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
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
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
- You divorce or
separate from the certificate holder.
You must apply within 30 days of losing group
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
- 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
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
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.
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
Employers of 20 or more workers must comply, including
However, COBRA does NOT apply to plans sponsored by the
federal government and some church-related
You must pay the full group premium including any part
your employer had been paying, plus up to 2 percent for
COBRA coverage ends after either
• 18 months;
• 29 months if you became eligible for Social Security
disability during the first 60 days of COBRA
• 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
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
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
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
Special enrollment is required in two situations:
- You or your dependent lost other health
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
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.
- 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
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
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
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
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
HEALTH INSURANCE PORTABILITY AND ACCOUNTABILITY ACT (HIPAA).
YOU CAN ACCESS MORE INFORMATION ABOUT HIPAA BY ACCESSING
THE CENTER FOR MEDICARE AND MEDICAID SERVICES AT
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
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
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
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.