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Medical underwriting: What it is and why it may affect your coverage

Some insurance companies use medical underwriting to figure out your health status. Here’s what you may need to know about it — and why it’s so important.

Have you started reading through an insurance brochure only to see something about “medical underwriting?” If you didn’t understand what that meant, keep reading. We’ll explain what medical underwriting is and how it can affect your coverage.

What is medical underwriting?

Medical underwriting is a process that’s sometimes used by insurance companies. It’s a way in which they try to figure out your health status when you’re applying for certain kinds of insurance coverage. Most of the time, they use it when you’re applying for health insurance or life insurance, says David Walls. He’s a Medicare and life insurance specialist in Dunnellon, Florida. They’ll use it to determine whether to offer you health insurance, and at what price.

Medical underwriting has become less common since 2014. That’s when an important rule went into effect under the Affordable Care Act (ACA). The rule says that, generally speaking, health insurance companies can’t do medical underwriting anymore for qualified health insurance plans. (Those are plans that meet the protections and coverage standards set in place by the ACA.) They also can’t use it to reject you or charge you higher monthly bills (premiums) if you have a preexisting condition, such as cancer or type 2 diabetes.

But medical underwriting can still be used in certain situations. Here’s what you need to know.

What plans still use medical underwriting?

Some insurance companies still use medical underwriting. It’s mainly used for certain types of coverage not regulated by the ACA. These include:

Medicare Supplement Insurance (Medigap). If you purchase a Medigap policy to fill gaps in your coverage outside of your Medigap Open Enrollment Period, you’ll usually have to undergo medical underwriting, says Adria Gross. She’s the CEO of MedWise Insurance Advocacy in Monroe, New York.

However, she notes that the following states require Medigap insurers to sell policies to all Medicare beneficiaries ages 65 and older (i.e., these states don’t have medical underwriting):

  • California
  • Connecticut
  • Idaho
  • Illinois
  • Maine
  • Massachusetts
  • Missouri
  • Nevada
  • New York
  • Oregon
  • Rhode Island
  • Washington

“Otherwise, Medicare Supplemental insurers will look at all of your past history to decide whether they will provide you with coverage for the remaining 20% not covered by direct Medicare,” she adds.

If you enroll in Original Medicare as soon as you turn 65, you get a 6-month Medigap Open Enrollment Period. During this time, you can enroll in any Medigap policy, and companies can’t use medical underwriting to decide whether to accept your application. This means you can’t be denied coverage if you have preexisting condition.

Self-insured group health insurance. This is a type of plan you might get if you work for a larger company. The employer will collect your monthly insurance bill and pay your medical claims. They may contract with an insurance service for things like:

  • Claims processing
  • Enrollment
  • Provider networks

Or they may administer all of the above on their own.

But many of these plans perform medical underwriting annually. “Employees need to go for blood work and be weighed in at specific labs,” says Gross. “The decisions about the annual premiums are decided by not just their weight and health conditions, but all family members who will be insured on the employee policy.”

Life insurance. If you apply for either term life or whole life insurance, you’ll most likely have to go through medical underwriting. If you are in poor health and/or have multiple health conditions, you may be able to get a “guaranteed issue” life insurance plan without underwriting, notes Walls. These policies are small — generally $5,000 to $10,000 — and tend to be more expensive than a fully underwritten product. “They’ll help pay for a funeral, but you don’t get much bang for your buck,” says Walls.

Short-term insurance. Short-term insurance plans provide health insurance that can last for up to 36 months in some cases. These tend to have lower premiums that long-term plan options. The catch is that they require medical underwriting and can deny you coverage for certain preexisting conditions. This makes them a better option if you’re young and in good health. If you have a complex medical condition, it’s possible your application won’t be accepted.

Want to explore a short-term medical plan? Take a look at the benefits and compare insurance plans, or contact a licensed insurance agent at 1-844-211-7730.

What do medical underwriters look for in your health record?

If you undergo medical underwriting, you can expect to fill out a health questionnaire. You may be asked to release medical records, including:

Plus, you may have to tell them about any other medical care you’ve received in the last several years. In addition, underwriters often ask the following questions, notes Walls:

  • Have you been diagnosed with any heart disease, including angina (chest pain), heart attack or cardiomyopathy (enlarged heart), or had any type of heart or circulatory surgery?
  • Have you had a stroke or ministroke?
  • Have you ever had a brain tumor or aneurysm? (That’s a bulge in a blood vessel in the brain.)
  • Have you ever tested positive for HIV?
  • Have you ever been diagnosed with cancer?

If it seems like a lot of questions, it is. “The main thing the underwriters are looking for with life insurance is to make sure that you don’t have a higher chance of dying within the next couple of years,” says Walls. “With health products, like a Medicare Supplement, they are wanting to make sure you won’t have any unusually large claims within the next couple of years.”

Keep in mind that any plan that requires medical underwriting can reject you, or charge you a higher monthly bill, if you have a preexisting condition.

Want an insurance plan that may require medical underwriting, but not sure where to start? Contact a licensed insurance agent at 1-844-211-7730. They can walk you through what’s available.

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