All About Medical Underwriting and Medicare

When you look for a Medicare plan, it can feel almost too easy, like buying a pack of cookies from the store. Just pick the brand you prefer, and you’re set. But it’s not always that simple, especially for other types of insurance. If you’ve only ever had insurance through your work and then Medicare after that, you may not even be familiar with an aspect of insurance affordability that helps insurance companies control costs to remain viable for their beneficiaries. This aspect is medical underwriters, and they play an important role in the insurance world. While you may not run into them too often in Medicare, there are circumstances where you may. Even if you aren’t encountering them within Medicare, there are other ways you may have to deal with them.

What is Medical Underwriting?

Medical underwriting is the process through which an insurance company determines a beneficiary’s medical history and health status prior to enrollment in a plan. Generally, they’ll be looking for pre-existing conditions, which are conditions that the beneficiary has prior to enrollment in the plan. Depending on what the underwriter determines, this process can influence whether you receive coverage from the plan. It can also cause you to pay more for your coverage or have specific limits or exclusions on your coverage.

According to a study by the Kaiser Family Foundation, 27 percent of non-elderly Americans (under age 65) have a condition that would make them declinable, with 45 percent of Americans having at least one family member that falls into this category.

Supporters of medical underwriting believe that the process keeps premiums on the majority of plan holders as low as possible since it shifts costs onto the plan holders who may use the plans the most or keeps “uninsurable” individuals off the plans. Those who are against underwriting believe that it can make health care costs unaffordable for those who need it most, even though with fairly treatable and common conditions. According to a study by the Kaiser Family Foundation, 27 percent of non-elderly Americans (under age 65) have a condition that would make them declinable, with 45 percent of Americans having at least one family member that falls into this category. While some of the pre-existing conditions can include some severe illnesses like cancer or HIV and AIDS, there are also some fairly benign or common ones like arthritis, mental illness, obesity, gender dysphoria, or pregnancy.

The requirement for medical underwriting in health insurance changed significantly with the passing of the Affordable Care Act. One of the most publicized outcomes of the act’s passing was that individuals or their children could no longer be denied coverage because of a pre-existing condition. It also protected those individuals from being charged more for their coverage or from having your coverage limited for those conditions. Those laws came into effect in 2014, though some plans were grandfathered into allowing certain limitations, though only if the individual or family was enrolled in the plan on or before March 23, 2010, and there hasn’t been a change that reduces benefits or increases costs. So, while most people won’t encounter medical underwriting directly with health insurance, there are tangential ways.

Medicare and Medical Underwriting

Original Medicare, like other health insurances now, does not require medical underwriting to enroll, ensuring that the millions of eligible Americans can have health care coverage they need. The same generally was true for Medicare Advantage and Medicare Part D. Until recently, there was one case where medical underwriting could influence an eligibility decision for Medicare Advantage, and that was if you had end-stage renal disease (ESRD) prior trying to enroll in the Medicare Advantage plan. This changed in 2021, however, when individuals with ESRD became eligible for Medicare Advantage plans.

If you choose to enroll in a Medicare Supplement (also called a Medigap plan), you may be subject to an underwriting exam, meaning your enrollment is not guaranteed or may be limited in some regards.

This leaves you with one main time you can run into medical underwriting with Medicare, and it’s almost entirely avoidable. If you choose to enroll in a Medicare Supplement (also called a Medigap plan), you may be subject to an underwriting exam, meaning your enrollment is not guaranteed or may be limited in some regards. Luckily, you can avoid this if you sign up for a Medigap plan during your Open Enrollment window, which runs for six months on the first day of the month after you enroll in Medicare Part B, or if the plans are guaranteed issue plans.

Where Else May You Encounter Medical Underwriting?

Of course, there are other types of insurance out there that may have underwriting attached before you’ll be enrolled. For example, some types of supplemental insurance plans like some dental, vision, and hearing plans may require some form of underwriting. This can also be true for some life insurance plans and final expense plans. Essentially, if it’s a health service not covered by Medicare, but has a supplemental insurance that can, there’s a chance there may medical underwriting requirements.

Guaranteed issue insurances are plans that must permit you to enroll regardless of health status, age, or other factors that could be used to predict your likelihood to use health services.

If you have a pre-existing condition that would normally be disqualifying for any of those insurances that you may be interested in, it may be worth exploring if there is a guaranteed issue form of that insurance available to you. Guaranteed issue insurances are plans that must permit you to enroll regardless of health status, age, or other factors that could be used to predict your likelihood to use health services. There are also guaranteed issue life insurance plans for individuals who may otherwise not be able to enroll in a life insurance plan. While these plans may generally offer less coverage and have a waiting period, it can offer a degree of coverage and support, even if you have a condition that may prevent you from normally getting aid.

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Medical underwriting is a process that insurance companies use to protect themselves and keep their finances stable. While this may be controversial, it is by no means purely a selfish decision. If an insurance company goes out of business because it covers everyone, everyone that the company was covering suddenly loses their plan. So, the argument isn’t a clear-cut moral one. That said, one of the many benefits of enrolling in a Medicare plan is that you’ll be a lot less likely to deal with underwriting blocking your coverage. In the end, it’s just another reason to appreciate your Medicare!