Unlocking the Secrets of Medicare Supplement Underwriting: A Comprehensive Cheat Sheet

Are you struggling to understand the intricacies of Medicare supplement underwriting? You’re not alone. Navigating the insurance world can be daunting, but fear not – we’ve got you covered. In this medicare supplement underwriting cheat sheet, we’ll unlock the secrets of insurance underwriting for Medigap policies. We’ll make it easier for you to understand and find the coverage that meets your needs.

Whether you’re new to Medicare or have been enrolled for years, underwriting can be confusing. But it doesn’t have to be. We’ll break down the process step-by-step, explaining the factors that insurers consider when determining your eligibility and pricing for Medicare supplement plans. From medical history and pre-existing conditions to age and location, we’ll leave no stone unturned.

Armed with this knowledge, you’ll be better equipped to navigate the Medicare supplement landscape and make informed decisions about your coverage. So, grab your pen and paper, and let’s create your own Medicare Supplement underwriting cheat sheet together. By the end of this cheat sheet, you’ll feel confident and empowered to take control of your healthcare coverage.

Develop Your Own Cheat Sheet for Medicare Supplement Insurance & Underwriting

Medicare supplement insurance, also known as Medigap, is designed to fill the gaps in original Medicare coverage. While original Medicare covers many healthcare expenses, it doesn’t cover everything.

Part A currently has a hospital deductible of $1,632 per event in a 60-day period, and Part B has an unlimited 20% coinsurance. That’s why you need a Medicare supplement policy to fill in the gaps.

Private insurance companies offer these policies to help you pay out-of-pocket costs such as deductibles, copayments, and coinsurance.  How do you get a Medicare Supplement policy?

The Basics of Insurance Underwriting

During your Initial Enrollment Period into Medicare, the insurance company is required to sell you a Medicare Supplement without asking any health questions–underwriting.  After your one-time Initial Enrollment Period into Medicare, you will need to answer health questions and pass underwriting to purchase a Medicare Supplement in most states.

Underwriting is the process insurance companies use to assess an applicant’s risk and determine eligibility for coverage. When it comes to Medicare supplement insurance, underwriting plays a crucial role in determining whether you’ll be approved for a plan and how much you’ll pay in premiums.

When people are denied during underwriting or rated, they are usually not happy. Some people are even upset and offended. I understand. I get rated as obese myself under most insurance underwriting. I’ve been lifting weights since I was twelve, so there is plenty of muscle. But guess what? My body fat is not 6%, either, so I’m fat. So, I pay more. I am working hard on trying to grow taller for my weight category. So far, it has yet to work.

Of course, the people who pass underwriting are happy, but they should be happy because others were not allowed into their insurance pool. Because a certain level of health is required, the number of clients can be covered with an affordable amount of premium. You want as low a number of claims as possible because that keeps your premiums low. The same goes for car insurance, homeowners insurance, and boat insurance. When there is a natural disaster, like hail or hurricanes, that is why premiums usually go up afterward.

Sometimes, actuaries get the underwriting wrong because insurance companies WANT to insure more people. The more people they insure; the more money they make usually–if they do it correctly.

When they do it incorrectly–in other words, poor underwriting standards–the result is that people with potential health issues get into the pool.  There are more claims than what the actuaries planned for, and the insurance company must make up the difference by increasing premiums for everyone.

Why Underwriting is Important in Medicare Supplement Insurance

Underwriting is necessary in Medicare supplement insurance because it helps companies manage risk. By assessing an applicant’s health status and other factors, insurers can determine the likelihood of the individual filing claims and estimate the potential costs they may incur. This allows them to set appropriate premiums that reflect the risk level the insurance company is taking on.

Factors Considered in Medicare Underwriting

Here is the meat of what you are looking for.  During the underwriting process for Medicare supplement insurance, several factors are taken into consideration. These factors can vary slightly depending on the insurance company, but some common ones include:

1. Age: Younger individuals may be seen as lower risk than older individuals with more health issues.

2. Gender: Although gender-based pricing is not allowed in some states, it may still be a factor in underwriting. In Nebraska & Iowa, Medicare Supplements are priced based on gender, and men are always more expensive.

3. Location: The area where you live can impact the cost of healthcare and, therefore, affect underwriting decisions.

I mainly do Medicare insurance in Nebraska and Iowa. I’m amazed at the price differences between Nebraska and Iowa, Omaha and Lincoln, and urban and rural areas.  Ultimately, some areas are healthier than others and consequently have fewer claims.  Thus the premiums are lower.

4. Medical history: Insurance companies will review an applicant’s medical history to assess pre-existing conditions and potential risks. As part of the application process, you give the insurance company permission to access various insurance resources that give a history of your health. You list your current medications and the dosage on the application.  Medications tell a great deal about your health profile.

5. Tobacco use: Smokers may face higher premiums due to the increased health risks associated with smoking. Some companies do not count you as a smoker during your Initial Enrollment Period into Medicare. We definitely highlight these companies to our new clients who are smokers.

6. Enrollment period: The timing of your application can impact underwriting decisions, as there are specific enrollment periods where guaranteed issue rights apply. This particular issue is NOT relevant to Medicare supplements in Nebraska and Iowa. There are no special periods, like the birthday or anniversary rule.

Common Underwriting Requirements

Insurance companies may require applicants to go through underwriting when applying for Medicare supplement insurance. The underwriting requirements can include:

Medical Underwriting

This involves answering health-related questions on the application form. People always ask if there is a physical; there is no physical. The health questions only take 5-8 minutes to answer.  The medical side of underwriting is all done electronically.  In a moment, insurance companies can scan your medical records and prescriptions to make a determination.  Some companies have the whole process so automated that I get an answer within seconds.

Pre-existing Conditions 

Insurance companies may ask about pre-existing conditions and impose waiting periods or exclusions for specific conditions. For example, most health questions begin with a qualifier: “In the past two years . . . .” “In the last six months . . . .” “Do you take _____ amount of insulin?”

Just because you had cancer in the past, a heart attack in the past, or a stroke in the past, you are NOT automatically disqualified.  The bigger questions is how longer go did it occur, what has been your health since, and was the problem rectified?

Guaranteed Issue Rights

There are specific situations where insurance companies must offer coverage without underwriting, such as when an individual is losing other health coverage. There are restrictions; for example, you can only select Plan G.

Medicare regulations in Nebraska and Iowa only have a Medicare guarantee issue for when you lose an employer health plan and are on Medicare. Nebraska & Iowa do not have a Medicare Supplement Open Enrollment.

How Medicare Underwriting Impacts Premium Rates

Underwriting can significantly impact the premium rates you’ll pay for your Medicare supplement insurance. Based on the information gathered during the underwriting process, insurance companies determine the level of risk you represent and adjust your premiums accordingly. If you’re considered a higher risk, you may face higher premiums, while lower-risk individuals may enjoy more affordable rates.  In some cases, the risk is too high, and the company denies coverage.

Implement Your Medicare Supplement Underwriting Cheat Sheet

Navigating the underwriting process for Medicare supplement insurance can seem daunting, but by developing your own medicare supplement underwriting cheat sheet, you can increase your chances of success.

Research and Compare Plans

Before applying, research and compare different Medicare supplement plans to find the one that best suits your needs.  We do hundreds of Medicare Supplement applications a year.  We know the companies that are strict or more lenient.  Some companies will cover insulin-dependent diabetics; many will not.  We know the levels of A1C that are acceptable to some insurance companies and will be rejected by others.  Rheumatoid arthritis is immediately rejected by some companies but is allowable under certain circumstances by others.  Each company picks its segment of the market it wants to go after and specialize in.  We help our clients find the needle in the haystack.

Understand the Underwriting Process.

Familiarize yourself with the underwriting requirements of different insurance companies so you know what to expect during the application process.  Understanding the process may be as simple as losing a few pounds. That will get you into a better health class and a lower premium.

Adjust your diet and then visit your doctor to have your blood tested. Reduced cholesterol or A1C levels may be enough to push you into the next underwriting category.

Be Honest and Accurate.

Provide truthful and accurate information on your application to avoid any complications or potential issues later on.  They will know if you are a smoker.  You will not be able to avoid the smoking rate by not disclosing tobacco use, even chewing.

Seek Professional Assistance

If you’re unsure about the underwriting process or need help with your application, consider contacting a licensed insurance agent professional or broker specializing in Medicare supplement insurance.

At Omaha Insurance Solutions, we know the landscape of Medicare Supplements in Nebraska and Iowa.  We can direct you to the plan that will be most favorable to your health circumstances and budget, especially if you have some health challenges.  Insurance professionals do not cost you anything.  The price is exactly the same if you do all the work yourself or use an insurance agent.  Why not use someone who has a thorough knowledge of the plans in your area?  Give us a call at 402-614-3389.

Common Underwriting Mistakes to Avoid

When going through the underwriting process for Medicare supplement insurance, it’s essential to avoid common mistakes that could potentially lead to application denials or higher premiums.

Providing incorrect information

Ensure that all the information you provide on your application is accurate and current.

I have clients who are “too honest.”  They think if they explain and justify certain health issues, the insurance company will understand and forgive. In my experience, when the underwriter hears certain words and phrases, they sometimes overreact.  As scientific as they try to make it, underwriting is still a very human process.  It is the job of the underwriter to protect the insurance company.   We then have to contact the doctors and go through a difficult and lengthy process to explain the health situation so the person is passed through underwriting.

My recommendation is like Sergeant Joe Friday used to say, “Just the facts, mam, just the facts.”

Failing to disclose pre-existing conditions

Be thorough when disclosing any pre-existing conditions, as failure could result in coverage denial or exclusions.  They will find everything.  I guarantee.

Where this situation becomes sticky is with surgeries.  One of the questions that is on every application is: “Has a medical professional recommended you have any surgical procedures?”  Or, “Do you have any medical procedures scheduled, such as cataract, joint replacement, or hip replacement surgery?”  Or words to that effect.

The new insurance company does not want to get stuck with a surgical bill that should go to the existing insurance provider.  After the surgery is completed and you are fully recovered, then you can proceed along with the application.

If you are not forth coming with that information and you do have a surgical procedure done after going on the new policy, like cataract surgery, the insurance company is in a position to say that you were not honest on the application.  Then they will deny the claim.  You will then be responsible for the full cost out of your pocket.

Honesty Is the Best Policy

Over the years, I have had prospective clients not disclose important information, “forget,” or lie.  “I forgot the doctor said I have a mild case of Alzheimer’s.”  “I only smoke once in a while.”  “The cancer is really slow growing.  The doctor said it’s tiny.”  “I didn’t know it was COPD.  I thought it was bad asthma.” 

While I’m sympathetic to harsh medical circumstances and the desire to reduce insurance costs, it doesn’t alter the reality they will not be offered a new Medicare Supplement.  The whole endeavor ends up being a waste of time for everyone involved.

Fortunately, systems are in place where insurance companies are almost infallible in finding out medical history.  That is a good thing because if a policy were issued under materially false circumstances, the person who made false or misleading claims would be in serious financial hazard. The process protects everyone involved.

Not Reviewing Your Application

Review it carefully before submitting it to ensure all the information is correct and complete.  When an application is denied by an insurance company, there is a record. Even if there was a mistake made in the application process, it is not as simple as reapplying with the same insurance company or another.  Depending on the situation, the person may be prevented from reapplying for several months.

How to Improve Your Chances of Approval

While the underwriting process for Medicare supplement insurance can be strict, there are steps you can take to improve your chances of approval:

1. Maintain good health: Adopt a healthy lifestyle and manage any existing health conditions to demonstrate that you are a lower risk.

2. Consider alternative plans: If you’re facing difficulties with underwriting, explore alternative options, such as Medicare Advantage plans, which may have less stringent underwriting requirements.

3. Seek professional guidance: If you need clarification on the underwriting process or assistance with your application, consult a licensed insurance agent or broker who can provide tailored guidance.

Bottom Line: Mastering Medicare Supplement Underwriting

Navigating the world of Medicare supplement underwriting doesn’t have to be overwhelming. By understanding the basics of underwriting, the factors considered, and the common mistakes to avoid, you’ll develop your own medicare supplement underwriting cheat sheet. Research different plans, gather necessary documentation, and seek professional guidance. With these tools, you will have a checklist to go through during the underwriting process and find the Medicare supplement plan that best meets your needs. So, take control of your healthcare coverage and unlock the secrets of Medicare supplement underwriting by building your own cheat sheet.

Get Your Own Expert Medicare Underwriting Guide

At Omaha Insurance Solutions, we are happy to share with you our wealth of knowledge & experience with Medicare Supplement underwriting.  Our Medicare Supplement underwriting cheat sheet was developed over a

decade with thousands of clients.  We have learned the lessons of Medicare Supplement underwriting.

The cost is EXACTLY the same whether you use an insurance agent or call the insurance company directly.  The difference with us is you see all of the insurance companies and Medicare Supplements, not just one or two.

Our loyalty is to our clients, not to an insurance company.  We can change companies on a dime.

And when your cost goes up, we are not going to say keep the policy.  We are going to look for the same coverage with a solid A-rated company at a lower cost.  If you can call the insurance company you have your policy with, I guarantee they will not recommend another insurance company.

We know the subtleties of the underwriting process and which company will be most favorable to your health situation. Not all companies are created equal, and we have learned the hard way over the years which ones to trust.  You’ll get that experience with us.

Over the years, we’ve learned a thing or two about Medicare Supplements and underwriting. We also take care of all the paperwork, follow-up, and headaches that come with dealing with an insurance company.  Call us for a free consultation at 402-614-3389.