Tata Consultancy Services' (TCS) plan to lay off over 12,000 employees globally has sent shockwaves across not only the IT community but also people employed in other companies and sectors, particularly the ones that face artificial intelligence or AI-led disruption.
One of the key benefits that employees stand to lose when they are laid off, resign or retire is the employer-sponsored group health insurance cover, which is a source of great comfort for those with elderly parents. Group health covers typically lapse once you exit your organisation.
To be sure, employers over the years have scaled down parental coverage, restricting the protection to the employee, spouse and kids. So if your workplace does offer this kind of coverage, it is an added advantage that goes beyond on-paper monetary value.
This is because securing a health cover for senior citizens is always a tough task. Besides prohibitive premiums and insurers' reluctance to issue policies given their advanced age and health parameters, the waiting period for pre-existing illnesses—which can extend to up to three years—is also a challenge while buying a new policy.
So if you’ve been relying solely on your employer’s group health insurance to provide cover for your parents, it’s important to make enquiries and ascertain whether you can port to the insurer's retail policy before parting ways. And if your current employer extends the protection to your parents, it's best to take it along when you switch jobs.
Porting versus fresh personal policies
You also have the option of buying a separate, independent cover before exiting the organisation. However, this is not as simple as it sounds. Even if you secure a new policy, pre-existing illnesses won’t be covered during the initial waiting period, which can last up to three years. Additionally, some surgeries—like cataract or hernia procedures—are subject to a separate one-year waiting period.
While you can explore buying a fresh policy, you should also explore an alternative alongside—migrating from the group policy to an individual plan with the same insurer, if your employer and the insurer are willing to facilitate this switch. As per the latest Insurance and Regulatory Authority of India guidelines, insurers are required to offer policyholders the option to switch from a group indemnity policy to an individual cover, maintaining the same sum insured and benefits.
Also read: TCS layoffs: How emergency fund, insurance coverage and robust financial plan can cushion the blow
“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 IRDAI rules on migration.
The key advantage here is the carrying forward of pre-existing diseases' waiting period credit. The period for which the employee was continuously covered under the group policy with the same insurer will be subtracted from the waiting period of the individual cover. That means if the insurer has provided the group cover for two years at the time you decide to switch jobs, you or your parents will have to wait for only one year more for the declared pre-existing diseases to be covered, in the case of a three-year waiting period.
Insurers' call
Accepting or rejecting the proposal, however, is at the insurer's discretion. They can ask you to go through medical check-ups and quote a premium based on their risk assessment of your health.
As soon as you decide to move on, check with your human resources team about the procedure to migrate from your employer’s group policy to a retail product (individual or family floater).
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 is best to initiate the process well in advance, as the cover will cease to exist once you are off your company's rolls.
To start with, you will have to submit your resignation letter and a note from your HR department certifying your period of employment. This apart, the insurer could seek other documents and health records, depending on its underwriting policy.
Also read: Exiting your organisation? Check if you can convert your group health cover into a personal plan
Check the fine print
Clarify the waiting period criterion with the insurer before switching. This is because employers do not stick to the same insurer throughout and can change every year. Likewise, scan the policy wordings to understand room rent, sub-limit and co-pay clauses.
You may not get access to all the features of your group policy. The insurer could offer you a retail plan closest to your group cover in terms of benefits. So, do not assume that the new retail policy will come with all the benefits offered by your group cover.
Finally, note that you cannot choose your insurer at the time of migration—you can only port to your existing group insurance company’s retail plan. Later, however, you can exercise your choice of porting to another insurer.
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