Health Insurance Underwriting Information

Health insurance underwriting determines how insurance companies design and sell health insurance policies. Each state dictates the laws pertaining to insurance underwriting. In many jurisdictions, companies may refuse older consumers or people who have poor health.

Function

Health insurance underwriting deals with the process of classifying, rating and selecting risks as related to health insurance. Underwriter must evaluate information and various resources to establish how a person’s classification as either a standard or substandard risk. Once the insurer completes the determination, it rates the policy, or settles on a premium that the individual must pay for the health coverage and issues the policy.

Considerations

Generally, an individual who requests health insurance coverage undergoes greater scrutiny by underwriters than those applying for group health insurance. After collecting basic information about the applicant, the underwriter uses his training and knowledge to develop an accurate summation of the individual’s lifestyle. The underwriter must investigate factors, such as job, habits, risky pastimes, and other factors. The intention is to uncover anything that may make the person more susceptible to illness or injury that may lead to high health care expenses. The health insurance underwriting process works to protect insurer against poor risk and fraud.

Function

The application represents a vitally important document for the health insurance underwriting process and becomes a part of the insurance policy. Usually, the application has three sections, such as general information, medical information, and the agent’s statement. The general information requires the name, address, date of birth, social security number, and occupation of the insured. The medical information section necessitates the insured medical history and current health status.

In addition, the insured need to list personal morals or habits like smoking, alcohol intake. Sometimes, a medical examination may also be necessary. The insurance agent must submit information about the applicant’s habits and general attributes, financial circumstances and other information associated to the underwriting of the policy. Often, the insurer may order a report from a third-party credit reporting company or investigation agency to undercover financial and lifestyle information.

Time Frame

Often an individual make request the health insurance coverage to start a specific date; ultimately, the date depends on the speed of the underwriting process. If the company does not complete the evaluation by the start date, the coverage may start retroactively. Most insurers take 30 to 45 days to complete the application and underwriting process. Most states have a specific period in which the insurer must make a decision.

Expert Insight

Regardless of the state, most health insurance companies have a list of conditions that do not meet their underwriting guidelines and results in the rejection of applications. According to the Colorado Health Insurance Insider website, the list may vary from company to company and some medical conditions permeate the list of every company. In some instances, while some insurers may decline an applicant because of a condition, others may have liberal underwriting standards. As a result, these companies may exclude the ailment or charge a higher premium.

References

• Financial Web: The Basics of Underwriting Insurance
• eHealth Insurance: Underwriting How Health Insurers React
• Health Insurance Colarado: No Blackball List In Health Insurance