This question gets asked less often than it should, usually after someone has already picked a plan. It is worth answering first, because the answer decides whether the rest of the conversation matters.

These plans are underwritten

Unlike coverage bought through the Marketplace, fixed benefit and limited-medical plans are medically underwritten. The insurer asks health questions and can decline an applicant, and providing incomplete or incorrect information can void coverage or cause claims to be denied later.

That is not a reason to avoid them. It is a reason to answer carefully and to find out where you stand before applying rather than after.

The two lookback windows

Applications commonly use two. A 12-month window covering recent investigation and treatment, and a 5-year window covering diagnosis of, or care for, a list of specific conditions.

The five-year list is the one that decides most declines. It commonly includes heart and circulatory disease, heart attack, bypass, stent, angioplasty, atrial fibrillation, pacemaker or defibrillator, congestive heart failure, stroke or transient ischemic attack, COPD and chronic lung disease, diabetes other than gestational, organ or bone marrow transplant, chronic kidney or liver disease, hepatitis B or C, HIV, cancer other than basal or squamous skin cancer, multiple sclerosis, paralysis, ALS, lupus, Parkinson's, Alzheimer's, schizophrenia, bipolar disorder, and Crohn's disease or ulcerative colitis.

What declines an application immediately

A handful of situations commonly disqualify regardless of history. Being currently pregnant, an expectant parent, in the process of adopting, or undergoing infertility treatment. Being currently confined to a hospital, nursing home, mental facility, inpatient rehabilitation, subacute facility or hospice.

Within the past 12 months: any such confinement, recurrent breast tumours or unexplained growths, unexplained weight loss, fatigue, dizziness or seizures, circulatory problems or uncontrolled high blood pressure, chest pain or irregular heartbeat, care for a condition not yet diagnosed, or being advised to undergo a test or surgery not yet completed.

The one people forget

Applications commonly ask whether you already hold, or are applying for, other hospital or fixed indemnity insurance that will not terminate before the requested effective date. Answering yes generally means the application is declined.

Insurers do not want two indemnity policies paying on the same event. If you are replacing existing coverage, the timing has to be arranged so the old policy ends as the new one begins.

Tobacco is priced, not declined

Tobacco use in the past 12 months, including e-cigarettes, smokeless tobacco and nicotine substitutes, is asked separately from the medical questions. It usually affects your rating class and your premium rather than your eligibility.

The difference is not small, so it is worth knowing that an honest answer costs money while a dishonest one can cost the policy, as we set out in how guaranteed issue supplemental coverage works.

Qualifying is not the same as being suited

Plenty of people who qualify should still not buy one of these plans. If you would be relying on it as your only coverage, or you have a condition that will need ongoing treatment, qualifying medically does not make it the right purchase.

That is a separate question and we treat it separately in who a fixed benefit plan is right for.

If you will not qualify

There are routes that do not require underwriting. Guaranteed-issue critical illness and accident coverage is commonly available with no health questions at amounts of $5,000 to $10,000. Comprehensive coverage through the Marketplace cannot decline you for health at all, and a change in income or circumstances may open a special enrolment period.

Being declined for one product says nothing about the others, and it is usually the start of a different conversation rather than the end of one.

Why insurers ask what they ask

A fixed benefit plan pays a set amount without asking what the bill was, and it does so with no deductible standing in front of it. That only works if the pool is broadly healthy, which is why the questions exist and why they reach back five years rather than one.

It also explains the specific list. The conditions named are the ones most likely to produce hospital admissions, surgery and ongoing treatment, which is precisely what the schedule pays for.

Answer the questions properly

An intentional misrepresentation of a material fact, or a fraudulent misstatement, can cause a policy to be voided or a claim to be reduced or denied. Insurers generally have a period during which they can contest statements made on an application.

A condition disclosed and accepted is a condition the insurer has priced for. A condition not disclosed is one that can unravel the policy at exactly the moment it matters. If you are unsure whether something counts, say it and let the underwriter decide, as we explain in what a fixed benefit plan does not cover.

Qualifying is also not the end of it. Being accepted does not mean everything is covered from day one. A preexisting condition limitation commonly runs 12 months with a 12-month lookback, and waiting periods of 5 to 30 days for illness and 30 to 180 days for wellness usually apply.

So someone accepted with a recent condition may hold a policy that will not pay for it until the following year. That is worth understanding at application rather than at claim.

So we walk the questions out loud before anything is submitted. It takes a few minutes and it avoids three bad outcomes: an application declined that we could have predicted, a policy issued on incomplete answers, and a client who believes they are covered for something they are not.

Where the answer is that you will not qualify, we say so and look at what will, which is usually a shorter conversation than people expect.

How The Jordan Insurance Agency helps

We are an independent agency based in Charlotte, licensed in 23 states, and we have helped families choose coverage since 2006. We would rather tell someone in five minutes that they will not qualify than take an application we expect to be declined.

Do you mind if we take a look together? Our licensed agents will walk the health questions with you before anything is submitted, and point you somewhere else if the answer is no.

Benefit amounts and premiums shown are examples drawn from published plan schedules. Actual amounts vary by plan design, benefit level, age and state. Higher designs are available: daily hospital and intensive care benefits can be issued as high as $10,000 a day, ground ambulance up to $3,000 per transport, and calendar-year and lifetime maximums up to unlimited. Ask us what your own schedule would pay.