When an insurance carrier requests an “Evidence of Insurability (EOI)” form, the process can feel daunting and the form can seem invasive. In this month’s Beyond Benefits Newsletter, we’ll break down what this form is, when an employee would need to fill it out, and why it’s required in the first place.
An EOI form (also known as a health statement) is a medical questionnaire used to collect information on an individual's medical history. This can include:
The form contains many detailed questions and the more details provided in the answers, the faster the process and the better the carrier can match the coverage to your needs. It is important to fill out the form completely; incomplete applications will be returned for further information, resulting in a delay of a decision. Keep in mind that the completed application also acts as a legal document that forms part of the insurance contract. Typically, only the form is required; however, in some cases, additional requirements (such as a visit to a physician, medical tests, etc.) may be requested. Any fees/costs associated with additional requirements are the responsibility of the applicant.
There are three common instances where an insurance carrier will request an individual to provide evidence of insurability.
If you recall from our March Newsletter, any salary-based benefit will also have a Non-Evidence Maximum (NEM) limit. If an employee is eligible for an amount greater than that NEM amount, an EOI form will need to be completed.
Some group benefit plans include coverage for Optional Benefits, such as Optional Life, Optional AD&D and Optional Critical Illness (for both employees, spouses, and children in some cases). As the name suggests, these benefits are optional, however an EOI form will need to be completed if the employee chooses to apply for them.
The advantage of a group benefits plan is that no one is required to provide proof that they are healthy enough to be insured if they are enrolled within 31 days of their effective date. However, if the 31 day grace period is missed, the employee will be considered a late applicant.
Essentially, it’s to prove the applicant is healthy enough for the insurance carrier to take on the risk of insuring them.
This is accomplished by a process called Medical Underwriting. Medical underwriting refers to the use of medical or health information in the evaluation of an applicant for coverage to determine the individual's risk level. In this process, the insurance carrier evaluates the person who is applying for coverage, noting certain factors such as health conditions, lifestyle habits, family history, age, nature of work, and geography. After reviewing all factors, the insurance carrier will determine whether coverage should be given to the individual and if so, how much.
This process protects the group benefits plan from adverse risks and reduces the likelihood of disproportionate claims. If individuals were given the ability to be insured without regard for pre-existing medical conditions, then they would wait until they got sick or needed medical care before purchasing insurance coverage (similar to how you cannot buy auto insurance to cover an accident after you’ve already had the accident). This would then create a pool of individuals with high claim amounts, which would then increase the premiums that insurance carriers must charge to pay for those claims incurred. These high premiums would discourage healthy people from obtaining coverage, and it would make offering a group benefit plan unaffordable or too costly for employers.
If you have an employee who doesn’t feel comfortable providing their completed form to you (their employer), they do not have to. Because of the confidential and personal nature of this form, there are usually instructions on how to send it in directly to the insurance carrier.
Alternatively, your benefits advisors at Humi can step in and act as the middle person. We’re happy to help! This option will help reassure employees that their health information will always remain between an external party (in this case, Humi) and the employee who completed the form. For assistance, you can email us at firstname.lastname@example.org.
We’re here for you. Reach out to us at email@example.com for additional assistance.