According to insurance executive Courtney Rogers, insurance is a game of risk. The higher risk an insured person represents, the more it will cost to insure that person. In cases of very high risk, individuals can be denied insurance altogether. Insurance companies are in business to make a profit for their stockholders, and set their prices and policies accordingly.
Insurance Risk Analysis
An actuary is a specially trained mathematician hired by an insurance company. Using computer models based on decades of health, death and medical statistics, they analyze the risk associated with every potential policyholder. For some individuals, risk is already classified by the body of existing evidence. For others, the risk is custom analyzed based on their rare or unique circumstances.
What Constitutes High Risk
For medical insurance, the most common factors that demonstrate high risk are medical. An individual suffering from a chronic, serious illness is high risk because of regular doctor visits, expensive prescriptions and risk of complications. Some serious, acute events, such as a successful bout with cancer, give a person a statistically higher risk of getting sick again. Risky behaviors such as drug use, a felony record and dangerous professions or hobbies can also increase a person's risk rate.
Higher Premiums
The consequence of being identified as high risk is often a higher premium for your health coverage. Two ways to mitigate the hike in your rates are to raise your deductible or sign an exclusion waiver. A deductible is an amount of money you must pay before you insurance starts to take effect. The higher the deductible, the lower your rates. An exclusion waiver is an addendum to your insurance policy that says the company doesn't have to pay medical bills associated with a specific factor. Although it's unwise, and often illegal, to have an exclusion waiver for medical factors, this can be a good way to limit the effect of a hazardous job or hobby.
Options for High Risk People
According to financial magazine "Kiplinger," health maintenance organization plans are a specific approach to health insurance that is even more highly regulated than the rest of the insurance industry. U.S. Department of Labor rules forbid most HMOs from considering pre-existing conditions when accepting members or setting rates. Another option is to get insured through a group policy, like those offered by employers, many of which have contracts that state the insurance company cannot exclude or charge a premium of any individual member.
2010 Health Care Reform Act
The 2010 Health Care Reform Act offers some hope for people with high medical risk. Beginning in September 2010, insurance companies cannot deny coverage to children with pre-existing conditions. Starting in 2014, this applies to adults as well. The bill also provides rules for creating "high risk pools" to give insurance options for people previously denied insurance due to high medical risk.
References
- Courtney Rogers, Insurance Executive, American Income Life, Richmond, VA
- U.S. Department of Labor: Health Benefits Advisor
- CBS News: Health Care Reform Act Summary
- "Exam Cram: Life and Health"; BiSys Educational; 2008
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