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What Is Medical Underwriting for Medigap?

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By Daniel Petkevich
Apr 14, 2023

Some tips to avoid missing out on your ideal Medigap plan

Are you trying to switch into a Medigap policy to supplement your Medicare coverage? If so, you may have come across the term "medical underwriting." But what exactly does it mean, and how does it affect your coverage options?

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Medical underwriting is an important part of the Medigap application process that determines your eligibility for coverage and the cost of your premiums. Understanding what medical underwriting is and how it works can help you make informed decisions when it comes to

choosing the right Medigap plan for your needs

. In this article, we'll delve deeper into the topic of medical underwriting for Medigap and explain its purpose, how it works, and why it's necessary for both insurance companies and policyholders.

What is Medical Underwriting for Medigap?

Medical underwriting is when insurance companies scrutinize your health history, which could lead to increased rates and, in some cases, prohibit you from joining a specific plan. This does not happen in every instance of trying to switch into a Medigap plan. For example, if you have a

special enrollment period

or you are in a state with a birthday rule, then you can enroll without facing scrutiny regarding your pre-existing conditions. 
The purpose of medical underwriting is to assess an applicant's health status and medical history to determine their eligibility for health insurance coverage and the cost of their premiums. Insurance companies want to evaluate the level of risk they would be taking on before offering coverage to an individual based on their potential for requiring expensive medical treatments or procedures in the future. 
Medical underwriting also helps to prevent adverse selection, which is when individuals with pre-existing health conditions or higher risks of needing medical care are more likely to purchase insurance, potentially driving up the costs for everyone in the insurance pool. Ultimately, the goal of medical underwriting is to ensure that insurance companies can provide adequate coverage and financial stability while offering fair and reasonable premiums to their policyholders.

How Does Medical Underwriting for Medigap Work?

The eligibility requirements for medical underwriting can vary depending on the specific insurance company and the Medigap plan being applied for. However, some common eligibility requirements may include:
Enrollment in Medicare Part A and Part B: An individual must be enrolled in both Medicare Part A (hospital insurance) and Part B (medical insurance) to be eligible for a Medicare Supplement plan.
Age: Some insurance companies may have age restrictions on their Medigap plans, such as requiring the applicant to be at least 65 years old or older.
Residency: The applicant must be a resident of the state where the Medigap plan is being offered.
Open Enrollment Period: The best time to apply for a Medigap plan is during

the open enrollment period

, which is a six-month window that starts the month an individual turns 65 and enrolls in Medicare Part B. During this period, insurance companies are required to offer Medigap coverage to anyone, regardless of their health status.
Medical Underwriting: If an individual applies for Medigap coverage outside of the open enrollment period, they may be subject to medical underwriting. This means they will need to answer health-related questions and provide medical history information to the insurance company, which will then determine their eligibility for coverage and the cost of their premiums.
It's important to note that while some eligibility requirements are mandatory, others can vary depending on the specific insurance company and plan being applied for. It's always a good idea to check with the insurance company or a licensed insurance agent to determine the specific eligibility requirements for the Medigap plan in question.
Once you've completed the application, you'll need to submit it to the insurance company along with any required documentation, such as proof of Medicare enrollment.
As you wait for approval, the insurance company will review your application and determine whether you're eligible for coverage. If you applied during the open enrollment period, you should be approved for coverage without any issues. If you applied outside of the open enrollment period and are subject to medical underwriting, the insurance company may take longer to review your application.
If your application is approved, you'll receive a policy from the insurance company that outlines your coverage and premium costs. You'll need to review the policy carefully to ensure that it accurately reflects the coverage you applied for and the premium costs you were quoted.

Why is Medical Underwriting Necessary for Medigap?

Medical underwriting is a necessary process for insurance companies to assess the risk of insuring an individual and ensure their financial stability. By evaluating an applicant's health status and medical history, insurance companies can determine the likelihood of paying out claims in the future. This risk assessment allows insurance companies to set appropriate premium rates that reflect the level of risk associated with insuring an individual. Additionally, medical underwriting helps prevent adverse selection, which occurs when individuals with pre-existing health conditions or high healthcare needs are more likely to seek insurance coverage. Without medical underwriting, insurance companies would be at greater risk of insuring a pool of individuals who require more medical attention and services, which could lead to higher premium rates for everyone.

How Beneficiaries Can Avoid Underwriting

Medicare beneficiaries can avoid having to go through medical underwriting for Medigap coverage by enrolling during their Medigap Open Enrollment Period. The Medigap Open Enrollment Period is a six-month window that begins the month that an individual turns 65 and is enrolled in Medicare Part B. During this period, insurance companies are required to offer Medigap coverage to anyone who applies, regardless of their health status. Insurance companies are also prohibited from charging higher premiums or denying coverage based on an individual's health status or pre-existing medical conditions during this period.
It's important to note that if an individual applies for Medigap coverage outside of their Open Enrollment Period, they may be subject to medical underwriting, which could result in higher premiums or denial of coverage based on their health status. However, there are a few situations in which an individual may be eligible for a guaranteed issue right, which allows them to enroll in a Medigap plan without medical underwriting even outside of the Open Enrollment Period. These situations include:
Losing employer-sponsored health coverage: If an individual loses their employer-sponsored health coverage, they may be eligible for a guaranteed issue right to enroll in a Medigap plan within a certain timeframe.
Losing Medigap coverage due to an insurance plan provider failing: If an individual loses their Medigap coverage due to their insurance company's bankruptcy, they may be eligible for a guaranteed issue right to enroll in a new Medigap plan.
Moving out of their Medigap plan's service area: If an individual moves out of their Medigap plan's service area, they may be eligible for a guaranteed issue right to enroll in a new Medigap plan.
Overall, the best way for Medicare beneficiaries to avoid medical underwriting for Medigap coverage is to enroll during their Medigap Open Enrollment Period. If they miss this window, they should speak to a licensed insurance agent to determine if they are eligible for a guaranteed issue right.

Conclusion

Medical underwriting is a crucial aspect of switching into a Medigap plan to determine beneficiaries' eligibility for coverage and the cost of their premiums. Insurance companies use this process to assess the level of risk they would be taking on and prevent adverse selection. Medicare beneficiaries can enroll during their Medigap Open Enrollment Period to avoid medical underwriting. If you need help finding the right Medigap plan for your needs, call

Fair Square

at 888-376-2028. Our licensed Medicare agents can help you navigate the process and find the right plan for you.

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