Health Insurance Portability – Process and Benefits

In 2011, IRDA issued a notification that allows for portability of health insurance policies. Portability means the transfer of one’s existing health insurance policy to a new insurance company. Most importantly, the transferee shall not lose any benefits that were accrued in the previous policy such as pre-existing disease waiting period and other waiting periods pertaining to specific diseases like cataract, tumor, hernia etc.

Health insurance portability is yet to pick in India but I am confident that in the months to come, more consumers will avail of this facility. Often consumers express their lack of knowledge on how to port policies. Additionally, only a handful of insurance companies like Apollo Munich and Bajaj Allianz have a section on their website that’s dedicated to portability. This post puts forward the recommended process for portability.

1. Understand your requirements

Start your porting process with an understanding of the health policy which you’d like to enroll in i.e. what amount of sum insured, cities where you’d like an expansive hospital network, would you require a critical illness rider option, would you need OPD benefits in the policy etc. I prefer to write these down on paper (like a checklist) and then start my research.

Your list can be a bit like mine. List the top 8-9 items before you start your research.

a) Sum insured - Rs. 5 lacs

b) Pre & post hospitalization – Yes

c) Day care treatment – Yes

d) Out patient (OPD) benefits – No

e) Critical Illness rider – Yes (should be lumpsum)

f) Network hospitals  – Yes (around Sarjapur, Bangalore)

g) Claims loading – No or minimal loading

h) Premium – Less than Rs. 6,000 per year for one individual aged 32

i) Medical tests – OK to give if insurer required

I have excluded pre-existing and waiting period requirements from this list because we are not enrolling for a new health plan but are porting our existing health plan.

Please note : Portability is applicable in case of renewals only i.e. policyholders cannot apply for portability in the middle of a policy term. For example – if your previous policy starts on February 1^st (which means the renewal comes up on Jan 31^st next year), then you cannot port it on an April 15^th. You will have port the policy closer to the renewal date.

2. Research well and narrow down your list of health insurance companies

Research should be top-down. List out the top 7 insurance companies and start preparing a table with your 8-9 items. Then tick or cross the benefits offered by these health insurance companies from your checklist.

Prudent research practices warrant the use of the following techniques.

a) You can visit insurance aggregator websites for preparing your primary list of 7 insurers but visit individual insurance company website to view the benefits, coverage, premiums and other terms & conditions.

b) Read the policy wordings of the policies to understand the offer made by the insurance companies (refer to my post on policy wordings in “The Fine Print”)

c) Check for the waiting periods, capping, co-payments, claim procedure, cancellation procedure & exclusions under the policy.

d) Select the insurance product that meets your requirements

3. Approach the target insurance company and submission of documents

You can approach the target insurance company using the agent, broker or directly (customer service or branch). Please ensure that you approach the insurance company around 45 days prior to the expiry of the policy. (while the decision surrounding whether to port or not is not difficult for the target insurance companies, the collection of the relevant documents and reverts from the other insurance company often takes time)

The documents that need to be submitted at the target insurance company –

a) Completely filled up proposal form – Insurance companies have new forms for portability so make sure that the agent/branch has sent you the right form. Re-confirm this with the customer service or check out the website if you are not sure. Please make sure that no cells are left blank and the declarations made are honest on the basis of the information available with you.

b) Policy schedule of your current policy – While enrolling for a new plan or renewing your existing policy, you would have received a policy schedule that lists the insured members, address, premium, policy name, coverage etc. It is also called a policy document or an insurance bond.

c) Medical questionnaire – Some insurance companies also require prospects to fill out a medical questionnaire that consists of underwriting questions. These are self-declarations on the medical health of the insured person, which helps insurance companies price the risk better.

d) Any other document required by the target insurance company – Some insurers may also require photo identification documents or renewal notices or even a medical test to accept the proposal esp. in case of applicants aged 50 years and above.

Insurance companies will follow their underwriting norms and assess whether they would like to accept or reject your request for portability.

To aid in the faster porting of cases, the IRDA has developed a portal where target and porting insurance companies will update data regarding claims history, policy conditions etc. to help the target insurance company to make a decision. The IRDA guidelines specifies that on receipt of data from the previous insurer, the target insurer will process the proposal further & inform the decision to the customer within working 15 days.

4. Pay the premiums

Only once the target insurer informs the applicant of their acceptance of the case that premiums need to be paid. Upon receipt of the premium, the policy will be issued with continuity benefits (pre-existing, waiting period etc.) & dispatched to the insured member.

More useful information on health portability

1. While porting your existing health insurance to a new insurer, you have the flexibility of upgrading to a higher sum insured. For example – if you have a 2-lac sum insured which you have had for the last 5 years and now want to upgrade to a 5-lac sum insured, then you can. However it is possible that insurer might port only benefits accrued on the 2-lac sum insured and not for the balance 3-lacs (which has to start from zero like a new policy).

For example – lets say you hold a 2-lac health insurance policy for the last 4 years, which means you will get complete transfer of pre-existing diseases years and waiting period years. Now you would like to port this 2-lac policy to a new insurer for a 5-lac policy. Here – the new insurer might in a single policy give –

a) For 2-lacs : give you complete portability of benefits earned and

b) For the balance 3-lacs : you will have to start earning the waiting period and pre-existing diseases years as if it is a new policy.

So, if after 6 months of porting to a new insurer, you make a claim of Rs. 3.5 lacs for a disease which was pre-existing – the new insurer might entertain only Rs. 2 lacs on the basis that you have earned pre-existing benefits for only that amount. I think this is fair to the insurer although it is possible that insurance companies might allow these benefits on the upgraded amount also if policyholders are willing to pay an extra premium (which is also a fair deal)

2. You might have to undergo medicals again. The IRDA has allowed portability but has (and correctly) not meddled with underwriting norms of individual insurance companies. So whether you need to undergo medicals again or not, depends on the target insurance company. You should clarify this with them while you give your application.

3. Portability is applicable in case of individual and family floater policies. Also while porting you can include another family member and convert your policy from an individual to a family floater policy. However the new member shall not get any of the benefits that you have earned (a bit of this has been explained in point 1 above – the same principle applies)

Health insurance portability will, in the months and years to come, play an important role in forcing health insurance companies build better products and improve services. Infact recent data on mobile number portability (MNP) shows that 2.9 crore requests for MNP has already been received by TRAI till Dec 2011 – that’s 5% of total mobile phone connections. And just like mobile operators, we can expect to see insurance companies creating advertising campaigns around health insurance portability.

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