What is Medicare Supplement Underwriting?

You can apply for Medicare health coverage once you reach 65 years old. While Medicare policies come with lower premiums than traditional health insurance, these policies typically come with copays, deductibles and coinsurance. These out-of-pocket costs can wreak havoc on your finances, especially if you live on a fixed income.

You can buy a Medicare supplement Insurance policy to help defray these extra costs. However, these supplemental policies have strict enrollment periods. You can still apply for coverage even if you miss open enrollment, but your application goes through added scrutiny during underwriting.

You may be left to wonder — what is Medicare Supplement underwriting, and can it affect my ability to get coverage? 

Understanding Medical Underwriting

Medical underwriting is the process insurance companies go through when determining your health status. Insurance companies ask a series of questions about your health history.

Underwriting helps the insurance companies decide whether to accept your insurance application, the limitations of your coverage and how much your premiums should be.

The questions vary by insurance company. However, some of the most common questions asked during the underwriting process include:

• How much do you weigh?
• Are you taking any prescription medications?
• Are you currently taking or have you been prescribed blood thinning medications in the past five years?
• Are you scheduled for a pending surgical procedure?
• Do you have a history of alcoholism?
• In the last five years, have you been diagnosed with or received treatment for cancer, stent placement, diabetes, COPD, stroke or heart attack?

Do Medicare Supplement (Medigap) Plans Require Underwriting?

A Medicare supplement policy helps cover gaps in Medicare coverage, such as deductibles, copays and out-of-pocket coinsurance costs. Known as Medigap plans, these supplemental packages are available on a state-by-state basis.

Whether your Medigap application requires underwriting depends on when and where you apply for coverage. 

Open Enrollment

While you can apply for Medigap coverage at any time, you are encouraged to apply during the Medigap Open Enrollment Period. During open enrollment, you have guaranteed issue rights, which means the insurance company cannot deny coverage or use the underwriting process to charge you a higher fee.

You can first apply for Medigap when you become eligible for Original Medicare (Parts A and B). The open enrollment period covers a six-month period when you are 65 years old and enrolled in Medicare Part B.

Guaranteed Issue Rights

If you miss the initial open enrollment period, you may still apply when you qualify for a guaranteed issue right. This is similar to a qualifying life event that makes you eligible for insurance coverage on the healthcare marketplace outside of open enrollment. A guaranteed issue right means that the company has to approve a Medigap policy.

Qualifying after the open enrollment period typically happens when there are changes in your Medicare coverage. For example, you may qualify for guaranteed issue rights if your Medicare plan no longer provides coverage in your area, you relocate from your Medicare service area or you lose Medigap coverage when the provider goes bankrupt.

If you miss open enrollment or don’t meet the guaranteed issue rights requirements, your Medigap application goes through underwriting. The guaranteed issue right protects you from getting denied during underwriting. Guaranteed issue rights also make sure that you that your policy covers you despite any pre-existing conditions in certain situations.

State Medigap Rules

State rules also influence underwriting. Some states allow flexibility with Medigap plans. For example, Washington lets you switch between specific Medigap plans at any time without going through underwriting.

In California, open enrollment is triggered yearly based on the individual's birthday. Under California rules, you may switch your Medigap plan for the same one offered by another provider at a lower premium. Or you can replace your current Medigap plan with another plan with equal or lesser benefits.

Individuals living in Connecticut can buy Medigap plans at any time on a guaranteed issue basis. Rates cannot be influenced by the applicant's health status or age. However, a pre-existing condition limitation may apply if the applicant has a coverage gap. This limitation may also apply to applicants with no prior creditable coverage, which is health insurance that meets minimum qualifications. 

How Does Underwriting Impact the Duration of Your Enrollment?

The underwriting process affects your premiums through the duration of your coverage. If you want to change your Medigap coverage to a less expensive plan, you may have to go through the underwriting again depending on the state you live in. If you experience a change in your health status, you could pay higher premiums or be denied coverage if you go through underwriting again.

However, you might avoid the whole underwriting process if you qualify for guaranteed issue rights or live in a state with exceptions to the open enrollment rules. 

How Does Underwriting Impact Your Premiums?

Underwriting can increase your premiums. When insurance companies consider your health history and age when evaluating your Medigap application, they may raise the premiums to offset the risk of offering coverage.

If you suffer from a chronic illness, auto-immune disorder or a heart condition, you may not pass underwriting. If the provider does accept your application, you likely will pay higher premiums because of your medical conditions.

Underwriters may also consider your age and health habits when evaluating your application. If you are a smoker, your Medigap premiums could be 12% higher than a non-smoker’s premiums when your application goes through underwriting. 

Can You Sign Up for a Medicare Supplement Policy Without Underwriting?

You have two ways to sign up for Medigap and avoid underwriting. The first option is to sign up during the open enrollment period, which spans six months after you have turned 65 years old and have enrolled in Medicare. Keep in mind there is only one open enrollment period for Medigap.

When you qualify for guaranteed issue rights, you can avoid underwriting. Guaranteed issue rights typically kick in when you have experienced a change in coverage. If your Medicare provider no longer offers coverage or you move to a state outside of your provider’s service area, you may be able to get Medigap coverage without going through underwriting. 

Can You be Denied a Medigap Plan?

You cannot be denied a Medigap plan during the open enrollment period or if you qualify for guaranteed issue rights. However, if you miss open enrollment or don't qualify for guaranteed issue rights, your Medigap application goes through the underwriting process. The insurance company could deny coverage based on your health history.

Insurance companies have different guidelines when underwriting policies. If one provider denies your Medigap application, you can apply for coverage through another insurance company.

You can also appeal the denial with the provider. Check with the insurance company to understand the steps necessary to file an appeal. Your healthcare provider will most likely complete a form and provide a written letter in connection with your appeal. 

Get the Best Medicare Supplement Insurance from Benzinga’s Top Providers

Medicare supplement insurance rules can be complicated and vary based on where you live. Working with the best Medicare supplement insurance provider can help you get the coverage you need at a price to fit your budget. 

Know the Medigap Rules to Avoid Underwriting

The rules governing Medigap coverage can be tricky. You could get stuck going through underwriting if you miss open enrollment or do not qualify for a guaranteed issue. If you don't keep close tabs on the rules, your Medigap premiums could cost you more money. Without it, an insurance company could deny coverage altogether. 

Frequently Asked Questions