Health Insurance is a financial tool that protects you and your family from the burden of unexpected medical expenditures. But have you sometimes felt let down or, have been dissatisfied with the service of your health insurance provider? Well, here is the era of portability. After mobiles, the latest entrant is Health Insurance Portability. So what is this concept and how do you stand to gain? Read on to find out more.
Forty Year old Mrs Kapur suffers from diabetes, which has been listed as a pre-existing disease in her health insurance policy. When her health insurance provider recently increased her premium, she wasn’t quite happy about it. After having held the policy for two years, she wanted to change over to a new insurer. However she realised by doing so she would lose the cover on her Pre-Existing Disease (PED) as the new insurer would treat her as a fresh customer. She would have to wait for another two years to get this pre-existing disease covered in the new policy.
The Concept of Health Insurance Portability
To solve problems like Mrs Kapur’s IRDA has set guidelines to implement Health Insurance Portability from July 1, 2011. Health Insurance Portability is a provision to switch over to a new insurace service provider, under the same terms that exist under the current policy. With this provision one need not compromise, or fear losing the waiting period of PED, while opting for a new policy.
- Carry Forward of Waiting Period of Pre-Existing Diseases(PED)
Health Insurance policies follow a waiting period in the initial policy years, during which time, PED are not covered. This waiting period could be for 2 to 3 years, depending on the disease. Suppose you shift to a new insurer after say 3 years, the new insurer considers you a new customer and would impose his waiting period for the PED. Now with portability of your health insurance, this waiting period of PED is carried forward (known as “credit” in insurance parlance), to the new policy. So you wouldn’t lose the waiting period already completed in the previous policy.
- Window period waived
Every new health insurance policy has a 30 day window period, diseases arising in which time are not covered. With portability, this waiting period of 30 days is waived off.
When Should One Opt For Health Insurance Portability
If dissatisfied with the insurer’s service, one could move one to another insurance provider for better service and policy features.
- When Moving Cities
When moving to another city, at times the insurer may not have an office or service outlet in the new place. At such times, one may desire a new insurer who would be able to provide the necessary policy servicing at the new location.
- Shifting of Jobs
Different employers provide health insurance through different providers. During times of job change to prevent loss of insurance cover, portability could be an ideal solution.
- Exceeding Maximum Age of Policy During Renewal
Some policies restrict age at which renewal is possible. One could thus opt to move to another insurer who could renew policies at a much higher age.
- Exclusions in policy
What is exclusion in one policy may not be exclusion in another. If you have a change in your insurance requirement, and have specific needs that are offered by another insurer it’s time to move on.
Drawbacks of the Provision
- Not all benefits continue in the new policy.
Though the waiting period credits are portable, not all the features of the old policy continue. It is actually the features of the new policy that would be applicable for any future cover.
- Presence of Ambiguity
Being a relatively new concept, health insurance portability has various aspects which are ambiguous in nature. Despite having set guidelines by IRDA, the following points need more clarity before, implementation in July 2011.
- The status of continuity benefits like free-medical check ups and no claim bonuses in the new policy.
- No clarity about how portability would take place between indemnity policies and benefit policies. Indemnity policies offer cover for hospitalization expenses where as benefit policies provide a lump sum amount for a pre –specified diseases or condition. Also there is no clarity if such portability is possible between life and non- life insurance companies.
- IRDA is yet to specify details regarding premium payment in case of portability
Making the Most of Portability
The process of portability would involve similar steps as in applying for a new health insurance policy. Before you shift between insurers it pays to do your bit of homework.
- Be clear of your motive. Shift for genuine reasons such as dissatisfaction, change in job or increase in premium etc.
- Do your bit of research about the new insurer you have chosen. Ensure you are getting a better deal in comparison to your existing policy.
- Have a clear understanding of the coverage and the sub coverage such as hospital room rent, check up etc…the policy has to offer. It could have slight variations from the earlier one.