What Happens to Employee Health Insurance When an Employee Leaves?

One of the most-asked questions during exit interviews is what happens to the health insurance. The rules in India are defined under IRDAI portability provisions and standard group policy terms. Here's the full picture.

When Cover Ends

For most Indian group health insurance plans, cover ends in one of these ways:

• Last working day. Most common — cover ends on the date the employee officially exits the company.
• End of notice period. Some plans cover the full notice period regardless of whether the employee actively works.
• End of policy year. A few plans (rare) cover the leaving employee until the next renewal, particularly for senior leadership.
• End of grace period. Some plans extend cover by 30 to 60 days post-exit as a grace period before formal termination.

Plan terms vary, so HR should confirm the specific rule in the company's group policy wording.

What Happens to Active Hospitalisation

If an employee is admitted to hospital while still employed and discharged after the exit date:

• Cashless treatment that started before the exit date typically continues through discharge
• Hospitalisation that started after exit is not covered, even if for the same condition
• Pre-authorisation issued before exit remains valid through completion

For pre-planned hospitalisations close to an exit date, employees should clarify timing with HR and the TPA in advance.

Portability to an Individual Policy

Under IRDAI portability rules, an employee leaving a group plan has the right to port the cover to an individual policy. Key rules:

• Right to port. Available to all members of a group plan including dependants.
• Application deadline. Port request must be submitted at least 45 days before the group cover ends.
• Same insurer continuity. Portability is to an individual policy with the same insurer; the employee retains accumulated waiting period and moratorium credits.
• Different insurer portability. An employee can also port to a different insurer; the new insurer must honour the accumulated waiting periods, subject to IRDAI's portability framework.
• Premium. Individual policy premium is calculated based on the new applicant's age and policy terms, not the group rate.
• Underwriting. The new insurer may underwrite the application; pre-existing conditions are subject to disclosure rules.

The Moratorium Credit

Under the IRDAI Insurance Products Regulations, 2024, the moratorium period in health insurance was reduced from 96 months (8 years) to 60 months (5 years). When an employee ports their cover to an individual policy, the months already served under the group plan count toward the 60-month moratorium. After 60 continuous months across plans, claims cannot be denied on grounds of non-disclosure or misrepresentation except in cases of established fraud.

Dependants After Employee Exit

Spouse, children, and parents covered under the employee's group plan lose cover when the employee exits. Options:

• Port the cover to an individual or family floater policy with the same insurer
• Buy a new retail policy elsewhere (subject to underwriting and waiting periods)
• If the spouse has their own employer-sponsored group cover, dependants can be added under that plan

New Employer's Cover

When an employee joins a new company that offers group cover, the new policy typically kicks in from Day 1 of employment with no underwriting. However:

• Pre-existing diseases are usually covered from Day 1 under group plans, unlike retail
• Continuity of waiting periods from the old policy does not automatically transfer to the new group plan
• The new plan's specific terms (sum insured, sub-limits, network) determine the actual experience

Practical Timeline for Exiting Employees

• 30 to 45 days before exit: Decide whether to port cover; submit port request to insurer if porting
• 2 to 3 weeks before exit: Confirm exit date impact on cover with HR; schedule any pending consultations
• Last working day: Verify final cover end date in writing
• Post-exit: Receive port confirmation or arrange new retail/employer cover

Frequently Asked Questions

Can an employee continue group health insurance after leaving a job?

Not as group cover. Under IRDAI portability rules, the employee can port to an individual policy with the same insurer (or different insurer) with continuity of waiting periods and moratorium credits.

What is the deadline to port cover after an employee resigns?

The port request must be submitted to the insurer at least 45 days before the group cover ends.

Do pre-existing diseases get covered after porting?

Yes, with continuity. Waiting periods already served under the group plan count toward any remaining retail waiting period. The 60-month moratorium under IRDAI 2024 rules also accumulates across plans.