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Understanding Medical Underwriting

Understanding Medical Underwriting - Daily Insurance News

Medical underwriting is when a health insurance company examines an applicants’ medical history in order to determine a price for coverage for that individual. Depending on the policies of the insurance company and federal or state regulations, medical underwriting can lead to the denial of coverage or coverage at a severely high cost and is somewhat controversial.

It is also used by life insurance companies and disability insurance companies to determine an applicant’s suitability for insurance. It gets a lot of negative press (and for good reason) but that doesn’t change the fact that medical underwriting is used by health insurance providers and cannot be avoided.

Understanding Medical Underwriting

It can be conducted for individuals or also for a group of people (such as employees) at a company but there are limits on the size of the group. Insurance companies will examine individuals’ medical history, lifestyle, activity level, demographic, family history, and other factors that may impact an individuals’ need for care in the future.

In a nutshell, an estimate of the financial risk to the insurance company for providing health insurance to an individual is determined. This gives the insurance company a price at which the risk associated with providing health coverage is reduced or removed because of a set plan cost that covers these risks.

Basically, it is what determines how much you will pay in monthly premiums for health insurance or if they will even offer you insurance at all.

 Legal Limitations to Medical Underwriting

There are some legal restrictions on the use of medical underwriting in some circumstances. For instance, the Affordable Care Act (Obamacare) limits the use of medical underwriting by insurance companies to determine to price for individuals on the marketplace. This meant that there were limitations to how an individuals’ medical history could affect their cost of health insurance through the Affordable Care Act exchanges.

The act went further and banned insurance providers from denying or limiting health coverage to individuals with pre-existing conditions.

This took a huge piece out of medical underwriting for individuals looking for an affordable health plan on a lower income. They could no longer be denied or penalized for care due to a pre-existing condition. This is a huge win for the Civil Liberties Union and people across the entire country, especially those with long medical histories.

It means you can’t be denied insurance because of a pre-existing condition.

Medical Underwriting: Pros vs Cons

The pros and cons associated with medical underwriting will be largely based on where we look at them. For a person applying for medical insurance, medical underwriting can have many cons in that they could be denied coverage outright or offered expensive health insurance because of the medical underwriting process’s determination.

This “con” to the individual would be perceived as a “pro” to the medical insurance provider because they have gotten the benefit or denying a high-risk candidate or offering care at an extremely high price. The insurance company sees the process as removing or reducing their financial risk to accepting an individuals’ health insurance application.

The opposite would be true for the customer or applicant as well. What helps the insurance company can hurt the applicant. So, it’s a case of what is good for the insurance company is bad for the customer.

Who Conducts Medical Underwriting?

It is either conducted in-house by the insurer or through a third party that the insurer hires to do their medical underwriting. When completed medical underwriting determines the financial risk for providing health insurance to an individual applicant.

Should I be Concerned about Medical Underwriting?

This will largely depend on your medical history, income level, and who you are applying for health insurance through. If you’re applying through the Affordable Care Act you don’t need to be concerned about a denial of coverage because of the wholeprocess. But, if you are applying for private health insurance and have a long medical history or an unhealthy lifestyle, you may have some concerns regarding medical underwriting.

Where Can I Get a Health Insurance Quote?

There are lots of different ways to go about getting medical insurance. Depending on your income level and where you live you may have many different plan options available to you. The first step is getting a quote, it is fast and free, so get started below.


Where Can I Get Medicare?

If you’re over the age of 65 or have qualified medical conditions you can get Medicare today. Open enrollment is active now so get started below, it only takes a few minutes and you’ll have Medicare coverage right after you finish the registration process.

Get Medicare Quote

See our article on What is the Right Amount of Insurance? (opens in new tab)

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