Policy Fees on Medicare Supplements: What You Need to Know

Policy Fees on Medicare Supplements: What You Need to Know

So, you’re enrolling in a Medicare Supplement for the first time. Great choice!

But you notice a small fee come out of your account that you maybe weren’t expecting – what is that policy fee all about, anyway?

Let’s take a look at everything you need to know about Medicare Supplement policy fees.

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What’s a Policy Fee on Medicare Supplements?

A policy fee is a one-time fee you may pay when applying for a Medicare Supplement.

This fee is usually refunded back to you if the policy isn’t issued or you return it during your 30-day free look period.

Not all insurance companies charge a policy fee.

How Much Is a Policy Fee?

If a company charges a policy fee, it’s usually $20 or $25.  

However, some states are less likely to have policy fees, and in other states, the amount is far less. But typically, in the state of Illinois, the fee is $20 or $25.

The policy fee isn’t an annual fee – you only pay it once, either on your issue date or your effective date (whichever you choose).

When Do I Pay the Policy Fee?

The small policy fee will only be deducted from your account once. It’s typically deducted at the same time as your first month’s premium.

If you don’t pay your first month’s premium right away, the fee will be deducted with your first month’s premium on your policy’s effective date.

How Do I Avoid Policy Fees?

While most Medicare Supplement carriers charge a policy fee, some don’t.

Mutual of Omaha, Medico, and Cigna are just a few examples of companies that don’t charge a Medigap policy fee in the state of Illinois.

That said, we would not advise choosing a supplemental policy based on whether or not it has a policy fee.

The most important factor to consider when shopping is the monthly premium.

How Do I Choose the Right Medicare Supplement?

The most important thing to consider when shopping around for a Medicare Supplement is the monthly premium, not the policy fee.

By law, Medicare Supplement plans in the state of Illinois (and most other states) must have the same exact benefits.

A Plan G is a Plan G, no matter which company you buy it from. Yes, you read that right – the benefits are exactly the same!

The main difference between companies is how much they charge you for those benefits. Our licensed sales agents here at Sams/Hockaday can run a quote for you that is based on your age, zip code, and gender.

You may also be eligible for a household discount, which can lower your monthly premium even more.

Do Other Insurance Policies Have a Policy Fee?

Most other insurance products, such as whole life insurance or cancer insurance, do not have a policy fee.

In addition, Medicare Advantage plans and Part D prescription drug plans do not have policy fees.


At the end of the day, policy fees can be a hassle, but they’re only $20 or $25. As long as you know it’s coming, it’s not a big deal.

If you have any questions about your Medicare Supplement, please call our office at 217-423-8000!

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Disclaimer: We do not offer every plan available in your area. Currently we represent 4 organizations which offer 41 products in your area. Please contact, 1‑800‑MEDICARE, or your local State Health Insurance Program to get information on all of your options.