insurance company. However, most private insurance carriers have the following payment options.
- By phone
- By mail
- Electronic Funds Transfer (EFT)
You will need to check with your insurer to figure out which payment options are available. We here at Boomer Benefits usually recommend setting up electronic funds transfer for your premiums. This payment method is often the most secure and requires the least amount of effort.
Paying Medicare premiums with a health savings account
A health savings account (HSA) is a savings account reserved for qualified medical expenses. You can put pretax dollars into an HSA to help pay for health care expenses, such as doctor visits, surgical fees, durable medical equipment, and drug prescriptions.
Although you can’t pay your Medicare premiums directly with your HSA, you can reimburse yourself with the funds. Medicare premiums (for Parts A, B, C, and D) are qualified expenses and therefore tax-deductible.
We should mention that if you get your Part B premium bill from the Railroad Retirement Board, then none of the above payment options apply. Instead, you must mail your Part B premium to the following address:
Because Medicare Easy Pay allows you to set it and forget it, it is the preferred way to pay Part B premiums among our clients who don’t receive Social Security benefits yet. Don’t forget that once you start receiving Social Security benefits, your Part B premium will be deducted from your SS payment automatically. But until then, these payment methods should help.