Health insurance portability has come in after a long wait. First let’s see what it means before we delve into whom it will benefit and how.
What it means
Mobile number portability means that you can keep the same mobile number even as you switch the service provider. In health insurance it means that the period of time that you spend with your existing health insurance provider will be taken into account while working out the period of exclusions such as reimbursement of hospitalization expenses coming from pre-existing diseases or other temporary exclusions. For example, if the new health insurance company has a clause that they will not cover hospitalization expenses of knee replacement surgery within the first two years of the policy and you have had a policy for three years with your existing insurance company, then the new health insurance company will cover knee replacement surgery expenses from the very first year of the policy with them. A pleasant surprise has been the right provided to the insured persons in group insurance policy to shift to an individual plan with the same insurance company that provided the group insurance policy.
What it does not mean
Just like mobile number portability, health insurance portability ensures that you have the option to shift to a new insurer with the same policy but it does not compel the new insurer to offer you the service. So if the new insurer refuses to provide the service, you will need to look at another provider or give up the idea of changing your service provider. Similarly, for health insurance, if you are already suffering from a serious disease, you are likely to find that portability is only a theoretical option as no other health insurance provider is willing to offer you its insurance policy.
However, if you are part of a group insurance plan then the same insurance company cannot deny you the right to buy an individual plan from them.
Who will benefit?
The biggest beneficiaries of this will be employees who are falling out of a group insurance plan either due to retirement or resignation from a company. A lot of group insurance plans allow coverage of the parents of the employees, who otherwise find it difficult to get an insurance policy on their own. Retired employees also find it difficult to get a good health insurance plan. Now such employees can get a family floater plan from the same insurance company which cannot be refused.
The other big beneficiaries will be young insured persons, who are healthy but are stuck with high-cost policies (think of companies which hiked premiums by 500% last year) or sub-optimal policies (which have very low sub-limits for room rents or other expenditure or require you to meet a large part of the eligible hospitalization expenditure yourself—called co-payment in insurance parlance). They can now shift to better policies that have no such restrictions and are reasonably priced.
How will you benefit?
Retiring people should make this application at least 60 days (the requirement is 45 days but it is better to be safe than be sorry) before their retirement date. Similarly, employees who are resigning need to make this application at least 45 days before they lose membership from the group plan due to the resignation (for resigning employees this has implications in terms of how soon will they let their employers know about their moving and whether their employer will give them the benefit of 45 days notice period). Regular consumers wishing to switch insurers should in any case make this application well in time before their existing policies expire.
In all cases, consumers will need to submit the regular proposal form of the insurance company along with a portability form that is available at www.irda.gov.in/ADMINCMS/cms/Search_Results.aspx
Please fully disclose all material facts that are relevant to the policy including any disease or claims made by you. This may result in the premium being higher or even the policy being denied. But it is far better to have an expensive policy or a policy that will actually pay the claim then to have a cheap policy where the claim is not paid.
Who may not benefit
When portability was thought about, the immediate beneficiary that came to our mind was the person who had a bad experience while getting his claim settled. Unfortunately, those consumers are unlikely to be welcomed by the new insurance company.
The only saving grace here is the unexpected procedural benefit provided by the Insurance Regulatory and Development Authority (Irda), wherein the refusal has to be conveyed by the insurance company in writing within 15 days of receiving the proposal and all documents and information relating to the portability proposal. So if you apply to any insurance company for portability plus an enhanced sum assured, then the company will need to respond back in writing or they will lose the right of refusal. In short, insurance companies will no longer be able to use inaction as a way to conveniently avoid taking on what they consider high-risk consumers.
Portability from group insurance policies was not envisaged when the subject was first being debated. Ironically, this benefit will ensure that group insurance policies will now be priced much higher and benefit for parents of employees are likely to be withdrawn or made prohibitively expensive since the company cannot refuse to issue an individual policy to the same family.
Harsh Roongta is CEO, Apnapaisa.com.
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