Medical Underwriting

Medical underwriting is the process of assessing the risk associated with providing health insurance coverage. Medical underwriting involves an examination and analysis of an individual’s medical information, which is used to determine how risky an individual is and, thus, how much that individual should pay for insurance. In some cases, the use of medical underwriting is restricted by law.

During the medical underwriting process, insurance companies want to understand as much as possible about a potential policyholder before actually underwriting the insurance policy. The insurer will examine the medical history, demographics, lifestyle and other factors that relate to the individual’s medical needs, and, through actuarial analysis, make an estimate of the risk associated with providing medical or health insurance coverage. If an individual is considered a high-risk prospect, the insurer may decline to offer coverage, may charge a higher insurance premium, or they may set exclusions or limits to the amount of coverage offered through the policy.

The amount of due diligence an insurer does when considering a health insurance application depends on the resources it has available to conduct research into an individual’s medical history. The most comprehensive examination is referred to as full medical underwriting, or FMU. Full medical underwriting involves an extremely thorough analysis of an individual’s medical records. This process requires the health insurance applicant to provide a full medical history, and the insurer may contact the healthcare providers that the individual has visited in the past. It is the duty of the applicant to provide a full disclosure of his or her medical history.

Advocates of medical underwriting say the process keeps individual health insurance premiums as low as possible. Critics of the practice maintain it unfairly stops people with relatively minor and treatable pre-existing conditions from obtaining health insurance. Diseases that can make an individual uninsurable include serious conditions, such as arthritis, cancer, and heart disease, but also such common ailments as acne, being 20 pounds over or under the ideal weight and old sports injuries. About 5 million of those without health insurance are considered "uninsurable" because of pre-existing conditions.

In the United States, the Affordable Care Act (ACA) changed many of the rules associated with the way insurers qualify individuals looking for health insurance. The ACA prevents health insurers from denying coverage to an individual, and from placing limitations on a policy for pre-existing medical conditions. However, this may change as it is currently unclear what, if any, of these changes will be rolled back by the current Presidential administration.