There is a particular word that is common while acquiring your loan for a home, getting a saving plan for your after retirement life, or your basic health insurance plan. Yes, you guessed it right, it is called underwriting.
You are probably wondering what is insurance underwriting and how is related to your health insurance plan and other insurance policies. When you take out an insurance policy your insurer’s (i.e. the company providing insurance) medical team and financial experts will calculate the risk of your insurance cover, this is called an “Underwriting”. For instance; the insurer will use statistics and take into consideration your age, gender, smoking, status, or lifestyle health to calculate the cost of your health insurance. This is why some insurance companies will ask you a wide range of health questions, and some may even ask for a medical examination before calculating your insurance premium. Signing off underwriting terms and conditions means that your insurance provider deems you capable of fitting their requirements of a particular insurance policy.
An underwritten insurance health plan which is sometimes also referred to as a self-funded or alternate-funded health insurance policy is essentially based on similar fundamentals and proposition.
Now, when it comes to providing the insurance policy to your employees, you can ask them to fill out some forms providing the information required for the insurance plan. As you have enquired about the information in confidence, thus it is highly critical for you to secure their private information. One thing that is important to mention here is that the amount of premiums your employee’s payout mainly depends on how risky your current business environment and the industry you operate in is. The payments that you make to the insurer gradually accumulate over the time period (annual, semi-annual, quarterly, monthly) are known as premiums. For instance, you operate a construction, mining, or steelworker business which is relatively riskier than an office job health-wise. So, such a risky job employee will pay higher premiums than someone whose job is not relatively riskier.
The Affordable Care Act (ACA) which is a federal statute, has been working for the last ten years to improve the availability, access, and affordability of private health insurance. Under ACA the insurance companies are banned from denying an individual a health insurance plan, moreover, the important point here is that companies cannot charge a higher premium rate in the presence of an individual’s health status or medical conditions. Prior to the ACA 2014 act, insurance companies located in different states were allowed to take into consideration an individual’s medical history to determine their eligibility for the respective insurance coverage policies. It was earlier mentioned that with underwritten insurance health plans the employees must pay higher premiums depending on the risk element complicated in their job type and environment. The reason for this is that underwritten insurance health is exempted as ACA has eliminated some medical underwriting plans. One disadvantage of not regulating is that the employers cannot also give their employees a discount on premiums as well.
Let us take into consideration three different types of medical coverages in individual, small and large group markets
These include health coverages that are mainly targeted and purchased from and off of ACA’s exchanges by individuals or families. Insurance companies cannot still take individual pre-existing health and status into the consideration while checking their eligibility for insurance plan providers. Now, individuals can purchase this plan either in the open enrollment period (OEP) or a special enrollment period (SEP).
OEP is the period of time set by the federal government during which individuals and employees may add, drop their health insurance, and make changes to their coverage. The open enrollment period this year is from November 1, 2020, and the deadline is December 15, 2020. These enrollment periods mainly vary with different states. SCP is anytime outside the annual OEP, during which you are legally permitted to sign up for or change your health insurance. For SEP an individual must qualify for a life change event such as becoming unemployed or the birth of your child etc. If you qualify for a special enrollment you usually have up to 60 days following the event to enroll in a plan and you’ll be required to provide specific documentation to prove your qualifications.
This health insurance coverage mainly caters to a small group of employees, usually 50 to a hundred employees, depending on which state where your business is located. Small groups as a whole are allowed or eligible to purchase the plan at a time period. But employees are only allowed to join their company’s plan depending on their open and special enrollment period. And here also as mentioned earlier that insurance providers are not allowed to take employees’ pre-existing health and status into consideration for determining their eligibility for health coverage. Therefore, the premiums that each employee will be paying will be the same and not different like pre-ACA reforms.
Large Group coverage
The rules for large or medium group health coverage are different from individual and small coverage even with ACA reforms. The big corporations usually do not hire an external insurance provider but rather chose to provide their own insurance coverage, but those companies who chose to insure themselves using an insurance company, their premiums are determined based on the group’s overall claims history. However, employees within the companies are insured health insurance on an individual basis.