What is a health insurance rider?
“To sum it up…”
- Riders are purchased separately from health insurance policies
- Riders can be added for many conditions or ailments
- Pregnancy and indemnity riders are the most popular
- Riders can be used to add or eliminate coverage from a policy
Not every person or every family needs the same health care coverage. In the interest of affordability, insurance companies carefully construct plans that meet the needs of their policyholders and protect the insurance companies interest. One way this can be done at an affordable cost is for insurance companies to offer applicants health insurance riders.
Riders are offered separately from policies to allow the coverage for most to be affordable. The increase in premiums only applies if riders are purchased to cover a particular condition or illness.
Any rider written by an insurance company is written according to laws that apply in the state and governed by the insurance company itself.
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What is a health insurance rider?
To put it simply, a rider is an amendment to an insurance policy. Some insurance riders add coverage for a situation and others exclude certain types of coverage.
Riders are more prevalent in individual health insurance than group coverage and are designed to provide applicant’s the coverage they need.
For example, some insurance companies may offer a maternity rider to applicants who want to have their pregnancy covered by their policy.
A rider can also apply to a policy in a negative manner called an exclusionary rider.
What’s an exclusionary rider?
An exclusionary rider, sometimes called an impairment rider, is still an amendment to a person’s insurance policy, but instead of adding coverage, it excludes coverage.
Usually, when an exclusionary rider is attached to a policy, it is eliminating coverage for medical care related to particular areas or organs of the body. For instance, a rider may be put in place to exclude coverage for heart conditions, body parts, or a body system.
An insurance company may issue an applicant this type of rider based on the application process. When an applicant applies for coverage, a series of questions is asked about the person’s medical condition and overall well-being.
If the insurance company deems your ailment or illness as preexisting, you may not receive coverage or receive reduced coverage related to that status.
Coverage in all other areas would be identical to someone without any riders attached. However, these exclusionary riders are not usually permanent. Instead, the riders usually expire after about one year.
After the expiration of the rider, the insured person usually qualifies for full coverage with no exclusions to care based on ailments or conditions.
Before September 2014, exclusionary riders could be imposed on anyone. The Affordable Care Act changed that practice. After the Affordable Care Act was installed, it became impossible for exclusionary riders to be applied to children’s healthcare coverage.
An indemnity rider is another type of rider associated with health insurance. Usually, this rider pays benefits to an insured person who lost a limb or use of a limb. The rider may also pay out if an insured person dies accidentally.
The intention of the rider is to provide resources for long-term care and recuperation time while the person gets better. Some insurance companies may offer indemnity rider benefits in the event of a covered person’s suicide.
Major Surgery Rider
Another common rider offered by insurance companies to applicants is a major surgery rider. The rider is only provided to those with specific medical needs.
The approval or limitation of this rider is based on the type of surgery, transplant, or major medical procedure received by the insured. The amounts paid or deductibles required for these kinds of operations can be raised or lowered based on the severity of medical conditions.
Cost of Health Insurance Riders
Health insurance riders are not free. Instead, these riders can be very expensive. However, insurance companies offer riders to spread the potential risk of a particular person’s medical conditions over a wider population.
It’s needed because the introduction of an individual with significant health hazards reduces the amount of resources that could have been used elsewhere. Instead of increasing premiums for everyone covered by the insurance, the company charges higher premiums for health insurance riders.
While no one will try to deny health insurance riders can be very expensive they still serve a purpose based on calculated risk. With the help of riders, a person that may not have been able to obtain coverage without the use of a rider can purchase health insurance with this added policy.
Despite the increase in insurance premiums, the insurer will still be saving money in the long run because the rider will cover a portion of their healthcare cost. Without the rider, the person would have been responsible for the entirety of their bill, which could easily be more than the increase in insurance premiums spread out over a 6 or 12-month policy.
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