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Medical Underwriting

Medical Underwriting and Medigap: How Does it Work?

Medicare Supplement Insurance, commonly known as Medigap, helps pay some of the costs not covered by Original Medicare. However, if you fail to buy a policy during your Medigap open enrollment period or want to change plans, you usually have to go through medical underwriting.

Medigap is a popular program because, even though Medicare covers 80 percent of most services – and 100 percent of some others – your costs can add up quickly, particularly if you have a chronic condition. Another plus is that, once you buy a policy, the insurer may not cancel it unless you fail to pay your premium.

To understand medical underwriting and how it affects your Medigap eligibility, keep reading. For more information about Medigap, read our post What Is Medicare Supplement Insurance.

What Is Medical Underwriting?

At its heart, all insurance is a bet. When you buy auto insurance, you’re betting you’ll have an accident. The insurance company is betting that you won’t.

Of course, the insurer won’t make a bet with everyone who asks. And, they offer different “odds” (your insurance rate) based on how likely they think it is they’ll lose their bet. That’s where underwriting comes in.

Insurance companies use the underwriting process to determine the probability that you’ll make a claim. To gauge how risky you are, they ask a variety of questions. Then, they compare your answers to the data in their actuarial tables. The information in these tables forms the basis of nearly every decision an insurance company makes, since it tells them how likely it is that you’ll file a claim.

Medical Underwriting

The most well-known actuarial tables predict life expectancy, but every type of insurance has its own tool to assess risk. In medical underwriting, Medigap providers review your medical history, specifically looking for information that indicates you are a high risk (more on that later). If your application makes it clear you’re likely to make numerous claims, the underwriter will deny your application.

In addition to a yes/no answer to the question of whether to sell you a policy, medical underwriting determines your rate. For example, most insurers look at the applicant’s weight. If your weight falls within guidelines, they may accept your application. However, if your weight is fairly close to either the low or high end, they’ll likely charge you a higher rate.

Do I Have to Go through Underwriting?

If you buy your Medigap policy when you first become eligible, your application does not go through the underwriting process. That means you cannot be denied coverage or charged a higher rate based on your medical history.

Medical Underwriting

Your Medigap open enrollment period begins the month you enroll in Medicare Part B and are aged 65 or older. This period lasts for six months. If you fail to buy a Medigap policy during this time, you must go through medical underwriting unless you have a guaranteed issue right.

There are two basic types of guaranteed issue rights: loss of coverage and trial rights.

Loss of coverage includes:

  • Your Medicare Advantage (MA) plan leaves Medicare, no longer provides care in your area, or you leave the service area
  • You have Original Medicare as well as insurance through an employer or COBRA and your secondary insurance plan ends
  • You move away from your Medicare SELECT policy’s area
  • You lose your current Medigap coverage through no fault of your own
  • You leave your MA or Medigap plan because your insurer misled you or failed to follow the rules

Trial rights include:

  • Joining an MA or PACE plan when you first became eligible for Medicare Part A and you decide to switch to Original Medicare within 12 months
  • Dropping a Medigap plan so you can join an MA plan or Medicare SELECT for the first time and you decide to switch back within 12 months

If you qualify for guaranteed issue rights, insurers must treat your application the same way they would if you were in your Medigap open enrollment period.

What Happens During Medical Underwriting?

Details vary by insurer, but you find a few items that are a part of every insurer’s medical underwriting process. One of these is the medical questionnaire.

Medical Underwriting

If you cannot answer No to all of the “have you ever had” health conditions listed, it is highly unlikely any carrier will approve your application. These conditions vary by insurer, but typical examples include AIDS, cirrhosis, chronic lung conditions (e.g. COPD and cystic fibrosis), kidney disease (e.g. ESRD and those requiring dialysis), and dementias (e.g. Alzheimer’s and Parkinson’s).

Not all chronic conditions result in a refusal. For example, controlled high blood pressure on its own is typically acceptable. It only becomes a potential issue when it’s paired with another chronic condition, such as diabetes.

Most Medigap carriers also ask about prescriptions you currently take as well as ones you’ve taken in the past. The insurance company is looking for drugs that are commonly prescribed for uninsurable health conditions.

Working with an Agent

One of the best ways to increase your odds of getting your application approved is to work with a licensed agent. For example, the team at Medicare Solutions has extensive experience and knowledge of Medicare plans, including Medigap and Medicare Advantage. They use their background to advise clients about how they can pass the medical underwriting process.

If it’s clear you won’t be able to pass the underwriting process, our agents help you understand your other options to reduce your out-of-pocket costs, such as Medicare Advantage. For a complimentary consultation, call us toll-free at 855-350-8101.

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