Example: Application & Underwriting Overview

Application Guidelines

The following excerpt is an example of application guidelines prior to the Affordable Care Act’s passage. Many features will remain the same regardless of the law, while some details may vary.


Key Points to Remember

Only Carrier A Underwriting can determine whether an applicant will be accepted for coverage.

Do not cancel current coverage until you have received written confirmation from Carrier A the application is approved.

Effective Dates – Carrier A will assign the first available effective date at the completion of underwriting. No requested effective date will be honored prior to or on the signature date.

Member Language – If the applicant does not read or write English, the statement of accountability must be completed.


Completion of the Application

An application cannot be reviewed by underwriting until all information has been provided by the applicant(s) and agent.
Please use this check list before submitting your application:

•    Print clearly, using black or blue ink.
•    Original application must be submitted. No photo will be accepted.
•    Current version of the application is used.
•    Any corrections to the application? Corrections must be initialed and dated.
•    Effective date selected? You may request an effective for the first (1st) or fifteenth (15th) of the month following your signature date.

•    Medical plan is selected (dental is optional).
•    Height, weight, date of birth and smoking status is listed for all applicants.
•    All applicants age 18 and older must sign and date the application, confirming they have read and agree with the information being submitted.
•    Signature date is current within 30 days.
•    All the questions in the Health History and Health Related Question Sections are answered (failure to do so will delay your application).
•    If any question is answered “Yes”, the Detailed Health History Section has been completed.
•    Prescription medication(s) are listed.
•    Name and address of physician or providers are listed in the Detailed Health History.
•    EFT/Credit Card information complete.
•    Broker information is complete.
•     You have explained in easy to understand English (or via translation where applicable) the risk to the applicant of providing inaccurate information on the application and that the applicant fully understands your explanation.
•    Review the application to ensure it is truthful, accurate and complete.
•    Retain a copy of the application for your records.


Underwriting Overview

Carrier A Traditional Plans are not guaranteed issue plans.

All applicants, enrolling spouse* and dependents are subject to medical underwriting to determine eligibility and placement within the appropriate risk level.

Medical Underwriting

The process of reviewing and comparing the medical history of applicants against established underwriting risk criteria in order to determine the appropriate level of risk.

Medical Underwriting Theory

The Medical Underwriting process is designed to identify the potential medical risk and cost for the conditions listed on an application. These costs are predicted on existing and
anticipated future:

•    Hospitalizations
•    Surgeries
•    Medical Office Visits
•    Out-Patient Therapies
•    Prescription Medications
•    Laboratory Tests
•    Radiological and Diagnostic Tests
•    Durable Medical Equipment and Supplies

In our current culture, the cost of prescription medications presents an increased financial risk component for the treatment of acute and chronic health conditions that do not require hospitalizations and surgeries.

Obesity and smoking can present an increased risk component in conjunction with specific health conditions that are complicated and/or exacerbated by such conditions or behaviors. Conditions that may be affected by obesity and smoking include but are not limited to:

•    Cardiac Conditions
•    Diabetes
•    Hypertension
•    Respiratory Conditions
•    Gastric or Intestinal Conditions
•    Back and Joint Conditions may present

The assigned risk category is based on the level of severity and potential risk of the listed health condition, phone interviews and by review of medical records.

Adverse selection results when there is an excessive coverage of high-risk candidates in proportion to the coverage of low-risk candidates. Through careful review and proper rating of health risks, underwriting guards against adverse selection.

A phone interview or medical records may be requested by the underwriter for the purpose of evaluating the underwriting risk.

Carrier A offers multiple risk levels based on the known and predicted medical risk factors of each applicant. These levels are represented in ten percent increments beginning at 1.0 (standard rating level – no rate up) through 2.5 (150% rate up).


Placement in Risk Categories

Medical Underwriters will assess the risk of all applicants through a review of all information submitted on the application, the health questionnaire, phone interviews and medical records.

Medical Underwriting will assign risk points associated with Medical Conditions, Build charts, Tobacco and Medication usage. Based on the assigned risk points, age and gender, the applicant:

1. May be enrolled in their selected plan at the standard premium charge

2. May be enrolled in their selected plan at a higher rate, based on the severity and associated risk of the medical findings.

3. Applicants age 19 and older may be declined coverage based on significant medical risk factors and medication usage.