Underwritten Versus Guaranteed

Insurers are very cautious about taking on risk. They only issue policies where they believe there is a reasonable chance of collecting more in premium than they will pay out in benefit. For health insurance such as Medicare supplements, the insurer will determine the level of risk by investigating your health history. If they decide to take on the risk, the policy is determined to be “underwritten” or acceptable risk.

In many instances though, the policy may be “guaranteed issue” or “guaranteed renewable.” Guaranteed issue means the insurer cannot refuse to issue your policy and must accept the risk. Let’s look at the 3 most common Guaranteed issue situations.

Medicare Enrollment.

When you first get Medicare Part B, you can choose any Medicare Supplement, Medicare Part D or Medicare Advantage plan offered in your area. You can’t be declined. This is one of the few times where the insurer must accept you, and your health history or pre-existing conditions are not a consideration. We advise most to choose the very best coverage you can afford during this period. Don’t bet on being able to upgrade your coverage later because, you may then be declined.

Medicare Birthday Rule.

In California, if you are enrolled in a Medicare Supplement, you have a 60-day window (30 days before and 30 days after after your birthday) to change your supplement plan as long as you don’t improve your coverage. In other words, you can move to a plan with the same benefits, or a plan with fewer benefits. Obviously, you would only do this if there is a reasonable assumption that you will save money.

Annual Enrollment or Open Enrollment Period.

Despite the name, these periods do not apply to everyone for any type of plan, especially Medicare supplements. AEP and OEP apply to those who want to choose an ACA compliant individual plan (under age 65), a Medicare Advantage plan or a Medicare drug plan called a Part D. During AEP, these policies are guaranteed as long as you meet the qualifications, they are not underwritten.

Take advantage of guaranteed issue enrollments whenever possible. Review your coverage each year and be sure you explore all your options.

Each individual’s health insurance needs are different. This is not meant to be insurance advice, simply general knowledge. For further information contact a licensed health insurance agent in your area. Randy Foulds of Foulds & Feldmann Health Insurance Agency is a licensed agent and a senior health specialist in la Quinta. license #0G69218. You can reach him at 760-346-6565.