Underwriting Pre-existing Medical Conditions

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Underwriting Pre-existing Medical Conditions

By Alex Routh


Pre-existing medical conditions are always problematic for people wanting medical insurance. Just like buying car insurance, you have to buy the car insurance before you have the car accident, otherwise nobody would buy car insurance before they had an crash! There are 2 methods of underwriting and approaching this problem that medical insurers adopt. They are called full medical underwriting (FMU), and moratorium underwriting (MU).


FMU is what all American expat underwriters I’m familiar with use to accept candidates into an insurance program. You must answer an exhaustive list of medical questions on the application, and if you have any condition likely to recur, you’re quickly rejected. They say they will accept pre-existing conditions after 2 years, but the reality is that they won’t let you in the door if you have had anything serious in the past. Generally, they will take people with well controlled hypertension. You can always try to see if you’ll be accepted, and this won’t go on the record in the USA where insurers register people declined for medical insurance in the past.


You would think that they might write exclusions on a policy and accept you for every other potential unrelated problem or accident that might come up, but they won’t do that either. The reason is the litigation system in the USA promotes legions of ambulance chasing contingency lawyers suing everybody and anybody especially individuals and corporations with deep pockets. In every other G-7 country, if you start litigation and lose, the judge will award costs to the defendant. That makes you think twice before you start an action having little merit. In the USA you can start any number of suits and walk away with no consequence for losing. In many US cases, out of court settlements end disputes simply because the cost of defending is greater than the potential award, so the defendant makes a business decision and pays the plaintiff to go away. US insurers are afraid to cover pre-existing conditions as this opens the door to litigation where there might be a dispute about covering related medical condition they will probably lose, whether this is just or not. The consequence is that you as an expat with a pre-existing medical condition can’t get cover from a US provider.


The Moratorium method of underwriting is more of a British approach. The Moratorium period on pre-existing conditions is for the first 2 years of the policy, and applies to pre-existing conditions present in the 2 years prior to joining. Anything you knew about, were symptomatic, taking medication, or had a consultation for is not covered for the first two years of the policy. After the renewing for the 3rd year, you may be covered for that pre-existing condition after two clear years, as they will deem it to be a new condition again. There are two versions of MU, what I call hard and soft. Hard MU is where they write exclusions on the policy and you have to petition later for this to be removed. Soft MU is where they don’t do that. In cases of soft MU, I’ve had clients try to claim for a pre-ex during the first two years, and had their policy certificate re-issued with the exclusion written on the document so there’s no ambiguity.


The advantage of MU is you can get insurance coverage. Most people understand they can’t be covered for pre-existing conditions, and are only happy to get cover for everything else. There is also the chance that you can be covered for your pre-existing condition after the moratorium period expires. Realistically, if you have a chronic condition then it will never be covered, as you will never have 2 clear years. Disputes under the British system are referred to an arbitrator before legal action commences, and there is a government insurance ombudsman who will take action on your behalf if you are treated unfairly. I’ve never heard a complaint about the system in the UK, and it seems to work well and private UK insurers don’t nearly have the rejection rate US ones do. Can any country having half the number of lawyers the US has per capita, be that bad??


The bad thing about UK expat insurance policies is that they generally won’t cover you for return treatment in the USA, or do it in a limited way, and if you choose that option are very expensive. If you are happy with the best hospital in Mexico or Switzerland, or anywhere else, then these policies should be good enough for you. Anybody can apply for a British style plan, you don’t have to be British. For older people they have more attractive options for lifetime cover as well.


If you have any questions about the above, please contact us at info@protexcare.com. We exclusively specialize in the expat medical insurance market.

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