Exiting your organisation? Check if you can convert your group health cover into a personal plan

Migrating from group to personal health insurance at the time of switching jobs will mean shorter waiting periods for pre-existing illnesses

Obtaining a health cover for elderly parents is always a tough task for a working professional. Besides steep premiums, waiting period for pre-existing illnesses, which can extend to up to three years, is also a hurdle while buying a new policy.

You need to be mindful of this challenge, particularly, if you been relying on your employer’s group health insurance policy to cover your parents, and also in between decide to switch jobs. Group covers cease to exist once you quit your current organisation.

If your future employer also offers parental coverage, you need not be concerned. However, several organisations restrict family floater coverage to employee, spouse and children. According to a Prudent Insurance Brokers’ report, 57 percent of employers offer parental coverage, while the rest do not.

In such cases, you will have to buy a personal policy for your parents before you exit your current organisation. Even if you manage to obtain a fresh policy, no claims will be paid during the waiting period for pre-existing illnesses. To make matters worse, there will a one-year waiting period for certain surgeries such as cataract and hernia.

However, there is another option that you can consider, provided your employer and group health insurer are willing to facilitate the process: migrating to the insurer’s individual health policy.

“General insurers and health insurers offering indemnity-based [regular, cashless and reimbursement] health insurance policy, except personal accident and travel policies, shall provide an option of migration to an alternative health insurance product to the extent of the sum insured and the benefits available in the previous policy. The insurer may underwrite the proposal in case of migration, if the insured is not continuously covered for 36 months,” says the new Insurance Regulatory and Development Authority (IRDAI) rules on migration.

Group covers, depending on the employers’ approach, extend cover to parents apart from the employee, his spouse and children. More importantly, pre-existing diseases are covered from day one. This facility is a huge source of comfort for the employee’s family.

“Portability is an important engagement tool today. Employers as a part of communication strategy to employees have started to build this product as one of the key elements. There is proper communication to all employees and for interested employees there is a pre-defined process,” says Surinder Bhagat, Vice-president, Special Lines – Employee Benefits, Prudent Insurance Brokers.

Also read: New IRDAI rules: Shorter wait for pre-existing illnesses, no disputes after five years of policy coverage

The key advantage is the carry forward of pre-existing diseases' waiting period credit.  If the insurer has provided the group cover for two years and that is when you decide to switch jobs, you or your parents will have to wait for only one more year for the declared pre-existing diseases to be covered.

“The primary benefit is a reduction in the waiting period that would be applied under the individual retail plan. The duration for which the employee was continuously covered under the group plan with the same insurer is subtracted from the waiting period of the individual plan,” says Bhagat.

The caveat is that accepting or rejecting the proposal is up to the insurer. “The detailed guidelines on the procedure to make the switch do not find a mention in the new regulations. The earlier rules were more detailed. Implementation is a grey area open for interpretation. But it depends on the insurance company, which can give employees an option to migrate,” says Hari Radhakrishnan, Regional Director, First Policy Insurance Brokers. Likewise, they can ask you to go through medical check-ups and quote a premium based on their risk assessment of your health. Bhagat says that many cases do get rejected after an evaluation process.

Also read: Why an individual health cover along with corporate health policy is more beneficial

As soon as you decide to move on, enquire with your human resources team about the procedure to migrate from your employer’s group policy to a retail product (individual or family floater). “The cause of separation from the group is not important to insurers. Group to retail conversion is available to employees who are leaving the organisation, subject to the insurer's underwriting [risk evaluation] guidelines,” explains Kapil Mehta, Co-founder, Securenow.in, an insurance broking portal.

Earlier regulations required policyholders to initiate this process at least 45 days prior to their date of exit. While the new regulations do not specify such time period, it's best to initiate the process well in advance, as the cover will cease to exist once you are off your company's rolls.

To kickstart the process, you will need to submit your resignation letter and a note from your HR certifying your period of employment. This apart, the insurer could call for other documents and health records, depending on its underwriting policy.

Enquire with the insurer about waiting period credit before switching. This is because employers do not stick to the same insurer throughout and can change every year.

Also, you may not get access to all the features of your group policy. “An employee has to understand that the new plan features will align with those of the retail individual plan available and not with corporate plan.  The room rent, sub limits and co-payment will be as per the retail plan of the new insurance company and employee has to read the sub limits before deciding on portability,” says Bhagat.

Finally, note that you cannot choose your insurer at the time of migration. “Portability can only occur within the same insurer as the group insurer and employee cannot switch to a new insurer for retail plan with continuity benefit. Once the retail plan is bought, the policyholder can port to the retail plans of other insurers in subsequent years,” adds Bhagat.