How is Medical Insurance Underwritten?

18 Mar

Posted by: Cobra Help Center in: Health Insurance

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Medical insurance underwriting is a formal process through which major medical insurance companies evaluate the risk of possible financial loss if coverage is extended to a single individual or group.

There are several risk factors that medical insurance companies may consider in their underwriting criteria for individuals such as age, health status and history, occupation, hobbies, risky behaviors, and lifestyle. If you are applying for individual coverage, the insurance company will often require you to fill out an application that will be reviewed by the underwriter. In addition to giving identification information such as your name, address and Social Security number, you will probably be required to answer questions about your past and current medical history, weight, hobbies, and habits such as smoking and drinking on an individual coverage application.

Individual underwriting typically does not take place in the same way for those enrolled in group coverage, such as that through an employer, union, or association. If you will be covered under a group policy, you will be asked to fill out a short application that includes your name, address, Social Security number and any dependents that will also be covered. The insurance underwriter will consider the number of people covered on the policy and the type of work being performed as underwriting guidelines. Often, individuals joining an insured group must serve a probationary period before becoming eligible for coverage and then they can enroll during the eligibility period; often call “Open Season.”

If you have medical insurance through your employer, you have the advantage of being eligible for COBRA coverage should your employment end voluntarily or otherwise, provided your employer has 20 or more employees. COBRA is an acronym that stands for the Consolidated Omnibus Budget Reconciliation Act, which is a law passed by Congress in 1986 to help eligible employees keep their medical insurance up to 18 months after a job loss or when transitioning between jobs. If you decide to keep your major medical insurance coverage through COBRA, you will be responsible for paying the full group coverage rate and any administrative fees but you will not be subject to individual underwriting. You will receive a booklet from your employer that explains what COBRA coverage provides, your eligibility period, and sign up information should you choose to continue coverage.

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Posted in: Insurance,Medical,Underwritten