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Published in Moneycontrol
Apart from loss of income and trauma, one of the biggest side-effects of losing a job is the loss of health insurance benefits. The going has been tough for many salaried employees across sectors owing to the novel Coronavirus Disease-induced (COVID-19) nationwide lockdown. Many corporates have handed out pay cuts, or worse, the dreaded pink slips citing bleak business prospects.
To cushion the impact of the blow for their employees, some organisations like Zomato, Swiggy and Ola have decided to continue covering such employees under their group health insurance plan until December.
However, not all organisations extend such health insurance schemes, which employees value primarily because of parental coverage and hassle-free claim settlement.
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Loss of office health cover hits us the hardest if our parents depend on it. It is not easy to buy a fresh independent health cover for our senior citizen parents at that age. They are seen as high-risk individuals due to their age and likely pre-existing ailments like diabetes and hypertension, among others.
Even if they manage to obtain individual policies, the premiums are bound to be steep and policies are likely to come with restrictions like co-pay, where the policyholders share a specified percentage of the claim before the insurer steps in.
Moreover, any fresh policy will come with a waiting period for pre-existing diseases– when claims will not be paid – of up to four years, besides specifying waiting periods for certain surgeries like cataract and hernia.
Group covers, depending on the employers’ approach, extend cover to parents apart from the employee, her spouse and kids. More importantly, pre-existing diseases are covered from day one – a huge source of comfort the employee’s family.
However, an employee ceases to be part of the group cover once her ties with the organisation are severed. This can cause immense anxiety at a time when COVID-19 pandemic has led to an unprecedented health crisis in the country, with senior citizens, especially those with co-morbidities, amongst the worst affected. This apart, the pandemic has resulted in increased awareness of the importance of health insurance for people across age-groups.
A switch from group cover to individual
There could be a way out. As soon as you are informed about the impending retrenchment, ask your office or human resources about the procedure to migrate from your employer’s group policy to a retail product (individual or family floater), which is allowed as per insurance regulator IRDAI’s portability guidelines.
This process is generally initiated at the time of switching jobs or retirement. “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 guidelines,” explains Kapil Mehta, Co-founder, Securenow.in, an insurance broking portal.
When you port or migrate to another product, you get to retain the continuity benefits as the accepting insurer will have to take into account your waiting period credit for pre-existing diseases. Assume that you have been working in your company for three years and you now have to leave.
Elsewhere, say, there is a retail health cover- to which you could be ported- that comes with a waiting period of four years. Now, since you have already spent three years with your company- and by virtue, your group office cover- your waiting period in the individual policy stands reduced to just a year, for any pre-existing ailments to be covered. If your employment tenure has been longer than four years, you and your family will be covered from day one. This is called continuity of benefits.
Therefore, this arrangement makes sense even if premiums of the product you are migrating to, are higher than other individual products offered by other insurers. However, the retail policy will be treated as a fresh cover and terms and conditions will be different from the ones in your group cover.
Frequent claims during office tenure might be a dampener for switches
While moving from group to retail, you will have to switch to the existing insurer’s retail product. You do not have the choice of approaching other insurers for this migration. When this policy comes up for renewal, though, you can port to other insurers’ policies.
“While the portability regulations require you to initiate the migration process 45 days prior to renewal (or in case of group covers, date of exit), most insurers can process the proposals quickly,” explains Mahavir Chopra, an independent health insurance expert. Therefore, ensure that you enquire even if you have been asked to leave at a very short notice.
Once you fill up the proposal form, it will go through the insurer’s underwriting process where your health risk will be assessed. You could also be asked to undergo pre-issuance medical check-ups. Based on the overall assessment, the insurance company will share the premium quote with you. Once you give your assent to the premium as well as other terms and conditions and make the payment, your new individual policy will be issued.
“Policy issuance is entirely at the insurer’s discretion. If you or your family members being covered under the policy are deemed to have riskier health parameters, the insurer might not extend the cover,” points out Chopra. This is likely to be the case if your parents are over the age of 55, suffer from pre-existing diseases and you have made multiple claims related to their ailments during your employment period, among other causes.
When not to shift…
Therefore, the insurer could either reject your application or charge prohibitively high premiums. So, while retention of continuity benefits seems like a clincher, your decision has to be based on deeper analysis. “For instance, let’s say you were employed with your organisation for a year when the layoff was announced. If you were to migrate to a policy that has, say, a 4-year waiting period, you and your family will have to wait for three years before pre-existing diseases are eligible for claims. But it may be possible to buy an individual product with just a two-year waiting period in the market. In such cases, the latter could be better, if the premiums are comparatively lower or terms and conditions more favourable,” points out Mehta.
For example, the retail policy that your employer’s insurer offers could insist on a co-pay of 25 percent, while a similar policy, offered by another insurer, could come with a much lower co-pay ratio of 10 percent. Keep an eye on such clauses as these usually do not form part of group insurance contracts. In case of multiple restrictions, a fresh policy from other insurers could be a better bet.