What is medical underwriting?

If you’ve been shopping around for Medicare Supplement, life insurance, or long term care insurance, you may have come across warnings that you may be required to undergo medical underwriting prior to being approved for coverage. Most people, however, are unaware of what medical underwriting actually entails. The term is not exactly self-explanatory, so the fairly common confusion around the process is no surprise.

Medical underwriting is the process used by health and life insurance companies to assess the risks involved with insuring each of their applicants. Typically, insurers will administer a health questionnaire, conduct a physical examination, and perform an in-depth analysis of an applicant’s medical history to determine:

  • whether or not to offer coverage;
  • how much to charge via monthly premiums; and
  • any limits, exclusions, or exceptions to the coverage

Whether or not you will be subject to medical underwriting depends on what kind of insurance you are looking for. Certain types of plans have been restricted by law from using traditional medical underwriting methods. For example, while medical underwriting used to be widespread among the private insurance companies that sell individual health plans, the passing of the Affordable Care Act in 2014 made it illegal for these carriers to discriminate against or deny coverage to applicants based on their medical histories.

Medical underwriting is still common in certain types of plans, however. Continue reading to find out how medical underwriting is used today.

Medicare supplement plans/ Medigap plans

While medical underwriting is not used for Original Medicare or Medicare Advantage plans, it is common on Medicare supplement (or “Medigap”) plans. If you decide to purchase a Medicare supplement plan after your Open Medigap Enrollment Period, you’ll likely be required to go through some sort of underwriting process. Depending on your medical history, the insurer may decide to charge you a higher premium, or even deny you coverage, if you don’t meet the plan’s underwriting criteria.

There are certain situations that may qualify you for a “guaranteed issue right” to a Medigap plan—which would prevent plans from subjecting you to an underwriting process, charging you higher premiums, or denying your coverage—but they are very rare. If you are interested in purchasing a Medicare Supplement plan, it is highly advisable to do so within your Open Medigap Enrollment Period.

If you’d like to learn more about Medigap plans available in your area, click below to browse Renew’s Medicare Marketplace.

Individual health plans

Before the ACA was passed in 2014, stringent medical underwriting was a common practice among private insurance companies that offered individual health plans.

People with chronic illnesses and serious medical conditions were considered “high risk,” and insurers were within their rights to charge these applicants higher premiums or even deny them coverage altogether. People with heart disease, autoimmune disorders, diabetes, and arthritis were just a few of the groups who were considered “uninsurable.”

With the passing of the ACA, certain rules and protections were put into place that dramatically changed the medical underwriting process.For as long as the ACA remains in place, these private health insurance carriers will no longer be permitted to discriminate against or deny coverage to applicants with pre-existing conditions. In fact, they aren’t even permitted to ask for your medical history during your application process. Don’t worry about all of those medical underwriters, though. They are still hard at work determining pricing for policyholders based on their age and tobacco use, which are the only remaining variables that can be used as justification for raising your premiums.

Life insurance plans

While medical underwriting is no longer being used by private health insurance companies to identify applicants with pre-existing health conditions, the practice is still alive and well within the life insurance market.

If you’re looking to purchase life insurance coverage, mostbut not allplan types will require you to answer a questionnaire related to your medical history, undergo an exam, and even submit to reference checks on your driving record.

Every company has their own set of underwriting criteria, and some plan typeslike Guaranteed Issue Life Insurancedon’t require any information at all to get coverage. Of course, those plans tend to be significantly more expensive in order to account for the increased risk the company is taking on without a clear picture of the health of the person they’re insuring. To learn more about the various types of life insurance available, and whether or not they will require applicants to undergo an underwriting process, read the following article.

Long term care insurance plans

The underwriting standards you’ll be subject to when applying for long term care insurance vary by provider, location, and other factors, but you should expect to undergo some form of underwriting if you’re hoping to get this type of coverage.
While a majority of people under 60 are approved for long term care insurance, it is possible to be denied care if the insurer considers you high risk due to a pre-existing health condition. And, as you might expect, it becomes harder (and more expensive) to get this kind of coverage as you age and become more susceptible to illness and injury. You can read more about long term care insurance in the following article.

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