Think your group health plan isn't good enough? Port your existing plan for one tailored for you!
There is something called portability in health insurance; it allows you, as a policyholder, to move your existing health plan policies to another insurer.
This keeps insurance companies on their toes, as they know if you are unhappy with their services, you will simply take the same policy elsewhere. It forces them to offer you more and improved options.
Do you lose any benefit if you opt out of one insurer in favour of another? No, you don’t; sectoral watchdog IRDAI has ensured that under the portability option, a policyholder retains the benefits he or she has accumulated.
While giving you the right to port your policy, IRDAI has stipulated that the new insurer “shall allow for credit gained by the insured for pre-existing condition(s) in terms of waiting period”.
“In the past in health insurance policies, such a move resulted in your losing benefits like the waiting period for covering ‘pre-existing diseases,” says IRDAI on its consumer education website.
But now IRDAI “protects you by giving you the right to port your policy to any other insurer of your choice”. The regulator also points out that this applied not only when moving from one insurer to another but was also enforced when moving from one plan to another with the same insurer.
You can also move from group health insurance to an individual policy. When this sort of migration happens, it is the number of years of continuous coverage from your group/corporate policy that gets ported.
Nowadays, insurance companies, mainly those associated with health insurance, offer a group health plan. Under IRDAI stipulations, you can also switch from such group insurance policies to an individual one. This is portability in play once again; to understand how it works with group health insurance plans, let’s first find out what such plans entail.
Group health insurance
As the name suggests, group health insurance is one single insurance cover for a specific group of people. The groups may be employees of a company or organisation, or members of an association. IRDAI requires that the group policies list the names of all members enrolled in a particular cover.
Group covers come with several advantages: first, it automatically covers pre-existing diseases from the start of the policy period. Sometimes, they extend coverage to the family of the person being insured under that policy.
Moreover, if a deal can be negotiated, such group policies can cost less than individual covers. As a result, many employers, including in India, negotiate such group health insurance plans for their staff so as to include it in their employee benefits packages.
In corporate group health plans, employees are deemed ‘members’ of that particular group, while the premiums are paid by the employer. All in all, it is a win-win situation for everyone: the employer gets a bargaining tool; the employee gets a free health plan, and the insurer gets a lot of business in one deal.
However, there is one snag with group plans: they offer uniform benefits to all members, which means members cannot opt for the sum insured or a policy more suited to their unique needs. This is all right if the person is an employee; the premium is paid by the employer. But if you have to invest your own money – say if you join the group health policy taken by an association that you belong to, like a retired people’s union – then uniform terms can be a major limitation for you. In fact, it is often cited as a reason for taking out an additional plan for oneself.
If it is your money you are investing in a non-employer-employee group policy, certain points have to be kept in mind:
- Only one person – the designated ‘manager’ of the group – will be issued the master policy;
- The policy will be in the name of the association/union;
- As a member, you will be entitled to a certificate of insurance that states (i) the schedule of benefit, (ii) premium charged and (iii) terms and conditions of the cover;
- The cover is lifted on your leaving the group, though the insurer could offer you continued coverage under an individual policy.
Moreover, as per IRDAI guidelines, the manager of the group is required to divulge details of the policy to members, which include the following:
- Premium rate;
- Other terms such as premium discounts;
- Administrative or other charges collected from members over and above the premium charged by the insurance company.
The manager should also pass on premium discounts, if any, to all members;
Quitting a group plan
As stated earlier, IRDAI stipulations maintain that under the portability option, a policyholder retains the accumulated benefits. So how can your interests be protected if you leave a group, especially if it is a non-employer-employee one?
Additionally, if your group health insurance policy also covers your family members, they too can migrate from a group policy to an individual policy or a family floater with the same insurer.
IRDAI also makes it mandatory for the two insurers to complete the porting procedure as per guidelines on the regulations on (and protection of) policyholders’ interests. At the same time, it is essential that policyholders are also aware of the conditions to be met if they seek portability. Let us take a look at these:
- First, as per IRDAI, you can port the policy only at the time of renewal. This means the new insurance period will begin with the new insurer;
- Also, the only aspect that the new insurance company has to abide by is the waiting period credit. Other than that, all policy terms including the premium are at the discretion of the new insurer;
Additionally, there are three things you have to do at least 45 days before your renewal is due:
- Intimate your current insurer in writing about the shift (in case you fail to do so, the insurer has the right to refuse the portability);
- Specify the insurer you want to shift the policy to;
- Renew the policy without a break (there is a 30-day grace period if porting is under process).
If you wish to migrate from group health to individual health insurance, you should be aware that the acceptance of your request for a new plan policy is subject to the new insurer’s underwriting process and guidelines.
As a result, you just might find yourself being underwritten as a new customer. If that happens, chances are that any disease that you may have contracted during the (old) policy term will be deemed a ‘pre-existing ailment’.
What this means is that you will have to serve the entire waiting period of the individual policy, instead of being able to enjoy a reduced waiting period for pre-existing diseases. However, as this clause is not followed by everyone and may vary from one insurer to the other, it is advisable to shop around a little.
Another area you have to be cautious about is the advice of your agent. As per the IRDAI’s new Health Insurance Regulations 2016, agents will not earn any commission if you opt for health insurance portability, though they continue to earn a commission every time you renew the same insurance policy.
Thus, there is the likelihood of your insurance agent advising you against porting your policy and trying to sell you a new product. This will work against your interests, as you stand to lose all the benefits you have accumulated.
People about to retire should be careful, as getting a fresh health plan after retirement may prove expensive. It is better to continue with the existing insurer, but you may port it to an individual policy. This way, you retain your accumulated benefits.