Old Versus New in Health Insurance – How Does it Affect You?

Have you ever received a quote for an insurance policy and thought, “Hmm. I think that’s a great deal!” only to later find out that the accident you had two years ago is not something an Underwriter likes very much? To make matters worse, you are now being told that you weigh more than what some chart says you should for your age and gender. Exactly who is this Underwriter, and why can he/she make that great deal you thought you were getting cost 50% more, only to then be told that if there was one more “thing” disclosed on your application that same Underwriter may have denied your application altogether? This is how health insurance applications were scrutinized in the past, but not in the future.

The Affordable Care Act (ACA) has revolutionized the ability to secure a health insurance policy by eliminating medical underwriting for most fully-insured plans. No longer does an applicant have to disclose their medical histories, height, weight, or even gender. It simply has no bearing on what a policy will cost you due to community rate mandates included in the ACA. You are guaranteed to be issued!

Community rating of Individual and Small group policies can only take into account these items when establishing a base rate.

  • Zip code
    • Where an individual resides
    • Where an employer’s corporate office is located
  • Age of individual(s) to be insured
  • Enrollment status
    • Single
    • Family
  • Tobacco use status of individual(s) to be insured

The future is going to present a huge challenge for carriers to accurately assess where their rates need to be in order to ensure they can continue writing enough healthy business to support those that were formerly referred to as “adverse selection.” In the meantime, many individuals will benefit from the Advanced Premium Tax Credits (APTC) available through the marketplace by reducing the amount of premium they are required to remit to the insurance carrier. In some cases, individuals can be insured by a qualified health plan with $0 monthly premium.