If your clients no longer have guaranteed issue rights, they will most likely need to undergo medical underwriting to change Medigap plans. You can help make the underwriting process easier to navigate by educating yourself on each carrier’s underwriting guidelines and by educating your clients on what to expect.
Guaranteed Issue Rights
Guaranteed issue (GI) rights, also known as Medigap protections, allow applicants to buy a Medicare supplement plan without going through medical underwriting. This means a carrier cannot deny coverage and cannot increase premiums due to a past or present health condition. Everyone has GI rights during their Medigap Open Enrollment Period, which lasts for six months and starts when the person turns 65 and enrolls in Medicare Part B. This is the best time to enroll in a Medigap plan because applicants are guaranteed coverage at a competitive rate.
Outside the Open Enrollment Period, there are specific situations where GI rights come into play and where applicants have the opportunity to switch or drop Medigap plans. If your clients do not meet any of these special situation requirements, you can help them determine their insurability for a Medigap plan and prepare them for underwriting.
Since enrollment periods and underwriting rules vary by state, it’s important to know the rules in your state. For instance, a few states have year-round open enrollment windows with no medical underwriting and some states have birthday rules that allow beneficiaries to change their Medigap policy around their birthday with no underwriting.
Underwriting Guidelines
Insurers use underwriting to limit their risk and contain costs. If an applicant has too many high-cost health conditions, the insurer has the right to raise the premium, limit coverage, or deny coverage completely. Although the federal government regulates GI rights, it does not regulate underwriting, which means each insurance carrier has different underwriting guidelines. As an agent, you need to be familiar with each carrier’s Medicare Supplement agent underwriting guidelines and the health questions portion of the application – here, carriers list the top health issues that result in denial and health conditions with strict limitations. Carriers also include a list of prescription drugs that usually result in denial.
As you research and review carrier guidelines, take notes and compare carriers. Learn which specific conditions will lead to an automatic denial, which conditions are considered borderline, and which carriers have wider parameters for applicants with certain conditions. The more applications you submit, the more familiar you will become with each insurer’s formula.
Denial of coverage is usually due to severe or chronic illness, as most carriers consider these medical conditions uninsurable. In some cases, though, the severity of the condition instead determines the applicant’s insurability. Although not a complete list, some of the common illnesses that usually result in being declined for coverage include:
- Autoimmune Disorders – Such as lupus, and rheumatoid and psoriatic arthritis
- Cancer – Carriers will only consider applicants who have been cancer free for more than two years
- Chronic Renal Disease – End-stage renal disease and polycystic kidney disease
- Nervous System and Neuromuscular Disease – Such as ALS, MS, myasthenia gravis, fibromyalgia, and epilepsy
- Chronic Cognitive and Neurological Disorders – Such as Alzheimer’s, dementia, stroke, and transient ischemic attacks (TIA)
- Chronic Cardiac Disease – Such as atrial fibrillation, congestive heart failure, and congenital heart disease
- Chronic Respiratory Disease – Such as COPD, chronic bronchitis, and asthma
Diabetes is an example of a borderline condition because it can lead to other serious health problems and complications. Applicant approval or denial is based on daily insulin dosage and the severity of the disease.
As part of your preparation, review your clients’ health history and prescription drugs. Ask the questions you find in applications – in a sense, you are pre-qualifying your clients. If they have a borderline condition, ask for as many details as possible, such as when they were diagnosed and their medications and dosages. This can help you determine if a client will pass underwriting and which carrier might have more lenient underwriting guidelines for the condition. If you know a carrier will issue an automatic denial based on a client’s health, you can save everyone time and disappointment.
Underwriting Questions
If you and your client decide to proceed with the application, you will need to answer a series of questions about the following:
- Age and gender
- Weight or BMI
- Alcohol and tobacco use
- Chronic health conditions
- Prescription drugs
- Family health history
Most applications will ask applicants if they have any upcoming surgeries, treatments, or tests. If the answer is “yes,” clients might like to delay their applications until after they receive the medical care, as this will lessen their chances of a denial.
What Comes Next?
Once you have submitted the application on your client’s behalf, your client will receive a phone call from the carrier’s underwriter. Help clients prepare for the types of questions the underwriter will ask to ensure the process goes smoothly. Your client should answer all questions honestly but should not provide more information than requested. Clients should answer with a “yes” or “no,” unless asked for additional information. This will decrease the risk of denial. Your clients may receive a decision from the underwriter after as little as seven to 10 days or after as much as two months.
Applying for a Medigap plan and undergoing underwriting might feel intimidating to your clients. Your knowledge of the carrier’s underwriting guidelines and your guidance through the process can help ease this anxiety.
PTT Financial is dedicated to helping you – we are here to answer your questions. Contact us today.