Medical Underwriting Guide

Medical underwriting is the act of reviewing a health insurance applicant's medical records and determining her level of risk. Since insurance companies know that risky applicants (those with serious medical conditions) are costlier, they often reject such applicants or raise their monthly premiums.

Background

• Insurance is based on risk; those who present the least risk get the best plans. To evaluate an applicant's risk, a medical underwriter will scrutinize his medical records and application. The underwriter will look at his body mass index (BMI), lifestyle as well as doctors' and hospital records.

Criticism

• The practice of medical underwriting is not without criticism, and it is illegal in many states, such as Maine and Vermont. A 2010 report by The Commonwealth Fund found that the nation's four largest health insurance companies, Humana, United, Wellpoint and Aetna, denied 651,000 applicants from 2007 to 2009 after medically underwriting them. Starting in 2014, insurance companies may no longer reject applicants because of pre-existing conditions.

Alternatives

• Insurance companies medically underwrite those who apply for individual policies. Since there is no medical underwriting for group plans, those with pre-existing conditions should enter a group plan. Another option is to enter a state high-risk pool, which all states must have per the 2010 health care reform bill.