Your client dislikes the increasing premium on their Medicare Supplement policy and wants to change plans, but they don’t have a guaranteed issue right. That means underwriting. What should you expect and how do you know if they can pass?
It’s always nice to sign up your client for a plan without any strings attached — no health background, prescription drug checks, or hassle required. But when you do have to help a client navigate underwriting, knowing what to expect, when to act, and what to do can make the process so much easier. We’ll help put your mind at ease with these tips for navigating Medicare Supplement (Med Supp) underwriting.
What Is Underwriting?
Insurance companies utilize underwriting to establish an applicant’s health status and determine whether they’ll allow access to a policy based off their findings. The process involves a thorough investigation of health history on the application and during a follow-up phone interview between an underwriter and the applicant. If a company deems the applicant has too many costly health conditions, they have the right to deny coverage, restrict coverage, or raise premiums.
If a company deems the applicant has too many costly health conditions, they have the right to deny coverage, restrict coverage, or raise premiums.
Why & When Carriers Underwrite Medicare Supplements
Simply put, insurance carriers underwrite certain applicants to keep their risk threshold as low as possible. The more people with health issues that a carrier allows on a policy, the increased chance of claims and amount the company will have to pay out to beneficiaries. Carriers want to pay out the least amount possible, so they underwrite applicants whenever possible. Keeping financial liabilities low is the reality of the insurance business.
Carriers can’t always underwrite Med Supp applicants, though, as the federal government — and certain states — dictate times when an applicant can join a plan no matter their health status. These times correlate with guaranteed issue (GI) rights, which mean that carriers must:
There are many various GI rights, and we won’t get into all of them here. (Check out these federal requirements.) We will mention that a person has a GI right to enroll in a Med Supp policy during the Medigap Open Enrollment Period (OEP). The six-month OEP begins on the first day of the month an individual’s Medicare Part B is effective and they’re 65 or older. What this means is that any of your clients aging into Medicare will be able to join any Med Supp plan letter from any carrier, regardless of their health.
Any of your clients aging into Medicare will be able to join any Med Supp plan letter from any carrier, regardless of their health.
Whenever your clients don’t have a GI right, then they’ll have to pass underwriting to join a Med Supp policy. While the federal government regulates GI rights, they don’t regulate underwriting, meaning each carrier treats the process a little differently.
Where to Look for Med Supp Carrier Underwriting Information
With so many different health issues, carriers can’t begin to address each and every one during the underwriting process. You can, however, learn how to find the information you need and begin to notice general trends of how carriers group certain conditions together.
Agent Underwriting Guidelines
The first places to look for underwriting help are in the insurance company’s Med Supp agent underwriting guidelines and the health questions portion of the application itself. The carrier will communicate essentially the same information in both, although the guidelines will usually include more detail.
The most important sections for knowing whether a client will pass underwriting are the health conditions and prescription drug list sections.
Carriers publish and update agent underwriting guidelines regularly to inform agents of many different application aspects, including policy issue guidelines, premium calculation, available discounts, required forms, appeals, and more. The most important sections for knowing whether a client will pass underwriting are the health conditions and prescription drug list sections. Here, carriers will outline the top health issues that will get your client declined and the health issues with strict parameters. They’ll also include a list of declinable prescription drugs.
Med Supp Applications
You can learn the same declinable conditions and parameters from the health questions portion of a Med Supp application. The more applications you submit, the more you’ll see that carriers follow a predictable formula in their applications, asking these two types of questions:
Any “yes” answers to the first type of question will lead to a decline, and you shouldn’t submit an application for your client. Any “yes” answers to the second type of question means a decline is likely but will at the very least result in a follow-up phone call between underwriter and applicant to determine eligibility.
Again, carriers draw different parameters around certain conditions, so research on your part is imperative. One carrier may limit the number of blood pressure medications an individual with diabetes can take while another doesn’t. Start with agent underwriting guidelines and call a company underwriter if you have further questions.
Tips to Make Navigating Underwriting Easier
The mention of research leads us to a discussion of how to make underwriting easier for you (and your clients!). And yep, you guessed it; the first tip is to research.
Take the top several Med Supp companies you write and scour their agent underwriting guidelines and applications. Compare them and take notes of any trends or differences. Is Carrier A better for people with COPD? Make a note. What about whether your client can take insulin to control diabetes? Maybe Carrier B is the better option. We recommend starting with research to form a solid foundation onto which experience can build. Taking the time to research before diving into the process with a client will save you time when helping your client. You won’t have as many moments of, “Hold on, let me check that.”
Ask the Right Questions
Before beginning an application with your client, you need to gain thorough knowledge of your client’s health history and prescription drugs. Every agent has a different method for gathering health details. We recommend following the same path as the carriers themselves, asking your client health questions in a similar way Med Supp applications do.
If your client has a borderline condition, find out as many details as you can (e.g., when they were first diagnosed). Additionally, ask for an updated list of prescription drugs. Compare this list to the list of uninsurable medications in agent underwriting guidelines to see if your client is taking any problematic drugs.
Come up with an approach before quizzing your client and keep thorough notes of their responses. You don’t want to have to call them back up to ask more health questions.
Prep Your Client
If you plan to submit a Med Supp application for a client who will undergo underwriting, prepare your client beforehand on what to expect. Receiving a surprise call from an underwriter can be unnerving. Walk your client through this process and check that they understand:
We recommend reminding them, too, that they should:
- Answer “yes” when the underwriter asks if disclosures were provided. These disclosures include HIPAA, approval to pull medical records, etc. that you gave during your presentation. Your client might be thrown off by the question and answer “no,” but then the underwriter cannot proceed.
- Answer health questions as minimally as possible with a simple “yes” or “no” or perhaps “please explain further.” Don’t provide more information than is requested, thus increasing the risk of a declined application.
Knowing what to expect and how to respond will empower your client and help them feel confident in the process.
Review Your Portfolio
If you keep running into your clients being unable to pass underwriting, it might be time to add a carrier with looser restrictions to your portfolio. Some carriers adopt wider parameters and simply charge more premium to those beneficiaries with certain conditions. These carriers offer more flexibility on who they allow onto their policies. Still other carriers offer more premium discounts, like for wearing a health tracking device or for living with another person (and you don’t even have to be married).
Consider adding one of these carriers to your portfolio. If you’re a Ritter agent, your sales specialist will be able to recommend strong Med Supp additions for your market.
Our eBook Helps Crack Tough Med Supp Underwriting Cases
We’ve scratched the surface here on the massive subject of underwriting, but we have a free 47-page eBook that goes much more in-depth! A Comprehensive Guide to Medicare Supplement Underwriting can help you explore:
- How underwriting impacts enrollment timelines, premiums, & commissions
- Which specific health conditions will lead to a decline
- Which specific health conditions qualify as borderline
- Which “wild-card” conditions carriers don’t always agree on
- Which questions to ask your clients in preparation
- How and where to keep thorough notes
- What to do when your client won’t pass underwriting
- What to do when your client wants to keep their Med Supp but can’t afford it
- A Client Q&A for Underwriting resource
- A Carrier Underwriting Comparison Chart resource
- And more!
Access to our guide is completely free, and so is registering with Ritter. We’d love to have you join us!