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That Genetic Test Can Cost More Than You Think

These days, genetic testing companies promise you can learn a lot about yourself by completing a simple at-home test kit. But before you reach for a cheek swab or a test tube, consider all the possible impacts of that test – including the impact on your insurance coverage.

Direct-to-consumer genetic tests have gone from niche to mainstream in the past few years, boosted by wide advertising coverage and a growing interest in genealogy. The MIT Technology Review estimated that 1 in 25 Americans has access to some form of genomic data, and for many of these people, that data arrived through an elective kit. These days, a variety of companies offer reports that detail your ethnic heritage, and most allow you to connect with distant relatives who have also taken the test.

The dominant player in the field, 23andMe, also offers a health report. As of 2017, the Food and Drug Administration permits it to market 10 tests for diseases or conditions directly to customers without the involvement of a doctor. A few more tests have received FDA approval since. The cleared tests include those for heightened risk of Alzheimer’s disease, celiac disease and Parkinson’s disease. The company tests for 250 diseases altogether, but the FDA restricts what it can share with consumers before the tests are checked for accuracy. For many conditions, 23andMe currently can only tell clients if they have a carrier gene, which means a risk of passing on a condition to their children.

Most people are familiar with the debate surrounding this sort of testing as it relates to privacy. 23andMe itself is certainly aware of this concern and has taken steps to assuage people’s worry; for instance, the company partnered with Destin Sandlin, who runs the popular YouTube channel “Smarter Every Day,” to explain the difference between genotyping and genetic sequencing so that potential customers can better understand what information the company does and does not gather and retain. Some concerns, such as potential family tensions created by these tests, are demonstrably well-founded.

Yet for all the worries cited in the public debate about direct-to-consumer genetic testing, I’ve heard relatively little about the potential insurance ramifications. The growing prevalence of these tests, especially for customers who are not especially interested in genealogy but who may be interested in learning about their health risks, could have consequences that are potentially expensive for insurance shoppers.

In 2016, Fast Company reported on a 36-year-old woman whose application for life insurance was denied in part because of a positive test for errors in the BRCA1 gene, which is associated with elevated risk for breast or ovarian cancer. While 55 to 65 percent of women with a harmful BRCA1 mutation will develop breast cancer by age 70, compared to 12 percent of women in the general population, the mutation itself is by no means a death sentence. But insurance is about probability, and an individual who the company knows carries the mutation now has those odds tilted against her.

Patient advocates have pointed out that it is unfair to penalize applicants who have proactively sought out more information, especially because doing so often allows people at higher risk for a disease to take steps to lower environmental and other contributing factors. For example, women who know they have the BRCA mutation may schedule more frequent screenings or choose to undergo precautionary mastectomies to lower their risk. But there is no legal mechanism at the federal level to prevent insurers from deciding they do not want to take on the risk involved in genetic predisposition toward a certain condition – at least where life insurance is concerned.

It is worth remembering, too, that direct-to-consumer tests are generally much simpler than genetic testing performed in clinical settings. This means that recipients – and insurance companies – could be led astray if they do not read the results carefully. And while few people take more than one direct-to-consumer test, instances where different companies’ results were at odds serve as a reminder that these results are not foolproof.

Part of the reason many people do not know genetic testing can affect life insurance is that legal barriers prevent health care insurers from using these tests to deny coverage. The Genetic Information Nondiscrimination Act, which passed in 2008, prohibits health insurance companies – and employers – from barring those with particular gene mutations from health coverage or from using such information to determine premiums. In addition, the Affordable Care Act’s protections for pre-existing conditions explicitly extend to conditions discovered through genetic testing.

However, neither GINA nor the Affordable Care Act prevents insurers from taking genetic tests into account when issuing life or disability insurance. Some states offer extra protections in this area, but these statutes vary in their exact application. Seventeen states restrict life insurers from using genetic material in underwriting life insurance, at least to some degree, including states like Oregon and Vermont that fully forbid using genetic information in underwriting life, disability or long-term care insurance. California passed a law prohibiting genetic discrimination in employment, housing, education, mortgage lending and several other state-funded programs. But many of these laws are comparatively new, and their application is not always clear-cut.

Right now, insurers generally do not require applicants to undergo genetic testing. However, if you apply for insurance, the company can ask you whether you’ve been tested and require you to turn over any existing results. You should not try to hide such results if they already exist, as failing to disclose such information or refusing to cooperate during the underwriting process can lead a company to cancel coverage.

The question of whether insurers should consider genetic testing when issuing life or disability insurance is complicated, in part because this sort of testing is relatively new. Over time, it may make sense to fine tune which genetic markers insurers can consider and which they can’t. As patient advocates have pointed out, we have collectively decided that some identity categories, like gender, are fine to consider in the underwriting process while others, like race, are not. Where we will eventually land on genetic makeup is not clear.

For now, if you are considering genetic testing and you don’t already have life insurance, it may make sense to sort out your coverage before you put a test tube of saliva in the mail. Testing done after you have a policy can’t affect your existing coverage, though of course it could become a factor if you switch insurers or pursue a new policy in the future. Bear in mind, too, that not all genetic testing is direct-to-consumer; if your physician recommends you get tested under his or her care, you generally should not refuse out of insurance concerns.

To the extent it is in your power, however, take care of your life and disability insurance needs first if you are curious about what your genotype reveals. Your wallet may thank you.

Vice President and Chief Investment Officer Paul Jacobs, of our Atlanta office, is the author of Chapter 20, “Giving Back,” in our firm’s most recent book, The High Achiever’s Guide To Wealth. He also contributed several chapters to the firm’s previous book, Looking Ahead: Life, Family, Wealth and Business After 55.

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