Health Insurance – What Is Underwriting?


What does it mean when an insurance broker says that a plan is fully underwritten? Individual insurance and sometimes senior health plans must be underwritten. Perhaps a better question to answer first is what does it mean if a plan is not underwritten? Underwriting happens when an insurance carrier looks into a prospective insured’s medical records. If a plan is not underwritten then usually it is called “guaranteed issue”. Guaranteed issue plans mostly are indemnity plans paying a flat pre determined amount of money for things like doctor visits and prescriptions. If a guaranteed issue plan has major medical hospitalization it is very limited. It is possible to have several different outcomes from underwriting. Below are 4 possible outcomes an underwriter might apply to your plan.

1. Rider. This is probably the most common outcome. A rider is something that “rides” along with an individual family plan. Riders can be for a specific period of time say for a two year period or they can be indefinite. The rider will be on the medical condition the applicant has and it means that nothing to do with that condition will be covered by the insurance carrier.

2. Condition Specific Deductible. Even if you applied for a high deductible health plan you may have a condition that the carrier will cover; they just want more out of pocket to do so. Let’s say you have asthma. They will cover the asthma, including prescriptions and testing but before they pay for anything you must pay an additional deductible for your asthma. The nice thing about the condition specific deductible is that it just applies to the individual with the asthma and not the whole family.

3. Rate up. A rate up usually happens when someone may be a little too short for their weight! Rate ups will also occur for prescriptions and medical conditions. With a rate up your health insurance premiums will be more money than quoted but the carrier will cover the condition(s).

4. No RX Card. The carrier will issue a policy and not issue any prescription coverage (unless you are in the hospital)

So, how do underwriters find out about you? All carriers support the Medical Information Bureau (MIB) which is where they start. Information is sent to the MIB every time you visit a doctor or get a prescription filled. There are two very important things to remember when submitting an application.

1. Never, Never Ever lie! They will find out and your application depending on what it is may get denied. The other bad result of lying is that the underwriter will most probably order medical records and go over your medical records with a fine toothed comb trying to find a reason not to issue the policy. The other important thing to remember is

2. Always use a licensed broker. The application will be completed correctly and if you have pre-existing medical issues a broker will be your best advisor as to which carrier would be the best choice for you and your wallet. Regardless if it’s a high deductible health plan, individual family plan or a senior health plan

Source by Hass Mohammed

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