What is Health Insurance Portability?

by Vinaya HS on September 6, 2016

in Finance

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In October 2011, health insurance companies provided a new feature to their customers. Users were allowed to port their health covers in case they were unsatisfied with the current service providers. Although the portability was considered to be simple, a policyholder cannot port as per his wish.

The Insurance Regulatory and Development Authority (IRDA) provide the right of accepting the portability to the service providers. This means that if the insurance company providing critical illness plan and mediclaim plans finds an application for portability unacceptable, it reserves the right to decline the request.

To avoid rejection, here are five important things an individual must know before making a portability request

1. What is health insurance portability?

Health insurance portability allows policyholders to switch from their current insurer to another service provider. During the portability, the policyholders do not lose the continuity benefits related to pre-existing conditions. The terms related to waiting period and other time-bound exclusions remain the same after porting the health plan. The portability is subject to the policyholders receiving the same coverage as offered by the previous insurer.

2. Who can apply for portability?

Holders of indemnity health policies issued by registered general or non-life insurers are allowed to port their plans. Furthermore, only similar policies (basic to basic reimbursement or top-up to top-up) are portable. If a person is covered under a group insurance plan, he first needs to migrate to an individual policy from the same insurance provider. After a period of one year from the date of such migration, he may port the individual health insurance plan to another service provider.

3. Is it recommended to port current health insurance?

The main reason for policyholders to port their insurance is the poor quality of services. Several users are dissatisfied with varying reimbursement limits, age limitations at the time of renewal, cumbersome claim settlement procedure, co-payment terms, room rent limits, and other conditions. Increasing awareness among the users has enabled them to gain an improved understanding of health insurance.

Policyholders have to undergo medical tests while applying for portability. The new insurer may reject the portability request if the underwriting norms are not met. Furthermore, individuals may lose their no-claim bonus resulting in higher sum insured when the policy is ported. This is because the new insurer considers the cumulative amount as the basic sum insured, which may entail a higher premium. Major variations between inclusions and exclusions among the two service providers may also result in rejection.

4. When should one consider porting health policies?

Most experts advise porting the health insurance policies at the time of renewal. A majority of the insurance service providers recommend applying for portability 45 days before the date of renewing the policy. This is because existing insurer is required to provide certain details within a specific period of time. Moreover, the new service provider must communicate the decision on the portability request within 15 days of receiving the application.

5. Does age and health history matter when it comes to health insurance portability?

Purchasing a health policy when a person is young and healthy is easy because of the low-risk profile. The insurers are hesitant to offer health cover to elders because the possibility of them falling sick is much higher. Applicants over a certain age need to undergo medical tests. If a person has contracted some medical conditions after acquiring the original policy, the new insurer may reject the application for portability due to the higher risk. Any adverse medical history reduces the possibility of being covered under new plans.

If a person is considering porting the health plan, it is important to initiate the process early. Being honest careful while filling the application form is advisable to avoid rejection. Moreover, portability is not guaranteed; therefore, users are advised to fully comprehend the implications.

About HDFC Health

HDFC Health is an initiative by HDFC Life, a life insurance company in India to help increase awareness, spread knowledge and enshroud myths surrounding the health insurance sector in India. As a wholly owned subsidiary of HDFC Life, HDFC Health Insurance and other mediclaim plans in India cover individual, family floater, critical illness and cancer care insurance plans.

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