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Post-issue underwriting


GA Medicare Expert
5000 Post Club
Post-issue underwriting (AKA retrospective underwriting) seems to be making more headlines in & outside of the trades. First there were the CA Blues


And now Assurant, parent company for issuing carriers, John Alden, Time & Union Security is in hot water.


I have had very little problem with this until the last year or so. During that time I had one individual policy rescinded and an attempt by the same carrier to rescind a group policy.

They successfully rescinded the individual policy but I was able to take them to task on the small group plan although they have tried unsuccessfully since then to cancel the account when premiums are even a day late.

Applicant fraud is an issue and seems to be becoming more prevalent. As applicants go direct to carriers and fudge (intentionally or otherwise) apps and agents become more ignorant (or larcenous, take your pick) I see this as more of a threat.

I pre-screen apps on all my clients, trying to uncover situations that can lead to problems. By asking the same questions an underwriter would I believe I short circuit most potential problems but even still I get crossed up when a client conveniently forgets the positive results for nicotine on a life insurance exam (reported to MIB) and applies for health insurance at non-smoker rates. Or the one who forgets the attempted suicide and resulting hospitalization even though they did note on the application they are taking meds for depression.

Denying claims for pre-ex, retrospective underwriting, all are issues that create problems for all of us.
This is a huge problem:

1) Applicants who fill out their own apps either don't know what really is pre-existing, honestly forget about something or purposely omit it because they're scared of the outcome.

Case in point: I'm filling out our app a few years ago and going over my wife's health. She noted everything. Then I come back with "Oh, what about the gestational diabetes when you were pregnant. Her response: "That doesn't go on the application. I only had it for 3 weeks before the doctor changes my diet." Wrong, went on the app. Had my wife filled it out by herself she would never have mentioned it.

2) Agents wants that commission. It's natural to want the deal to go through. Now, there's less blatant app washing where a client states something is pre-existing and they simply leave it off the app. What there's more of is agent simply playing a "don't ask don't tell game." They brush over their client's health history, hope to God they don't mention a condition then rush to clean sheet the app.

Questions you should ask all clients, especially the ones who claim they don't have anything pre-existing:

1) Are you on any prescrition medication? Have you EVER been prescribed medication in the past "X" years even for something small like the flu?

2) How many times have you seen your doctor in the past "X" years? What was the reason for those visits?

3) Have you visited any outpatient clinic or ER in the past "X" years?

And the biggie a lot of people forget:

*How are you feeling now? Do you have any symptoms for which you're planning on seeking medical treatment?"

You'd be suprised on the answers you'll get to that one.
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I don't have any carriers in MD that don't underwrite the claim. How else is an insurance company supposed to protect itself from blatant fraud?

To me, this is a lot of grey area. Take away the ability of insurance companies to underwrite the claim and now every deal requires medical records. But records don't tell the story do they? How 'bout that back you threw out a month ago that's killing you now and you haven't seen a doctor yet?

If you lie on a job application should the company be able to fire you? If you lie to your girlfriend, get married then she finds out you have HIV does she need to stay married?

However, this all being said, it's unethical for an insurance company to rescind coverage when:

A: It's clear the client was not malicious when filling out the app by leaving off something "stupid."

B: The ommission would not have resulted in being declined.
At least according to the article, many of the complaints are against the STM plans. Not surprising given a 5 yr lookback on pre-ex and the fact that Time probably writes more STM than anyone else.

Can't say how much of the article, and the charges, are hype and how much is real.
"Phone therapy".

Is that what they call it now? Sounds much cleaner than phone sex.
At least according to the article, many of the complaints are against the STM plans. Not surprising given a 5 yr lookback on pre-ex and the fact that Time probably writes more STM than anyone else.

Can't say how much of the article, and the charges, are hype and how much is real.

STM has a few landmines and if the client goes on the site without a knowledeable agent it could be nasty.

First of all, STM is a flat decline for all conditions that would normally decline on major med. Some clients thing STM is a haven for uninsurable people. The online app only lists a handful of conditions. What if you have factor 5 blood and a month ago your foot went completely numb and you ended up at the hospital. Think you qualify for STM? Errrrr.

Secondly there is an option that bears a lot of liability; monthly payment option versus defined period. Say you choose 60 days of coverage since it's cheaper then the monthy payment option. In 60 days your policy is over. If you want to renew it you have to apply again. And if you've since had a medical event? No dice.

If you choose the monthly payment option you can still have coverage for only 1 month and up to 12 months, however if something happens to you on month 2 you can simply continue to pay and hopefully it'll be a full recovery by the time the end of the 12 months is up.

I have a bad feeling a lot of people choose the 10% decrease in rate and don't choose the monthy payment option. Bad move.