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Preferred risk health insurance rates

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Preferred risk health insurance rates

by Tony Novak, CPA, MBA, MT
,last updated on 12/1/2011

Some very healthy people who meet specific medical guidelines may qualify significant discounts on health insurance rates in the same way that those individuals with clear driving records qualify for discounts on auto insurance. Overall, only about one in twenty Americans qualifies for this discount and not all health insurance companies utilize a preferred risk pricing system.

To qualify for preferred risk rates, an applicant must generally have a build that falls within the normal range as determined by AMA gender-specific height/weight guidelines. No prescription drugs may be taken at the time of application and the applicant should be generally free of significant medical treatment for the past five years. A normal healthy physical exam with favorable BP, cholesterol measurement and blood test with normal results should have been completed within the past twelve months.

Note that heavily muscled athletes will not qualify for the discount despite a perfect health history because the AMA height/weight guidelines do not distinguish between various types of body mass, and so many elite athletes are medically classified as “overweight”.

This class of preferred risk applicants often favor high deductible low cost health insurance plans including insurance that qualifies for Health Savings Accounts. The amount of the premium discount ranges from about $200 for an average single to about $600 for a typical family.

Two excellent sources of nationwide coverage available online are Celtic Insurance (www.celticenrollment.com) and Freedom Benefits (www.FreedomBenefits.net). Both companies offer individual and family plans that quality for Health Savings Accounts. Celtic uses an entirely online application, whereas Freedom Benefits uses an exchange-based pricing and enrollment system.

These plans are available in most states, excluding New Jersey, New York, Massachusetts, Rhode Island and Vermont where preferred risk pricing is not allowed by law. Most Blue Cross and managed care plans do not currently offer preferred risk pricing.

Because of the strict scrutiny and medical underwriting procedures of applications for preferred risk plans, it is best to continue other health insurance until the preferred risk plan is approved.

 Keep in mind that a majority of insurance applications will not be issued at preferred risk prices.

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