Individuals that have lost their job and are currently receiving health insurance provided by COBRA can typically convert to an individual health insurance policy. This right is provided by the laws that exist for individuals when COBRA coverage ends. Laws for COBRA state that if an employer offers a conversion plan to active employees must make the option available to qualified individuals who are receiving COBRA. However, not all individuals are eligible for a conversion policy.
COBRA regulations provide individuals the right to convert to an individual health insurance policy only when their COBRA coverage period ends. COBRA is available to eligible individual for a period of 18 months. Individuals who are eligible to convert to an individual policy should be given the option before their COBRA coverage period ends.
Individuals in some situations can be ineligible to convert to an individual health insurance policy when receiving COBRA. One situation in which an individual can be ineligible is when COBRA coverage for an individual ends early. COBRA coverage can end early when the premium has not been paid or the group health insurance plan has been canceled by the former employer. Coverage will also end when an individual receives health insurance that is provided by a new employer.
COBRA Notice Requirements.
Individual who are receiving COBRA should receive a notice or be given the option to convert to an individual health insurance policy. COBRA regulations state that an individual should be given the option to convert to an individual health insurance policy during the 180 day period before COBRA coverage ends.
State Notice Requirements
States are permitted by law to have their own conversion notice requirements when group health coverage ends. The state of California requires notification within 15 days after the termination of group coverage. Wisconsin requires a notice be sent within 5 days after the loss of group health insurance coverage.
HIPAA is the Health Insurance Portability and Accounting Act which provides protections from pre-existing exclusion requirements for some individuals when purchasing an individual health insurance policy. HIPAA prevents a health insurer from imposing a pre-existing exclusion when an individual has can continuous coverage under a group health insurance plan, including COBRA. However, is there is a break in coverage of more than 63 days the protections provided by HIPAA are lost.
Employers are not required by federal law to make a conversion health insurance plan available. The same coverage options may not be available with a conversion plan as those available with a former group health insurance plan. Individuals that are receiving COBRA may need to exhaust their coverage before becoming eligible to convert to an individual health insurance policy.