Yesterday, I promised to elucidate [ed-Oooh! A $10 word!] how group conversion plans work. As you may have guessed, there’s not a lot of “there, there” so this will be a brief post.
In Ohio, carriers in the group market must make available a conversion plan for those who lose their jobs and are not eligible to continue their coverage under either COBRA or state continuation rules. The idea is that someone with a serious pre-existing condition may find it difficult or impossible to obtain (adequate) coverage in the individual market.
As you may recall, HIPAA is rather a one-way street; that is, group plans must (generally) recognize coverage from individual plans, but the reverse is not true. Individual plans can limit or exclude coverage for pre-ex, or even decline to insure one who is seriously ill. The conversion rule requires that the carrier offer some plan, one that doesn’t exclude pre-ex. But these plans are notoriously bad deals for those who can qualify for a regular policy. It’s true that the conversion plan can’t exclude a pre-exiting condition, but the benefits in such policies are quite stingy. There is usually a high deductible, no office visit co-pays or drug cards, and other limitations. And they are VERY expensive.
But not all carriers choose to do these conversions in-house. Many out-source this product to other carriers. Recently, I had occasion to do two conversions for folks who didn’t qualify under COBRA or state continuation. Interestingly, the carrier sent me to another insurer, which uses HIPAA plans (perfectly legit). This has the effect of moderating the premiums, offers a choice of two plans (instead of just one), and has a few “bells and whistles” built in (network discounts and an rx card). They’re still pricey (my sister calls this “spendey”), but they don’t seem to be as bad as the traditional conversion plans.
Have a great weekend, and a Happy Easter!