Importance of Health Insurance Portability:
In India, the concept of portability was first introduced in the telecommunication sector. The mobile number portability made life a lot easier for the cell phone users. It permitted them to shift to a better mobile network provider without having to change their mobile phone numbers. Such a phenomenon was also introduced in the health insurance domain by the IRDA to achieve its objective of protecting the interests of the policyholders and for ensuring the orderly growth of the insurance industry.
Before portability came into the picture, shifting risk coverage from one health insurer to another was not a feasible proposition for the policyholder. It was so because of the discrepancies about the waiting period concerning the pre-existing diseases. Initially, when the policyholder changed the health insurance company, the new insurer would make him complete the entire waiting period for one more time for the same pre-existing disease which he had already completed with the previous insurer. He was not allowed risk cover on pre-existing conditions from the very first day of the policy as he could not transfer the credit regarding the pre-existing disease which he had gained under the previous insurance plan. Ultimately, it placed the policyholder at a distinct disadvantage and tied him compulsorily to the same insurance company. IRDA regarded this feature as not being in the interest of the policyholder and considered it to be detrimental to competition. Thus, with effect from 1 July 2011 the IRDA made the portability provision applicable in the health insurance category of the non-life segment.
Health insurance portability refers to switching from one insurer to another insurer or from one plan to another plan under the same insurer along with keeping the benefits intact. In portability, you get an opportunity to change from one insurance company to another without having to lose the benefits that you have accumulated earlier. It is applicable even at the time when you change from one plan to another with the same insurer. When you exercise the option of health insurance portability, the credits gained by you in the previous health policy on pre-existing conditions & time-bound exclusions also get transferred to a new plan with the same insurer or with the different insurer. Portability ensures that the insurer does not take you for granted; you get better value for money. It bolsters healthy competition in the health insurance market, curbs monopolistic tendencies and offers superior options to existing policyholders.
Firstly let me take you through the background as in what was the need to introduce health insurance portability segment in India.
As you know, health insurance is a specialised product which entails comparatively higher premium than other classes of insurance, and thus, it should cater to the unique well-being needs of the policyholder to be useful, as no two individuals are same. Every policyholder has a different set of requirements and it keeps on changing as he grows old. It is quite natural that the policyholder may like to switch from one health insurer to other or from one health plan to another for varied reasons. Some of these are as follows:
1. Poor Service
Many times the policyholder does not receive the services which were promised at the date of policy inception. In such a scenario it would not be fruitful to hold on to the same insurance company when it has failed to keep up the quality assurances.
2. Unable to Step-up sum insured
As one grows older, one may be susceptible to age-related diseases whose treatment may result in massive cash outflow. So one may consider to step-up the amount of sum insured under the health insurance policy. It may happen that the existing health insurer does not agree to step-up the sum insured, and he may have to continue with an insufficient risk cover.
3. Poor Claim Settlement history
The claim settlement ratio of the insurer may have come down since one had purchased the health insurance policy. So, one may feel the need to switch to another insurer who has a better claim settlements ratio.
4. Lack of transparency
One might not have expected that the insurer may levy some hidden clauses to repudiate the claim whenever one approaches the insurer on happening of the contingency. Such instances may necessitate shifting to a new insurer who offers better transparency.
5. Poor product Design
One may end up paying exorbitantly high amounts of the premium for a product which does not cater to one’s specific needs and there lies a possibility to purchase the same features at a comparatively lesser premium from another insurer. Moreover, one may have purchased health insurance from a insurer focusing on multiple verticals and may require changing to a specialised health insurance company which provides services as per your requirements.
Conditions regarding Health Insurance Portability
1. To be eligible for portability you need to make sure that your policy is in force and you have paid all the premiums due.
2. You may look forward to port the existing policy only when it is nearing the time of renewal. It implies that you cannot exercise the portability option in the midst of policy tenure.
3. Once you have made up your mind to port, you should notify your intentions to your insurer. It can be done by writing an application letter to your insurer 45 days before the due date of policy renewal.
4. In the application form, you need to specify the company to which your risk cover should be transferred.
5. Your insurer would have to acknowledge the receipt of your application of portability within three working days.
6. The new insurer may require you to submit additional documents like policy certificate of previous years, latest renewal notice given by insurer before porting, duly filled & signed proposal form and duly filled & signed portability form.
7. You need to remember that it is not mandatory for the new insurer to accept your proposal.
8. You may carry forward the credits on the waiting period only, but you would have to comply with all the underwriting process and guidelines of the new insurance company.
9. Portability is free of cost. You need to pay just the premium applicable as per the plan of your choice.
10. When you switch from one insurer to another, portability will be allowed only for similar kind of policies i.e. basic to basic or Top-up to top-up.
11. You may have to undergo fresh medical examination as per health insurance underwriting guidelines of the company.
Features of Portability
1. You can shift your policy from one insurer to another insurer or from one general insurer to a specialised health insurer and from one health plan to another.
2. You can port any individual policy or any family floater policies and from group policy to individual/family floater policy.
3. You will get the benefit of credit regarding waiting period for pre-existing conditions that you have earned with the old insurer.
4. The minimum risk coverage that you will get with the new insurer will be equal to the sum insured under the old policy.
5. Your policy details will have to be shared by your former insurer with the new insurer within seven days of receiving such request.
6. After receiving your policy history from the old insurer, the new insurer will have to complete the portability process within 15 days and communicate the acceptance/ rejection of your proposal. If you do not receive any intimation within 15 days from the new insurer, then consider your proposal to be accepted.
Specific Issues about portability from group insurance to individual/family floater insurance
Usually, individuals; especially those who do not possess standalone health policy are apprehensive about the termination of risk cover upon a job loss or job change. But now you need not worry because the IRDA has come up with a ray of hope. Under the portability regulations, you can port from group health policy to individual policy. If you and your family were covered by a group insurance cover, then you can also port to family floater insurance. On porting the plan, don’t expect the same terms and conditions from the new insurer. As soon as you move out of the comfort zone provided by the employer into individual/family floater coverage, you should be prepared to accept all the new conditions levied by the new insurer.
Let me take you through some of the specific rules that you need to follow to port from group insurance to individual/family floater insurance:
1. The application for such portability should be initiated 45 days before the renewal of the group insurance cover.
2. You may choose to continue the policy as an individual or a family floater policy after portability. If the family floater encompasses a family member who is a senior citizen, then the amount of base cover may be reduced to a lower value by the insurer as compared to the original coverage amount that you were getting under group insurance.
3. In the first stage, you will be allowed to port from group insurance to individual/family floater insurance under the same insurer which sold group insurance to the company. After completion of one year from the date of porting, if required, you may shift your risk coverage to another insurance company.
4. You would be allowed to carry forward the benefit of waiting period regarding Pre-existing disease upon a change of insurance company.
5. The risk premium that you need to pay to the new insurer under individual/family floater policy is much more than you had to pay for group insurance.
6. Make sure your personal cover after portability begins before you part ways with the employer.