Can Insurance Coverage be Conditioned on the Taking of a Medical Examination?

Yes. Insurance coverage can be conditioned on taking a medical exam if this does not result in discrimination in favor of highly compensated employees. For employees who do not pass the medical exam, insurance is typically limited to the amount, if any, that can be purchased for them using the amount of premium dollars that would be available if they were insurable. For example, if the plan’s insurance formula provides insurance of one hundred times the monthly benefit for standard risks (i.e., those employees who pass the medical exam), the insurance provided for a medically rated employee might be only fifty times the monthly benefit, since a fifty-times benefit for that employee would cost as much to provide as a one-hundred-times benefit for a standard risk.

Reproduced with permission.  Copyright The National Underwriter Co. Division of ALM

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