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When you leave an employer group, health insurance may get more complicated and more expensive. You will generally have four options: permanent conversion to an individual policy, temporary continuation of the group benefits under COBRA, purchase of an individual policy with Blue Cross Blue Shield of Michigan, or enrollment in an HMO during their open enrollment period.

What are my conversion rights?
What are my continuation of policy rights?
What is the Consolidated Omnibus Budget Reconciliation Act (COBRA)?
Will an illness prevent me from getting new insurance if I change jobs?
What is HIPAA (The Portability Law)?
How does HIPAA apply if I am moving from one group plan to another group plan?
What events trigger a special enrollment period?
Are there different rules if the employer offers HMO group coverage vs. group health coverage offered through BCBSM or a commercial insurer?
What is creditable coverage?
How does HIPAA apply if I am moving from a group plan to an individual plan?
I heard there are different HIPAA laws: One for small groups and a different one for large groups. Is this true?
Does the law require a non-employer group trust to accept my certificate of creditable coverage ?
How long after my coverage ends should a carrier provide me with a certificate of creditable coverage ?
What are my options for group conversion or open enrollment as a HIPAA eligible individual?
I have health coverage through my employer, but I am planning to change jobs. I like my current coverage . Can I Keep It?
I am covered through my employer’s self-funded health care plan. I’ll be leaving that job to stay at home, but I have a pre-existing condition. What are my options?
When I started my new job there was a 90-day waiting period for health coverage . I had a claim on the 91st day. The insurance company denied the claim saying coverage goes into effect the first day of the month following the 90-day period. Is this right?
Can late enrollees be denied coverage ?


What are my conversion rights?
Unless your employer is self-insured, you may have the right to convert your group insurance certificate into individual coverage (called a group conversion policy) provided by the group's insurance company or HMO plan. Your benefits may be changed or the amount of benefit may be reduced for a specific covered service. Premiums may increase. However, you can keep the policy as long as you pay premiums. You have the right to convert your group policy to an individual policy with the same company if you have been continuously insured for at least three months in the group and:

  • You leave the employer, the group policy has been discontinued for all employees or for a specific class of employees, you are involuntarily terminated for reasons other than gross misconduct.
  • You are a covered family member of a certificate holder who has died,
  • You have reached the age limit for coverage under your parent's group coverage or
  • You divorce or separate from the certificate holder.
    You must apply within 30 days of losing group coverage.
    Example: For the past five years you've worked for Joe's Hardware and your family has been insured by Old Reliable Insurance Company or HMO.
  • Within 30 days after leaving the job you apply to Old Reliable for a group conversion policy.
  • The group conversion policy might have fewer benefits and higher premiums than the group policy.
  • Old Reliable must issue the policy regardless of your health.
  • You can keep the group conversion policy as long as you pay premiums.

In Michigan, once you have converted your policy to an individual policy you are no longer a HIPAA eligible individual and will lose protections provided under this Act. Please see section on HIPAA protections.

What are my continuation of policy rights?
You have the right to continue group coverage under COBRA if you lose your current job, if you company employed at least 20 or more people. Please see COBRA benefits section .

Continuation if you are laid off by a Michigan "small" employer, less than 20 employees.

You have the right to a conversion policy with the small employers group insurer or HMO.
You can apply for a policy with Blue Cross Blue Shield of Michigan.
You can apply for coverage with an HMO that services your area during the HMOs open enrollment period.

Continuation if you are laid off by a “large” employer, 20 or more employees.

  • COBRA: you have the right to continue in the group coverage on a temporary basis after you (or your spouse or parent) leave an employer with 20 or more employees.
  • Your former employer must notify you of your COBRA rights within 30 days after you leave the group.
  • Once notified, you have 60 days to apply for continuation of coverage.
  • If you do choose to continue coverage, you are insured from the date group coverage ended, even if you wait until the 59th day to apply.

What is the Consolidated Omnibus Budget Reconciliation Act (COBRA)?
COBRA is a federal law that gives you the right to continue in the group on a temporary basis after you (or your spouse or parent) leave an employer with 20 or more employees.
Employers of 20 or more workers must comply, including self-insured employers.
However, COBRA does NOT apply to plans sponsored by the federal government and some church-related organizations.


Premium
You must pay the full group premium including any part your employer had been paying, plus up to 2 percent for administrative expenses.
 

Duration

COBRA coverage ends after either
• 18 months;
• 29 months if you became eligible for Social Security disability during the first 60 days of COBRA continuation;
• 36 months if you were insured through your spouse's or parent's employer and the spouse or parent has become eligible for Medicare, died, divorced, or separated OR your former employer goes out of business or stops offering a group plan to the employees.
 

Warning! 
COBRA is not this simple! Your employer's personnel office should have a booklet that explains all of the twists and turns. You may also contact the U.S.Department of Labor, Employee Benefits Security Administration at 1-866-444-3272 or on the Internet at
www.dol.gov/ebsa.

Will an illness prevent me from getting new insurance if I change jobs?
The 1997 federal health care reforms limit the right of group plans to discriminate against new employee members based on health. If your new employer offers health coverage, you must be offered the coverage, no matter what your health status.

If the new plan has a waiting period for pre-existing conditions, you will get credit for the time you were covered under your old plan. For example, if the new plan has a 6 month waiting period and you were covered under the old plan for over 6 months, you would not be subject to their waiting period. If you were only insured under your old plan for 3 months, then 3 months of the new plans waiting period would be waived. You will be eligible for the credit as long as you enroll in the new plan by midnight of the 63rd day after you left the old plan.

What is HIPAA (the portability law)?
The Health Insurance Portability and Accountability Act (HIPAA) is a federal law that makes it easier for you to stay insured and covered for pre-existing conditions when you move from one job to another. HIPAA establishes rules that identify HIPAA eligible individuals.

“Portability” may be a confusing term because it sounds as if you can carry a plan from one job to another. However, you do not take your plan or benefits with you. What you carry from your old job is your eligibility to join a health care plan without preexisting condition exclusion waiting periods when you arrive at your new job…if your new employer offers health insurance.

How does HIPAA apply if I am moving from one group plan to another group plan?
HIPAA applies if you are covered by your employer’s health plan and you move to a different employer that offers a health plan. Your new employer’s plan must cover any family member who was covered with the old employer, if that employer’s group plan provides dependent coverage. You cannot be turned down or charged higher premiums because of a family member’s health problems. Your new employer group plan may cost more and provide different coverages.

If the new plan offers dependent coverage, it must have a special enrollment period if you add a dependent because of marriage, birth, adoption or loss of other coverage- any family member may enroll during a special enrollment period with no waiting period for coverage of a pre-existing conditions. If you enroll a child within 31 days of birth or adoption, the group plan must cover all preexisting health conditions, for that child.

What events trigger a special enrollment period?
Special enrollment is required in two situations:

  1. You or your dependent lost other health coverage:
    To get a special enrollment opportunity in this situation, the employee or dependent must earlier have turned down coverage available through the group health plan because he or she had other coverage.

    If the other coverage was COBRA continuation coverage, special enrollment can be requested only after the COBRA coverage is exhausted.

    If the other coverage was not COBRA continuation coverage, the individual can request special enrollment when the other coverage ends because the individual is not longer eligible for it.

    A special enrollment period must also be given if the employer sponsoring the group health plan stops paying its share of the premiums.

     
  2. You get a new dependent through marriage, birth, adoption, or placement for adoption with you.

    If the triggering event is a birth, adoption, or placement for adoption, the child, the employee, and the employee’s spouse are entitled to special enrollment, either individually or in any combination.

Are there different rules if the employer offers HMO group coverage vs. group health coverage offered through BCBSM or a commercial insurer?
The only difference is the way in which the preexisting condition waiting period rules are concerned. No small employer insurance company can require waiting periods for preexisting conditions. BCBSM and HMOs may not require preexisting condition exclusion waiting periods for any size group. Commercial insurance companies may require a preexisting condition exclusion waiting period of no more than 6 months for large groups.

What is creditable coverage?
The concept of creditable coverage is that individuals should be given credit for previous health coverage when moving from one employer group health plan to another, from an employer group health plan to an individual policy, or from certain kinds of individual coverage to an employer group health plan.

Most health coverage is creditable coverage, including prior coverage under a group health plan (including a governmental or church plan), health coverage (either group or individual), Medicare, Medicaid, a military-sponsored health care program such as TRICARE, a program of the Indian Health Service, a State high risk pool, the Federal Employees Health Benefit Program, a public health plan, and a health benefit plan provided for Peace Corps members.

How does HIPAA apply if I am moving from a group plan to an individual plan?
When leaving group insurance for an individual plan it will help to know if you are a “HIPAA eligible individual”

If you qualify as a HIPAA eligible individual and are a resident of Michigan and apply for individual coverage with Blue Cross Blue Shield of Michigan, you cannot be turned down for coverage regardless of your health. If you have creditable coverage from the prior group policy, the number of months you had that coverage will be used to eliminate the pre-existing condition exclusion waiting period. For more information about Blue Cross Blue Shield of Michigan, please reference that section.

In Michigan, you can apply for coverage through any commercial health insurance carrier for individual coverage. However, they can underwrite your application and refuse coverage based on your health conditions. If they do choose to accept you as an insured, they can only exclude any pre-existing condition for up to 12 months.

HEALTH INSURANCE PORTABILITY AND ACCOUNTABILITY ACT (HIPAA). YOU CAN ACCESS MORE INFORMATION ABOUT HIPAA BY ACCESSING THE CENTER FOR MEDICARE AND MEDICAID SERVICES AT WWW.HHS.CMS.GOV.

I heard there are different HIPAA laws: One for small groups and a different one for large groups. Is this true?
No. The federal law, HIPAA, applies to all group health policies - small employer, large employer and non-employer related groups. It also applies to self-funded health care plans and individual policies sold by Blue Cross Blue Shield of Michigan. Michigan law has at least the same requirements as HIPAA, except for self-funded health care plans,which are not subject to state law. There are some cases when Michigan law is more restrictive than the federal law. When this happens, Michigan law governs.

Does the law require a non-employer group trust to accept my certificate of creditable coverage?
No. A trust does not have to credit previous coverage against pre-existing exclusions. However, the law requires a group trust to issue you a certificate of creditable coverage when you leave the trust plan.

How long after my coverage ends should a carrier provide me with a certificate of creditable coverage?
HIPAA provides that you receive a certificate automatically when coverage ends. Your old employer or insurer must issue the certificate within a "reasonable" period. In addition, upon your written request within 24 months after coverage ends, you must be issued a certificate whether or not you already received an "automatic" certificate.

What are my options for group conversion or open enrollment as a HIPAA eligible individual?
In Michigan you must be offered a conversion to an individual policy issued by the same company that issues your employer’s group policy. The group conversion policy must be issued with no pre-existing condition exclusions and cover all members of the family covered under the group plan.

If you do not choose to purchase a group conversion policy, you can apply for an individual policy with Blue Cross Blue Shield of Michigan. Blue Cross cannot turn you down for health reasons or institute a pre-existing condition exclusion waiting period, if you are a Michigan resident, and if you have prior creditable coverage. If COBRA coverage was available to you, you must have exhausted all COBRA benefits.

You can also apply to an HMO that services your area during their open enrollment period. They can not turn you down during their open enrollment period, unless they have too many members for their service area, and if you have more than six months of creditable coverage they can not institute a pre-existing condition exclusion.

I have health coverage through my employer, but I am planning to change jobs. I like my current coverage. Can I keep it?
No. HIPAA does not allow you to carry coverage from one job to the next. The law also does not require your new employer to offer health insurance. If the new employer does offer health coverage it does not have to match your old plan. HIPAA does allow you to give evidence that you had previous coverage. Your new employer must credit you for the previous coverage, if no more than 63 days have expired since your prior coverage terminated. This reduces any pre-existing condition exclusion waiting period in the new employer's health plan for both you and your dependents.

I am covered through my employer’s self-funded health care plan. I’ll be leaving that job to stay at home, but I have a pre-existing condition. What are my options?
If you are a Michigan resident, you can apply for individual coverage through Blue Cross Blue Shield of Michigan or apply to an HMO during their open enrollment period. You must first exhaust any continuation of benefit options (COBRA).

When I started my new job there was a 90-day waiting period for health coverage. I had a claim on the 91st day. The insurance company denied the claim, saying coverage goes into effect the first day of the month following the 90-day period. Is this right?
If you work for a small employer (from 2-50 employees), and coverage is provided by an insurance company, the law allows a service waiting period of not more than 90 days, at the employer's option. However, if the enrollment cycle creates an additional period of time before the person can be enrolled and the policy actually goes into effect, the claim may be denied because the individual cannot be enrolled until the formal enrollment process can take place.

Can late enrollees be denied coverage?
No, they cannot be denied. However, a traditional insurance company or an HMO may delay coverage for a late enrollee for as long as 90 days.


 
 

 

  

 

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