All you need to know about Health Insurance Portability

Not satisfied with your existing health insurance plan? Do you find the premium too high? You know about another health plan which is cheaper or offers better coverage. But you fear you will have to serve waiting period for pre-existing illnesses all over again if you migrate to a new plan.

Well, you don’t have to worry. You can port your health plan to a different insurer and still get credit for waiting periods served under the existing plan. That’s health insurance portability for you.

Are there any rules for health insurance portability? What is the process of porting health insurance plan from one insurer to another? Do you get the benefit of serving waiting period in your existing policy? What if the new insurer declines to issue policy? What are your rights as an insured? How much discretion does the insurance company enjoy? What are the aspects you must consider before porting to another insurer?  In this post, I shall try to answer such questions.

The rules for Health Insurance Portability have been laid out in IRDA Health Insurance Regulations, 2013. Before we delve into details, let’s first understand what portability means.

What does Health Insurance Portability mean?

Under portability, you can migrate from your existing health insurance plan to a different plan from another insurer (or the same insurer) without losing continuity benefits.  This means you shall get the credit for any waiting period (pre-existing illnesses or any time bound exclusions) served under the existing health insurance plan.

When can I apply for porting my Health Insurance Policy?

This is as per IRDA Health Insurance Regulations, 2013.  You can also refer to Page 89 of the regulations.

1. If you want to port your health insurance plan to a different insurer, you must apply to the New Insurer at least 45 days before the renewal date of your existing plan.
2. The New Insurer is not liable to offer portability benefits if you do not approach the New Insurer at least 45 days before the renewal date. This is a slightly strange rule but that’s the way it is. The New Insurer can still offer portability benefits but is not liable to do so.
3. You can port the policy only at the time of renewal of the existing policy. So, you cannot switch plan midway into the policy year. Remember, you have to apply earlier.

To be on the safe side, approach the new insurer at least 2 months before renewal date. Then, complete the process as suggested by the insurer.

How do I apply for Health Insurance Portability?

1. You must fill the portability form along with the proposal form and submit to the New Insurer. Along with the form, you may be required to provide existing policy details, medical records etc to the New Insurer. Please note this must be done at least 45 days before the renewal date.
2. On the receipt of portability form, the New Insurance company contacts the Existing health insurance company. This has to be done through web portal of IRDA. There is no timeline defined for this step by IRDA.
3. The Existing insurance company shall furnish data to the New Insurer within 7 days of receipt of such request from the New Insurer.
4. After receiving such information, the New Insurer underwrites the policy and conveys its decision to you i.e. whether it can issue the plan and the required premium. Please understand the New Insurer can decline to issue the policy. This can happen for many reasons including an existing illness.
5. However, if the New Insurer does not communicate to you its decision within 15 days from receiving information from the Existing Insurer, it CAN NOT reject (or decline) your proposal and shall have to accept the proposal.

So, be aware of your rights and the timelines associated with each step.

There is a standard format for Portability form as specified under IRDA Health Insurance Regulations, 2013. You can find the details on Page 92 of the Regulations. To apply for portability, you can download the form from website of the New Insurer.

To get an idea of details sought in portability form, you can visit this link on the Apollo Munich Health Insurance website.

The process is quite simple if you want to migrate to a new plan with the Existing Insurer. There is no requirement of 45 days for migrating to a new plan with same insurer. There is no need of exchange of information as you are with the same insurance company. It can be as simple as calling customer care (to change the plan) and paying the premium. Talk to your insurance company for exact details.

In this post, I shall focus on cases when you are porting to a New Insurer.

Additional Rules

1. The New Insurer cannot levy any additional charges exclusively for porting the policy.
2. The New Insurer cannot pay any commission to any intermediary for accepting the ported policy.

Which Health Insurance policies can be ported?

1. All individual health insurance plans and family floater plans can be ported.
2. You can also port your group health insurance plan to an individual or family floater plan to the SAME insurer. This clause is useful to those who are covered under group health insurance plan provided by their employer. In such a case, you can port from group policy of the insurer to another policy with the same insurer. Once you have ported your group plan to a personal plan (individual or family floater) with the same insurer, you can port to another insurer after one year.

What about the waiting period for the Pre-existing diseases served under the existing plan?

You get the credit for the period already served. Consider the following examples.

1. You have disease X. The waiting period for the illness under the existing plan is 4 years. You have already served 2 years i.e. you have been insured under the existing plan for 2 years. The waiting period for disease X in the new plan is 3 years. You need to serve waiting period of 1 year under the new plan i.e. treatment for disease X shall be covered after 1 year under the new plan.
2. You have disease X. The waiting period for the illness under the existing plan is 4 years. You have already served 2 years. The waiting period for disease X in the new plan is 2 years. You do not need to serve any waiting period under the new plan. This means you are covered for disease X from day 1 under the new plan.
3. You have disease X. The waiting period for the illness under the existing plan is 2 years. You have been covered under the existing plan for 3 years. The waiting period for disease X in the new plan is 4 years. You need to serve waiting period of 1 year under the new plan before the disease gets covered.
4. Group health insurance plans typically do not have any waiting period. Hence, while porting from group health insurance plan to a personal plan, you get the benefit for number of years of continuous coverage. For instance, you have been covered under the group plan for 3 years. You decide to switch to a personal plan from the same insurer. The waiting period for pre-existing illnesses under the new plan is 4 years. You will have to serve just 1 year of waiting period under the new plan.

Can the New Insurer decline the insurance proposal?

Yes, it can. The New Insurer underwrites the fresh policy. If the underwriting rules do not allow the insurer to take the risk, your request to port the policy can be declined.

This is quite possible if you have a life threatening ailment say cancer or had a heart attack in the past. In fact, any ailment that increases your chances of getting hospitalized can impact your chances.

Please understand it does not matter if you did not have illnesses at the time of inception of your EXISTING policy. You may have acquired these illnesses after the inception of EXISTING policy.

However, for the New Insurer, a ported policy is a new policy. It will assess its risk just as it would if you were taking the policy for the first time. If the insurance company feels its risk of payout is too high, it can reject your proposal.

Additionally, the New Insurer can also load your premium based on your existing health condition.

This is an interesting point.  Your Existing Insurer cannot increase the premium based on claim experience. Claims based loading is not allowed as per IRDA Health Insurance Regulations, 2013. However, the New Insurer will price the policy based on your existing health condition (and not your condition at the time of inception of existing plan).

Hence, if you are planning to port to a new insurer in search of a lower premium, you can be in for a surprise. This is especially true if you got diagnosed with a serious illness while your EXISTING policy was in force.

What if I want to enhance cover at the time of porting health insurance plan?

Yes, you can. However, the portability benefits (waiting period) shall apply only to the existing Sum Insured (and not the enhanced Sum Insured). Let’s consider an example.

You have disease X. The Sum Insured under the existing plan is Rs 6 lacs. You have already served 2 years of waiting period for disease X under the existing plan. You port to a new plan from another insurer, which has a waiting period of 2 years for disease X. You also get the health cover enhanced to Rs 10 lacs.

For the Sum Insured under the existing plan (Rs 6 lacs), there shall be no waiting period. However, for the enhanced portion of Rs 4 lacs, you will have to serve another 2 years. Therefore, if you get hospitalized for treatment of disease X within two years of porting the policy and run a bill of Rs 8 lacs, the New Insurer will pay only Rs 6 lacs.

On the other hand, if you get treated for disease X two years after porting the policy, the New Insurer will cover up to Rs 10 lacs.

Please note Existing Sum Insured includes accumulated bonuses too. For instance, original Sum Insured under the Existing plan was Rs 5 lacs. However, you got some bonus Sum Insured (say Rs 1.5 lacs) due to no-claims during policy years or timely renewal. For matters pertaining to portability, Existing Sum Insured shall be Rs 6.5 lacs.

Additional point to note is that your existing insurer doesn’t charge additional premium for accumulated bonuses i.e. you pay premium for Rs 5 lacs while enjoying coverage for Rs 6.5 lacs. However, when you port the policy, the New Insurer will charge you premium for Rs 6.5 lacs (and not Rs 5 lacs). So, essentially, the benefit of accumulated bonuses is lost while porting policies.

New Insurer rejected my proposal. Can I go back to my existing Insurer?

Yes, you can. In fact that’s why you need to apply for porting at least 45 days before the expiry of Existing policy.

So, in case the New Insurer does not accept your proposal, you can renew your health plan with the Existing Insurer. Even though you have applied for portability, your Existing Insurer cannot decline to renew the policy.

What if New Insurer has not yet made the decision on the date of renewal of Existing Plan?

Delays happen. The Existing Insurer can be slow in providing information. The New Insurer can be tardy in processing information. There can be delay at your end too. Hence, it may so happen that the New Insurer has still not made its decision by the date of renewal. What do you do then?

In such cases, you can extend your existing plan for a short period (at least one month). You need to pay only pro-rata premium (premium for only that duration). The Existing Insurer cannot decline this request.  Moreover, the Existing Insurer cannot cancel your policy till such time New Insurer issues the policy or you give the request to cancel in writing. But yes, you must have paid pro-rata premium.

Subsequently, if for any reason, you choose to continue with the Existing Insurer (and not port to the New Insurer), you can pay the regular premium and the Existing Insurer is bound to renew the policy.

PersonalFinancePlan Take

Porting a health insurance is equivalent to purchase of a new health insurance plan with no waiting period clause (or relaxed waiting period clause).  And for a new plan, the insurance company has the right to reject your application or increase (load) your premium based on your existing health condition.

So, portability is not exactly transferring your existing plan to a New Insurer. As we have seen, there are many caveats.

From what I have seen, porting is easier for healthier individuals. If you are young, do not have any serious illnesses or have not made too many claims in the past under your existing policy, the porting should be relatively easier. For others, porting may not be so easy and the New Insurer can reject the proposal.

No two Health Insurance plans are likely to be exactly similar. So, two policies can be different based on sub-limits, coverage, waiting periods, co-payment clause etc. Hence, do assess if the new policy meets your requirements and think about porting subsequently. As discussed before, you will lose out on accumulated bonuses if you switch to New Insurer.

Health insurance portability is certainly beneficial for policyholders. IRDA has done a good job. It certainly increases the pressure on insurers to serve you better. However, if you look at details, not everyone will be able to enjoy benefits of portability. Insurance companies can still pick and choose.

Image Credit: Pictures of Money, 2014. The original image and information about usage rights can be downloaded from Flickr.