Health insurance underwriting is a cornerstone of the industry. The task of underwriting is a crucial part of the application and enrollment process, and impacts the insurance company and the applicant equally. The job description is to determine who get to buy a health plan and who is uninsurable. Over time, the need for underwriters has decreased as technology allows the process to go much faster and therefore one person can complete the job more efficiently. Underwriters decide not only if an applicant qualifies for a health insurance plan, but how much their monthly premium will cost, if there are any benefit exclusions to issue, therefore evaluating the person’s overall risk and customizing their plan accordingly.
As one could imagine, there is underwriting software that churns out the recommended coverage for an applicant when their information is entered. The program’s word is not the final one, as the underwriter assesses these suggestions and then makes their own decision based on the company’s underwriting guidelines. At times, consulting medical records and physicians, as well as credit scores, will be necessary to conclude a difficult case. The goal is to determine whether it is worthwhile or too risky to insure a certain individual. If too many high-risk individuals are approved, the insurance company will have to pay more claims. Simultaneously, underwriters cannot turn everyone away, as premium profits are valuable to every insurer.
The Future of Medical Underwriting
According to the Bureau of Labor Statistics, employment in underwriting is expected to increase 6 percent over the next 8 years, which is slower than the average for most occupations. On the contrary, they acknowledged that underwriters with a health insurance specialty will experience more rapid employment growth due to the new health care law. As more Americans will be required to buy a health plan, there will be an increased need for underwriters to manage the onslaught of millions of new insureds. More applications means more work for health insurance underwriters.
With the key aspects of health care reform in place, it has also been projected that medical underwriting will be eliminated by guaranteed issue of coverage. As the most important laws of the Affordable Care Act are now effective, there is no doubt that underwriters are still necessary. Despite the streamlining of eligibility criteria for individual health plans, rate increases (though mild) will still take place, and informed professionals in the insurance field will be required for this transition go smoothly.
The National Association of Health Underwriters (NAHU) advocate the need for the continuing use of those who contribute years of knowledge and experience to the industry, regardless of the changes to come. NAHU says the following of this grave importance in hopes of national recognition for thousands of health insurance workers:
Professionally licensed health insurance agents, brokers and consultants provide valuable services to individuals and employers to obtain prices for coverage that best fits their needs. Licensed specialists design benefit plans, explain coordination issues of public and private benefits to individuals/employees, and solve problems that may occur once coverage is in place… Some contend that agents and brokers add unnecessary expense to the cost of health insurance and that a government-run entity can substitute for the role and value of professional benefit specialists. However, the record clearly indicates that government bureaucrats are ill-equipped to provide the personal service, timely objective information, guidance and accountability that professionally trained and licensed agents and brokers deliver on a daily basis.
Underwriters are the essential link between the insurance company and the agent. For health reform to be a success, there must be people working to regulate these new policies, whether in the exchanges or private health insurance companies. This position will certainly be needed for processing the massive number of applications, and is expected to grow in demand.
Underwriting Requirements Under Health Reform
As health reform has made adjustments to underwriting plans issued since the law was passed, it is evident that underwriting remains necessary. Grandfathered plans in the individual market will not be required to adhere to the pre-existing condition changes made by the ACA, even after 2014. Thus far, underwriting has changed by being unable to rescind policies or decline children with pre-existing conditions. After 2014, underwriting guidelines for private health plans in every state will change in regards to the following:
- Pre-existing condition exclusions: Health plans cannot impose any benefit exclusions based on health.
- Guaranteed issue of coverage: Insurers on both individual and group markets must accept every applicant. There may be open or special enrollment periods, subject to HHS regulations yet to be issued.
- Nondiscrimination of health status: Eligibility may not be based upon health status, a medical condition, claims history, medical records, or other such factors.
- Guaranteed renewability of coverage: Health insurers must continue a policyholder’s coverage on the individual and group market at the option of the member or plan sponsor.
- Excessive waiting periods: Waiting periods may not exceed 90 days for employer-sponsored plans.
- Nondiscrimination of healthcare providers: Health insurers cannot discriminate against any healthcare provider with respect to participation under the plan, or a provider acting within the scope of that provider’s license or certification under applicable state law.
1. Bureau of Labor Statistics. “Insurance Underwriters: Occupational Outlook”. http://www.bls.gov/ooh/business-and-financial/insurance-underwriters.htm.
2. Phyllis A. Doran, Milliman Group. “Rating and Underwriting Under the New Healthcare Reform Law”. pp 8-9.