How health insurance portability would be useful

By Deepak Yohannan
June 28, 2011

(The views expressed in this column are the author’s own and do not represent those of Reuters)

Health insurance is a financial tool that protects you and your family from the burden of unexpected medical expenditure. 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.

Mrs Kapur, 40, 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 to a new insurer. However, she realised by doing so she would lose the cover on her pre-existing disease 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 this problem, IRDA has set guidelines to implement health insurance portability from July 1. This is a provision to switch over to a new insurance 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.

KEY BENEFITS

Waiting period carried forward
Health Insurance policies follow a waiting period in the initial policy years, during which time PED is not covered. This waiting period could be for 2 to 3 years, depending on the disease. Suppose you shift to a new insurer after 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.

WHEN SHOULD ONE OPT FOR HEALTH INSURANCE PORTABILITY

Dissatisfaction
If dissatisfied with the insurer’s service, one could move on 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 job
Different employers provide health insurance through different providers. During times of job change, portability could be an ideal solution to prevent loss of insurance cover.

Exceeding policy renewal age
Some policies restrict the age at which renewal is possible. One could opt to move to another insurer who could renew policies at a 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 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 IRDA guidelines, the following points need more clarity before implementation in July.

a) The status of continuity benefits like free medical check ups and no claim bonuses in the new policy

b) No clarity on how portability would take place between indemnity policies and benefit policies. Indemnity policies offer cover for hospitalisation expenses whereas benefit policies provide a lump sum amount for a pre-specified disease or condition. Also, there is no clarity if such portability is possible between life and non-life insurance companies

c) 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 a bit of homework.

a) Be clear of your motive. Shift for genuine reasons such as dissatisfaction, change in job or increase in premium, etc

b) 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

c) 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.

( Write to the author at deepak@myinsuranceclub.com )

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