As an insurance agent I see many health insurance applications each month.
The process of determining if the insurance company will accept or decline your application is called “underwriting.” Until December 31, health insurance companies will still consider your health status when they are deciding how much premium to charge.
In this post I want to try to answer some common questions that people ask after they complete an application for health insurance.
WHY IS THE FINAL PREMIUM SOMETIMES MORE THAN WHAT YOU FIND ON LINE?
The published premiums you find, on sites like mine and other places, are merely base premiums that assume you are in average health for your age, gender and location. If your health is slightly worse than average, the underwriter may require you to pay more premium since your anticipated medical bills will be higher.
If you have a serious medical condition or are clearly not taking care of yourself, the health insurance company will decline coverage for you. You will have to wait until medical underwriting is done away under Obamacare in January to get health insurance unless your state has a high risk health insurance pool.
Whether you like it or not, until the end of this year, health insurance companies will continue with medical underwriting to make certain that they are charging those who are more likely to use the health insurance their fair share.
What often happens is that people assume that the fact of completing an application guarantees their acceptance and final rate with an insurance company. IT DOES NOT!
WHAT ARE LEGAL RIGHTS DOES THE INSURANCE COMPANY HAVE?
Legally, a health insurance policy is a contract between you and the insurance company. Your application is only an “invitation to contract.” It is the way that you let the insurance company know that you are interested in allowing them to pay you medical bills.
The official offer is made by the health insurance company only after they have had a chance to classify and price your risk. The application you submit to them is just the start of that process.
The person at the insurance company who reviews your application (underwriter) will use the information you supply on that form to decide what, and where, to gather any additional information that may be needed.
The underwriter can gather information in many ways. He can request records from your doctor, request a private investigation of your lifestyle, request that you be checked by a doctor if you have not had a physical for several years.
The problem is that all of those requests cost money. In spite of what the politicians and press have told you over the past several years, insurance companies are typically very frugal. Although they will pay for medical records from a doctor if they must, in the last few years insurance companies have ordered fewer medical records and relied on telephone interviews with applicants.
I do not see major problems with this practice, however, there is a risk. I have had clients charged a higher premium or declined by insurance companies on the grounds of what they say in a telephone interview.
Please do not get me wrong. In the grand scheme of things I like it that insurance companies often elect to use a telephone interview rather than order medical records from a doctor. It speeds up the underwriting process.
Depending on which state you are in, the information that you provide on your application is only good for 60-90 days. After that period of time has elapsed the insurance company is required by state law to get a new application from you showing your current health status.
Most doctor’s offices understand that your application is on a deadline. They react quickly to request for records from an insurance company. Unfortunately, some doctor’s offices do not. They consider the insurance industry to be of significantly less importance than their own. They can take 30-45 days to respond to a request for medical records.
It is because of doctor’s offices like this that I am required to answer the question, “How long will it take for me to know about this application?” with “It can take 6-8 weeks.”
DO YOU HAVE TO WORRY JUST BECAUSE YOU HAD SURGERY LAST YEAR?
The politicians have done an incredible job of scaring the American public who think that they will be declined for any pre-existing medical condition they may have. That is not true but why waste time arguing with politicians by using facts.
The truth is that a person’s health history has to be pretty bad before an insurance company will outright decline coverage. That does not mean that insurance companies will not “rate” or “waiver” an application. (A “rating” is an extra premium and a “waiver” excludes coverage for medical bills for a stated condition for a set period of time.)
If you had surgery last year, and have fully recovered, it will not affect your application much more than if you had just gone to see your doctor for a common cold. However, if you had surgery last year and still need more medical treatment, it is likely that you will be declined for pre-existing conditions.
HOW SOON WILL I HEAR FROM THE INSURANCE COMPANY?
As an insurance agent, probably the most common question I get is, “How long will it be before I hear from the insurance company?” The standard line that I am supposed to tell people is that underwriting can take 6-8 weeks.
However, that is a worst case scenario. It typically does not take anywhere close to that amount of time to get an answer from a health insurance company unless there is an unavoidable delay getting records from a doctor.
WHY DO MOST INSURANCE COMPANIES USE TELEPHONE INTERVIEWS TODAY?
A few years ago insurance companies learned that they can often get the information they need if they will just pick up the phone and call the applicant directly. In many cases, this eliminates the extra time and expense of getting records from a doctor.
Today, unless the underwriter needs more detailed information, they will often request a telephone interview rather than order records from your doctor when you submit an application.
If you submit an application for health insurance between now and the end of the year, don’t be alarmed if you get a call from someone with the insurance company. It is a normal part of the underwriting process. It is designed to save the insurance company money and to save you frustration while you are waiting for a decision.
However, just because it is normal does not mean that it is routine. Not everyone will get a telephone interview. If your application for health insurance does not imply that there is anything out of the ordinary, underwriters only “spot-check.” If you get a telephone call, it is entirely random. It is nothing to worry about. As long as the answers you give over the phone are consistent with your answers on the application, they know that you were telling the truth on your application.
If you admit on your application that you have been treated for a physical problem in the last couple of years, there is a greater chance that you will get a telephone call. The insurance company is only verifying the degree of recovery you have made. If there are future medical bills that are anticipated, they want to get a good idea of what they will be.
Normally, all they are wanting to know is at what level of control your medical issue is. Insurance companies do not like to insure people who ignore symptoms and let things get out of control. It is much cheaper for them to pay for your prescriptions than it is for them to pay for a hospitalization because you do not take your prescription.
However, there is a risk if there is a telephone interview. If you say something over the phone that causes concern with the underwriter there can be a problem. Underwriters must assume that you understand the words you use and they are required to assume the worst case scenario.
Often people try to appear more educated than they are. It is human nature to try to use scientific terms when talking about health issues. Unless you have been trained in medicine that is a mistake during a telephone interview.
If an insurance company calls you, assume that there is nothing you can say over the phone that will help you. Answer their questions honestly but avoid using medical terms. For example, rather than saying, “I have a touch of arthritis in my knee” say “my knee hurts when it rains.”
Leave the medical jargon to the doctors who speak their language. A simple mistake can cause a significant rating, like happened to one person last month, or a decline. It is better to say, “I don’t know why my doctor prescribed this drug. Here is his contact information.”
THE INSURANCE COMPANY HAS AN AGENDA IF THEY CALL YOU. YOU SHOULD TOO!
Your goal is not to deceive but to force them to get accurate information from someone who speaks their language.
If you accidentally make a mistake and say something that causes an underwriter to decline or rate your policy, it can be corrected through the insurance company’s appeals process. However, that process is often costly and time-consuming.
It is better for everyone concerned to force the insurance company to get records from your doctor in the first place. It may take more time to get your coverage but if there is going to be a rating or decline of you application, it is better for you to have it done as the result of accurate information rather than a miscommunication.