Sometimes, people leaving group health plans sold by an insurance company have "conversion" privileges. That means when group coverage ends (for example, if you leave your job, get divorced from an insured worker, or if your employer stops offering health benefits), you have the right to buy a non-group health insurance policy from your former group insurer.
Many states require conversion rights to be included in group health insurance contracts. Some states establish conversion rights for individual health insurance contracts as well (for example, in case of divorce or when a dependent child reaches adulthood.).
What benefits will be included in a conversion policy?
Often conversion policies will not cover the same benefits that your former group health plan covered. In addition, conversion policies are usually much more expensive. However, in a few states there are rules establishing minimum benefits that conversion policies must cover (for example, most or all of the benefits that were covered under the prior policy) and maximum rates that can be charged. Absent such state rules, however, conversion policies tend to have somewhat limited benefits and are very expensive.
Contact your state insurance commissioner's office for additional information on conversion coverage laws in your state. Contact information for state insurance department is available is at: http://www.naic.org/state_web_map.htm.
Eligibility for conversion coverage
Eligibility for a conversion policy means you cannot be turned down for the coverage. Conversion policies also will not impose new pre-existing condition exclusion periods. In some states, there are also rules establishing minimum benefits that conversion policies must cover (for example, most or all of the benefits that were covered under the prior policy) and maximum rates that can be charged. Absent such state rules, however, conversion policies tend to have somewhat limited benefits and are very expensive.
Additionally, if you are eligible for both a continuation policy and COBRA continuation coverage, you will need to weigh your options carefully. Electing conversion coverage instead of COBRA will disqualify you from being eligible for a federal law (HIPAA) that guarantees health insurance coverage without a pre-existing condition period once your COBRA policy expires. Find out more about the HIPAA law.
This information was drawn from "Health Insurance Resource Manual" prepared for the American Diabetes Association by Georgetown University’s Health Policy Institute, ©2003, Georgetown University. All rights reserved.
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