Portability In Health Insurance: Details, Process, Benefits, Pros & Cons

Post-Covid, as we start to get ourselves adjusted to the new norms of life, there are many things that we now appreciate and value a little more. Our health is one of them. And while it may not always be possible to avert a visit to the hospital, having the cover of the best possible health insurance plan can make a lot of difference. There is a need to ensure that health insurance coverage is adequate to cover the expense pattern in current times. 

The industry overview:

The insurance penetration has risen from 3.76% in FY20 to 4.2% in FY21, according to the Swiss Re sigma world insurance report, where insurance penetration is calculated as a percentage of the total GDP of the country. In March 2021 itself, the health insurance industry in India, triggered by Covid-19 hospitalisation, grew by 41% (Source: IBEF). The standalone health insurance industry is growing at a quick rate of 35% (Source: Firstpost) per annum. So, people have understood the importance of having a health insurance plan and also opting for higher coverage now.

Health insurance policies enable us to afford medical treatments without undue out-of-pocket expenses. The rate of cost escalation of medical expenses is the highest. Historically, medical expenses have grown at a rate much higher than that of inflation, and the pandemic has proved this to us beyond measure. In such a scenario, do you feel your insurance policy is not really adequate or do you wish to switch your health plan? Well, worry not. You have the option to port your insurance plan. Read on to know all about health insurance portability.

How to increase your health insurance coverage?

If you have already availed of health insurance and then find out that there are other plans which are being offered at a lower premium quote, then it only makes sense to switch out from your current commitment to health insurance which offers the same benefits at a lower premium. This article discusses the importance of health insurance and how you can port your health insurance policy easily.

Reasons behind health insurance portability

If you are confused about whether or not you wish to go ahead with a new company, you can go through the following pointers. Ask yourselves these questions, and you’ll surely have your doubts cleared:

• Are you happy with your insurance provider?
  Do you feel other insurance plans are offering better coverage at a much lesser premium? Do you see that despite paying a good premium, you are not getting enough benefits?
  
• Do you feel your plan coverage is not enough?
  With the onset of the pandemic and the increasing need for healthcare, do you feel you do not have sufficient coverage for yourself and your family? Are you concerned that in case of a medical emergency, the current plan will not be very helpful? Then it is time for you to port.
  
• Do you wish to avail better customer service?
  If you feel that even years after having the insurance policy, you still do not get very efficient and proactive services from your insurer, maybe it is time for you to make the switch.

Health insurance portability rules

While the possibility of porting of health insurance sure looks luring, there are certain insurance portability rules laid down by the IRDAI that you must bear in mind:

• Similar policies
  As a policyholder, you are allowed to port similar kinds of policies only. There can not be any drastic changes in the coverage.
  
• Similar insurers
  It is also important that you switch to a similar insurance company in terms of the insurance that is provided. For example, switching from a life insurance company to a general insurance company may not be possible.
  
• Gap in Insurance
  There must not be any renewal gaps when you want to port your insurance policy. If your policy has lapsed, the new insurer will not accept your portability request.
  
• No Fee
  As per the health insurance portability rules laid down by the IRDA, there is no fee that is charged for the portability.
  
• Changes in premium
  The premium you pay towards your insurance depends on several factors. Therefore, at the time of medical insurance portability, there is a possibility that you have to pay a higher/ different amount of premium, even if the policy terms remain the same.
  
• Notifying the insurer
  At least 45 days before the date of renewal, make sure that you inform your current health insurance company about your plan to port the policy. Also, this notification has to be in writing.
  Note: Once you have informed your existing insurer about the portability, the company has to acknowledge the same within 3 working days.
  
• Grace period
  When you have an insurance policy, you are given a grace period of mostly 30 days, which starts from the date of expiry of the policy. In this period you need to renew your policy once this period is over, or else your policy will be terminated. You can port till the time your policy is valid.
  
• Sum insured
  Depending on the policies of the new insurance company, you can opt for a higher sum insured and thus a higher coverage.
  
• Waiting period
  When porting, there are specified rules to the waiting period. In case you are opting for more coverage, you may have to serve the required waiting period, if applicable. 

Benefits of porting of health insurance plan

If you are unhappy with your current health insurance plan, you can easily port the same to another competitor who offers better services or charges less premium for the same benefits. The key benefits of porting health insurance are 

• Customise your healthcare plan
  During the porting of health insurance,  you have the option to customise the health plan as per your changing insurance and healthcare needs.
  
• Carry forward your previous benefits
  You not only get the desired services or pay a lower premium but also save on the accumulated benefits. Accumulated benefits include coverage of pre-existing diseases and no waiting period.
  
• No more wait
  The Insurance Regulatory and Development Authority (IRDAI) mandated that all past accumulated benefits will continue under the new plan that the individual switches into without any waiting period.
  Note: The waiting period is only applicable to the additional coverage and not for the existing amount.
  
• Make use of the competition:
  With more and more health insurance companies entering the market, you, as a customer, can benefit from the competitive rates that are being offered. Porting to a new health plan can help you get more coverage that too at lesser premiums.
• Allowing porting of family floater plans
  The Insurance regulator allowed porting of individual and family floater health insurance policies in the year 2011. Here again, insurers are required to allow the credit gained by the policyholder for pre-existing diseases concerning the waiting period. Note: If any member has been added, then the waiting period would be applicable to that member only.

Documents required for the portability of a health insurance policy

While some of the health insurance portability rules may be slightly different from insurer to insurer, the basics remain more or less the same. Make sure you get in touch with your existing and new insurers so that you have all the required documents handy. The following documents may be asked from you:

• Proof of identity
• Proof of address
• IDRA Portability Form
• Existing Policy papers
• History of previous claims, if made
• Medical history papers

Rejection of health insurance portability requests:

While IRDAI allows you as a customer to port your health insurance policy, there are still certain grounds on the basis of which your health insurance portability request may be rejected. Take a look: 

• If your medical condition is not as per the requirements of the new policy, the request may be rejected
• If you have distorted or have not disclosed it, the new insurance company can reject your application
• Your age plays a significant role in the acceptance or rejection of your portability request. After the age of 70 years, it may be a little difficult to port.

Things to consider before porting a health insurance policy

At the time of porting, remember the following things: 

• You must inform the current insurer about your decision to port at least 45 days before the expiry date of the policy. After the policy expires, you won’t be allowed to port.
• When sharing information with the new insurer, make sure you tell them about your medical history and the claims that you have made previously.
• Make sure you understand the terms and conditions of the new health insurance plan that you are opting for. Different insurance companies can have different features for similar plans also.

Nuances of porting

The IRDAI regime specifies that the porting would only apply to the carry-forward benefits of time-bound exclusions and no-claim bonus. This means that the waiting period credit related to pre-existing conditions would be applicable, provided there is continuity.

However, the features of your existing policy cannot be ported. The features of the new policy would be applicable. Thus, the porting is allowed only to the extent of the current sum assured, inclusive of the no-claim bonus.

For example, if your current medical insurance has a sum insured of INR 5 Lakhs (inclusive of no-claim bonus), but you would like to opt for a top-up cover of another INR 10 Lakhs with a deductible of INR 5 lakhs, the porting benefits will be applicable only for the initial amount of INR 5 lakhs. The additional coverage of INR 10 lakhs cannot avail of the benefits or credits accumulated, and the waiting period would be applicable here. This essentially means that the applicant has to undergo the waiting period and other related procedures (pre-policy medical test, etc.) to avail of the cover.

Process to port your policy
Below is the step-by-step process of porting your health insurance policy –

• Notify your current health insurer at least 45 days before the expiry of your current health plan – the notification should not happen before 60 days
• Mention the new insurer with whom you intend to switch your policy
• Fill portability form with all details of the policyholder (individual) / holders (family floater plan) and that of the existing health insurance plan. This could be done via the health insurance portability online facility as well.
• A proposal form should be filled out to facilitate the new insurer to underwrite your policy based on their criteria.
• Submit the necessary documents as requested by the new insurer, including your existing health insurance policy document
• Portability applications are required to be acknowledged within 3 working days.
• The new insurer has to notify his decision regarding your application within 15 days of submission, especially if he intends to reject your proposal. This will provide you with enough time to renew your existing policy.
• A 30-day grace period is allowed if the porting is under process with the new insurer. If the new insurer fails to respond within the time limit stipulated as per the insurance regulator, the insurer will be duty-bound to accept your policy and insure you.

Porting from group health insurance or family floater to an individual health cover 

If you wish to port from group health insurance or from a family floater to an individual health cover, you would first need to discuss the same with your insurer. You may be asked to undergo a health check-up. Make sure you understand all the terms and conditions of the new plan that you would be porting to, especially about:

• Coverage
• Sum insured
• Waiting period
• Premium amount 

Cons of health insurance portability

While porting to a health insurance plan that offers better coverage is surely a good idea, you must keep in mind the following pointers:

1. Health insurance porting is possible only at the time of renewal
2. The changes to your ongoing plan may be limited. You may not be allowed to make too many variations.
3. In case the new insurer has a longer waiting period for a specific illness, you will have to serve it
4. You may have to pay a higher premium in case you are opting for higher coverage.

Conclusion

Remember to check the nuances, such as waiting periods, exclusions, co-payments, etc., of your new plan. Although premium is a very important point to consider, you need to also look at the incurred current ratio (ICR) of the new insurance provider, an ideal ratio is between 70% – 90%. You will have to look out for any exclusion clause or waiting period imposed by the new insurer to ensure that you do not run into obstacles while filing for a claim.

You no longer have to be stuck with a health insurance plan that does not match your requirements. It is time to port!

DISCLAIMER

This article is issued in the general public interest and is for educational purposes only. The blogs should not be used as a substitute for competent expert advice from a licensed professional to best suit your needs. Insurance is a subject matter of solicitation. For more details on policy terms, conditions, exclusions, limitations, please refer/read policy brochure before concluding sale.