Understanding medical underwriting: What are your options?

As you navigate the world of health insurance, you'll likely encounter the term "medical underwriting." Understanding how this process works—and when it doesn't apply—can help you make smarter decisions about your coverage and potentially save you money while securing better benefits.

What is medical underwriting?

Medical underwriting is the process insurance companies use to evaluate your health history and determine whether to offer you coverage or not, and at what price. During underwriting, insurers review factors like your age, medical history, current health conditions, prescription medications, and lifestyle habits to assess their risk in covering you.

The goal? To predict how much you might cost the insurance company in claims. The higher the perceived risk, the higher your premiums—or in some cases, you might be denied coverage altogether, offered a policy with exclusions for pre-existing conditions, or given reduced benefits.

I don't remember answering medical questions when I got hired?

Medical underwriting sometimes applies, and sometimes doesn’t. And how it applies is different depending on the type of health insurance.

Major medical coverage: The good news is your primary health insurance—including ACA marketplace plans, ACA-compliant employer group health plans, Medicare, and Medicaid—has no underwriting. This is the coverage you think of when you think health insurance. You cannot be denied coverage or charged more based on your health status. These protections ensure everyone has access to essential health coverage regardless of pre-existing conditions. That goes for everyone in your group, including dependents.

Medicare supplement plans: Medical underwriting typically applies when you purchase a Medigap policy outside of your Initial Enrollment Period (IEP) or other guaranteed issue situations. Insurance companies can review your health history and potentially deny coverage, charge higher premiums, or exclude pre-existing conditions. This is why your agent might suggest getting a supplement plan right when you turn 65 if you're interested in one.

Voluntary coverage: Most accident, cancer, critical illness, and hospital indemnity plans purchased individually involve medical underwriting. Insurers will ask about your health history, current conditions, and lifestyle factors to determine your eligibility and rates. Group voluntary benefits, while often touting lower rates, can sometimes have underwriting requirements, too.

Then what's guaranteed issue?

Guaranteed issue means you can obtain insurance coverage without answering health questions, undergoing medical exams, or risking denial based on your health status. This is incredibly valuable, especially if you have pre-existing conditions or health concerns.

Know when you get a free pass

As we already talked about, most major medical is underwriting free. Your Initial Enrollment Period (IEP) is your golden opportunity for Medigap coverage. This six-month period begins the month you turn 65 and are enrolled in Medicare Part B. During this window you:

• Cannot be denied coverage
• Cannot be charged more due to pre-existing conditions
• Cannot have coverage exclusions based on your health
• Have access to all available Medigap plans in your state

Once this period closes, insurance companies in most states can use medical underwriting to evaluate your application, potentially resulting in denials, higher premiums, or coverage exclusions.

Other guaranteed issue instances:

You may also qualify for guaranteed issue Medigap coverage in specific situations, including:

• Your Medicare Advantage plan leaves  or stops serving your area
• You move out of your plan's service area
• Your employer group coverage ends
• Your Medigap insurance company goes bankrupt

Employer-sponsored coverage

If your employer offers supplemental insurance during open enrollment, you may have guaranteed issue or simplified underwriting. This means limited or no health questions and coverage regardless of health status. This is an excellent opportunity to secure accident, cancer, or hospital indemnity coverage that might be difficult or expensive to obtain individually.

Timing matters

Missing the IEP: Tom turned 65 and skipped purchasing Medigap because he felt healthy. Two years later, after a diabetes diagnosis, he faces significant out-of-pocket costs. When he applies for a Medigap policy, he's quoted premiums far higher than what he would have paid during his IEP due to the diabetes coming up during underwriting.

Entering employer coverage early: Lisa enrolled in hospital indemnity insurance during her employer's open enrollment with no health questions. When she later required hospitalization, her policy paid $5,000 toward her expenses. Had she waited to purchase individual coverage after developing health issues, she likely would have been denied.

Key takeaways:

1. Don't miss your Medicare Initial Enrollment Period. This is your best opportunity to secure Medigap coverage without medical underwriting.
2. Take advantage of employer open enrollment. Group coverage often comes with guaranteed issue or simplified underwriting for both primary and supplemental insurance.
3. Understand your guaranteed issue rights. Know when you qualify and act on these opportunities.
4. Plan ahead. Medical underwriting means waiting until you're sick can result in denial, exclusions, or unaffordable premiums.

So am I just out of luck?

Every situation is unique, and the right strategy depends on your age, health status, current coverage, and future needs. Even if you are subject to medical underwriting, it doesn’t mean you are out of options. The plan you want might still be in reach. We are here to help you understand your options and make the best decision for your circumstances.