What is health insurance portability?
Health Insurance Portability allows you to shift from one health insurance provider to another, without having to lose any of the benefits that your current health insurer provides.
What are the reasons for its introduction into the system?
The main reason why the Insurance Regulatory and Development Authority (IRDA) decided to allow health insurance portability is to improve service and delivery in the insurance industry. Insurance Regulatory and Development Authority in its new regulation claims “Persons shifting from one region to other regions are many times put to disadvantage due to lack of insurers’ office providing necessary policy servicing at the new location. Further, employees shifting from one organization to another organization many times lose health insurance cover due to lack of portability of the health insurance policies. It is essential to protect the policyholders against discontinuity and consequential loss of Pre Existing Diseases (PED) cover by making the health insurance plans portable across the insurance companies.” The portability feature will allow the policyholder to shift from one insurer to the other without the fear of losing the cover of PED
What are its enhanced features?
Health Insurance Portability is going to be implemented from 1st July 2011. The most important feature is its portability, the feature that will allow switching to other companies without incurring losses. This will be beneficial for people who are not satisfied with their health policies or the services being provided. It will also be helpful:
- For people with pre-existing illnesses.
- For those who are eligible for bonuses and are compelled to continue with their existing policy providers due to the fear of losing benefits.
- For someone moving to another city or state, where their present policy provider company does not work.
The main features of portability are:
1. The credit from the waiting period already completed can be carried forward to the new insurer.
2. When you switch from one insurer to another, the new insurer will provide some cover, at least up to the cumulated sum assured in the old insurance policy
3. The timelines for requesting for portability is available in the IRDA (Protection of Policyholders’ Interests) Regulations and guidelines.
What are the benefits from the consumer view point – in terms of convenience, features and other aspects?
Portability helps to carry forward the waiting period of pre-existing diseases to the new plan. For instance, let us assume that the new policy covers a pre-existing disease only after three years but you have been in possession of another policy for two years. In such a case, portability will ensure that you have to wait just one year for the claim while earlier you would have to wait for another three.
There is a waiting period of 30 days when a new policy is bought and diseases incurred in those 30 days are not covered. Under the new Insurance Regulatory and Development Authority policy, the waiting period will be waived off.
What does one need to watch out for?
The following are some of the conditions for which you should consider switching your policy:
- Maximum renewability age: Certain policies do not let you renew them after you reach a certain age. In that case it is better to change to a policy with the maximum possible renewable age.
- Exclusions: There are certain exclusions in each policy and if the same is covered under some other policy then you should switch.
Insurers are still not clear about a few things with regard to portability. It is difficult to transfer credits from some specific policies to another like from a benefit policy to an indemnity policy.
Another point which is being discussed is that it will also be difficult to transfer credits from group insurance policies to individual policies.
What is the impact of this new intro by IRDA on the overall industry?
This reform is expected to bring about a positive change in the insurance industry as a whole. The industry players have welcomed this development. Health Insurance Portability will bring about a higher level of competition within the health insurers in order to retain the existing customers. This will ensure there is constant innovation and improvement in the efficiency standards and services.