A conversion medical insurance policy is available to individuals when a group health insurance policy ends. A conversion policy comes from the company that provided the employer's group insurance plan. Individuals may need to apply for COBRA coverage first then wait until the end of the coverage period before obtaining a conversion policy. This can vary depending on the regulations from state to state.
Coverage
The coverage provided by a conversion policy has to meet the minimum requirements of the state regulations where the individual lives. Many conversion policies do not offer the same amount of coverage that was previously available from a group health insurance plan.
Pre-Existing Conditions
Most conversion medical insurance policies cannot deny coverage or apply new pre-existing condition requirements. This is the main difference between obtaining a conversion policy and applying for an individual health insurance policy with a new company. If an individual was on a previous group plan but did not complete its exclusion period, he may need to do so before the new policy coverage will start.
Premiums
The premium for a conversion medical insurance policy varies depending on the age of the individual, his health status and the type of coverage. Keep in mind that any premium for a conversion policy is going to cost more than a group policy.
Canceling a Policy
An insurer cannot cancel a conversion policy because the insured becomes sick. Most conversion policies have a provision called guaranteed renewability, which means the policy will always be renewed as long as the individual pays the premiums. The policy can be canceled at any time by the individual if he no longer requires coverage or obtains a new job with insurance.
Notices
Individuals who are currently paying for COBRA coverage should receive a notice about converting to a conversion policy. This should come from the former employer or the COBRA administrator. The notice includes the options available, how election coverage can affect qualified beneficiaries, rights to individual health coverage and how to obtain additional information.
Federal Rules
Employers that provide COBRA coverage have to follow certain rules when making conversion polices available. This includes offering individuals the right to enroll in a conversion medical policy by the end of the COBRA coverage period.
