COBRA Health Insurance Conversion Plans
- COBRA lets you keep your existing employer-provided health insurance for 18 months. (You pay the entire cost, including your employer's contribution.) By law, you have 60 days to sign up for COBRA. For more on COBRA, see References below.
If you have what would otherwise be a pre-existing medical condition (cardiac problems, for example) that your group policy covered, COBRA will cover it as well. Keeping your coverage for a pre-existing condition offers the best reason to pay the price of COBRA. - When your COBRA benefits expire, you may be able to "convert" your group health insurance into an individual policy that the insurance industry calls a "conversion" plan.
Some, but not all, group plans contain such a conversion option. When there is one, your ex-employer's insurer will offer to sell you individual coverage. Talk to your company's human resources department to find out if your group insurance contains a conversion option. Talk to the insurer to get rates and coverage benefits. - Because the states regulate all insurance sold within their borders, rules vary from state to state. However, many states have increased the length of time you may keep COBRA coverage (with their own mini-COBRA plans), and many require that group policies contain conversion options. Contact your state's insurance commissioner's office for more information.
- The advantage to you of the conversion option is that, as you have (or had) coverage from that company, you don't have to be "underwritten" to prove your insurability. If your group insurance covered your pre-existing condition, your conversion policy will cover it as well.
Underwriting is "insurance-speak" for a thorough background investigation with emphasis on your medical history. Companies can refuse to sell you a policy or can charge you more based on the results of underwriting so it's good to be able to avoid it. - The term "conversion" is a bit of a misnomer because the health care benefits provided by a conversion policy may (almost certainly will) differ from those of your group policy. Typically, the benefits will be fewer, and their cost will be greater. Keep in mind, however, that you don't have to buy a conversion policy, even if you or a family member does suffer from a pre-existing medical condition. Your "best practice" will be to compare the cost and benefits provided by other individual policies with those of the conversion policy before you make a buying decision.
If you don't have a conversion policy, of course, you will have to look at individual plans exclusively.
