Group to Individual Plan Conversion
In your situation, the first thing you need to determine is your eligibility for a standard issue individual health plan. If you are in good health, obtaining a separate policy may be your most logical option. May we ask a couple of questions that will help us better advise you? 1) In which state do you reside? 2) Do you have any pre-existing medical conditions, smoking or overweight? 3) Does your employer have a COBRA option? If so, approximately how many employees work for the company? 4) Do you intend on eventually working for another company that will offer health care benefits? If so, approximately how soon? 5 CommentsLeave a comment |
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For the past 18 months I have been covered by my company’s employer-sponsored group health plan. If I voluntarily leave this company and would like to apply for health insurance with the same provider of health insurance only on an individual basis, will this essentially be a continuation of insurance at individual rates or is this a complete separation and re-insure issue? What are the conditions to taking this step?
This depends on a few different factors, but most importantly, your current health status. Also, the state in which you reside will have an influence on the options available to you. Some states have regulations that require group health insurers to offer a conversion option to any person leaving the group health plan. A conversion option is where the insurance company takes your group coverage and converts it to an individual health plan. However, the individual policy they offer may not be identical to your current coverage. There may be a reduction in benefits. Since conversion plans are guaranteed issue, they are usually much more expensive than a standard issue individual health plan that requires a medical review. In fact, conversion plans are usually more expensive than your COBRA option, so they are rarely exercised.
Per the above questions:
1) I reside in Iowa
2) Light smoker, but a smoker recently quit. High blood pressure recently detected and on light medication.
3) Present company has a COBRA option. Approximately 60 employees.
4) I am presently retired from another company and working full time with present company. I may work for another company, but I don’t know if it will be a full time arrangement.
Thank you for your time in this matter.
Comment by Steve — December 6, 2006 @ 6:37 am
Based on your response, it does not appear that you would considered “uninsurable” under an individual health insurance policy. You will pay a higher premium because of the smoking, but the premium should still be less than that of a conversion plan. Iowa law requires that insurance companies “guarantee issue” standardized policies to any resident that has 12 months of prior coverage. However, they are permitted to place elimination riders on these plans. This means that they may exclude coverage for pre-existing medical conditions.
Based on the size of your current employer, they are subject to federal COBRA regulations. This means that you are eligible to remain on the group health plan for up to 18 months. Once you leave your job, you will have 60 days to accept your COBRA coverage. This gives you time to consider other options. During this 60 day period, you will remain insured under the group plan and will not be required to make your premium payment until the end of that 60 days. If you decide to accept your COBRA option, you will need to pay the premium back to the date when your COBRA option started.
This allows you time to compare other options. So, we suggest that when you leave your current employment, do not decline your COBRA coverage. Use the 60 days to look at all of your other options, including standard issue individual health insurance and the standardized plans offered under guaranteed issue coverage. If you find an alternative better than your COBRA option, that COBRA option will automatically expire at the end of the 60 days and you will not be liable for paying the back premiums. It is likely that your COBRA option may provide you with the best coverage at the lowest rate. Once your COBRA expires, you will be eligible for guaranteed issue coverage through the standardized plans offered through the individual health insurance companies in Iowa.
Hope that helps. Please let us know if any part of this is confusing or requires further explanation.
Comment by admin — December 6, 2006 @ 7:03 am
Dear sirs,
Thank you so much for all of your advice and time/timeliness in this matter. It is obviously of great importance to me at this point.
I have two additional questions (for now) as I contemplate my future options:
1) My current group plan is a family plan covering both myself and my wife (no dependents). I believe that COBRA allows both to be covered under the group plan for the 18 month period. Is this correct?
2)Would there be any advantage to declaring in advance my intentions of a voluntary separation from my current company’s employment to my companies current group healthcare insurance provider regarding continuing coverage under the “guarantee issue” law and/or individual policy coverage for myself and my spouse or is the 60 days period you have period you have described most appropriate?
Comment by Steve — December 6, 2006 @ 9:58 am
Yes, you are correct. Any dependent that you have insured under your group plan has the same COBRA rights as yourself. They are what is called a “qualified beneficiary.” Now, this is assuming that your company is indeed bound by federal COBRA laws. There are companies that are exempt, such as some church organizations and non-profits. Here is a link to the U.S. Department of Labor website that has some very helpful COBRA Law questions and answers.
In repsonse to your other question, you could most certainly contact your current health insurance carrier and explore your options with them prior to giving notice to your employer. They should be able to tell you about the guaranteed issue options available to you under a conversion plan. They might also be able to give you a better idea if you would be eligible for a standard issue individual health plan, but this typically requires some medical underwriting and review, which isn’t done until you submit an application for standard issue coverage. And, while you have them on the phone, see if they can confirm that your group health plan is subject to federal COBRA regulations and not exempt for some unknown reason. Your insurance company should keep any conversations they have with you completely confidential. They have no obligation to inform your employer that you are considering resignation.
Comment by admin — December 6, 2006 @ 10:36 am
I am in the opposite situation, I want to go from individual health insurance to a group health insurance. I want to know if I would be covered immediately for pregnancy or not? I am currently on an individual health plan, but I do not have maternity coverage because I chose not to pay extra for it. My husband will start a new job in a few months and I will be covered on his group health which have maternity coverage. My question is: Will there be any waiting period before the insurance company will cover? Can I get pregnant or will there be a waiting period before the maternity benefits can be received? If I added maternity coverage to my individual plan, I know that I would have to wait for 9 months, so I really hope that it is different with this group health insurance.
Comment by Wendy — June 14, 2009 @ 6:39 am