For employees, group health insurance offers many benefits. It is often also an incentive to stay with an employer. But what happens when you retire from your job? Does your corporate mediclaim policy continue to cover you? This post attempts to provide some clarity on this question.
Insurance options for the retired
If you are retiring, continuing with an existing group medical insurance coverage can be extremely beneficial since getting a fresh policy might be a costly affair. Many insurers might offer only limited coverage to the elderly. As people grow older, the risk of pre-existing and lifestyle ailments increases. This makes it daunting and expensive to get individual health insurance coverage.
This is good because retirees may find it difficult to buy insurance on their own. In some cases, retirees get together and form a group, so they can buy group health coverage from insurers post-retirement. This requires retirees to organise themselves into an association or trust, but it is worth doing just for the insurance benefits.
Continuity of Insurance
Nowadays, some companies let their employees continue their group health insurance policies even after retirement. This cover is typically restricted to a few years after retirement and is meant to give the individuals time to make their own insurance arrangements. If you do not have personal insurance when you retire, this is the time to evaluate options and buy. The most important option to consider is porting from a group insurance policy to individual insurance with the same insurer.
Porting from group to individual insurance
You have the option to port your corporate health insurance policy to an individual one. This allows you to switch insurance policies without losing the benefits earned. However, you can only port with the same insurer. After a year of coverage with the same insurer, you can switch to a new insurance provider. You should initiate the porting process 45 days before the renewal date of your policy. If not, the insurer can refuse your transfer request.
Similarly, if your group health insurance policy also covers your family members, you can migrate them to an individual or family floater policy.
Contrary to individual health policies, group plans rarely have waiting periods. This means all ailments are covered from Day 1. However, individual health insurance policies have a waiting period for various ailments. When moving from corporate health insurance to an individual medical insurance policy, you are porting the benefit of the years of continuous coverage. Let’s assume you have had group health insurance coverage for two continuous years. You now decide to port to an individual health cover that has a waiting period of four years for pre-existing ailments. Your waiting period would be only two years since you have already had two years with the group health cover.
You should know that the insurer has the right to assess your health and decide if they want to give you individual health insurance. This is explained below.
What to look out for?
An insurance company’s acceptance of a proposal for a new health insurance policy is subject to the underwriting process and the company’s guidelines. When you port from a group policy to an individual one, the insurer may underwrite you as a new customer. What this means is that diseases contracted during the policy term could be termed pre-existing ailments. This means that you might have to endure the full waiting period that an individual policy stipulates. However, each insurer has its own process for dealing with such developments. Thus, it is important that you don’t depend on just this porting feature to get personal insurance. Ideally, you should buy personal insurance well in advance of your retirement.
Case study: Porting group insurance
After working as a mechanical engineer with MJS Engineering for four years, Rajiv decided to join another company as a senior mechanical engineer. MJS Engineering offered its employees corporate health insurance with good features. However, the new company did not offer group health insurance. So, Rajiv decided to convert the group insurance policy from MJS Engineering into an individual health insurance policy.
He approached MJS Engineering’s group insurer who readily agreed to convert the group policy into an individual health insurance plan. As Rajiv had been covered under the group health insurance policy for four continuous years, the insurer also waived off the waiting period for pre-existing ailments in the individual cover.
Coverage during the notice period
If you are not retiring but resigning from your job, then your company will discontinue your group health coverage. The main thing to check is if you are covered during the notice period. The time beginning from your submission of resignation till your last working day in the firm is your notice period. This tenure can range from one month to three months. If you don’t have health insurance during this period, it means you would have to bear all medical expenses. So, check with your HR department to understand if they will cover you during your notice period. The protocol is that you will be insured as long as you are an employee of the company, i.e., until your last working day. You are eligible to port your insurance from group to individual cover even if you resign, so do reach out to your insurer to discuss that.
