Switching from One Health Plan to Another

When you are changing jobs, losing your job, leaving a job for other adventures or taking an early retirement, there are many questions you may have about how it will affect your health care coverage. Educating yourself on your rights and options will ensure you make the best decisions for your situation.
If you are losing employer coverage, you will generally have two options:

Consolidated Omnibus Reconciliation Act (COBRA)
COBRA is a federal law that may give you the right to continue employer provided group health coverage on a temporary basis after you, your spouse, or your parent leave an employer with 20 or more employees. Employers of 20 or more workers must comply, including employers who provide coverage through self-funded health care plans. However, COBRA does NOT apply to plans sponsored by the federal government and some church-related organizations.

Your former employer must notify you of your COBRA rights within 30 days after you leave the employer. Once notified, you have 60 days to apply for the COBRA coverage. If you choose to purchase the COBRA coverage, you are insured from the date the employer group coverage ended, even if you wait until the 59th day to apply. You must pay the entire premium, including any part your employer had been paying, plus up to an additional 2 percent for administrative expenses.

You can purchase COBRA coverage for:

  • 18 months, or
  • 29 months if you became eligible for Social Security disability during the first 60 days of COBRA coverage, or
  • 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 if you are a dependent child who has reached the age beyond eligibility.

COBRA is not this simple! Your employer's personnel office should have a booklet that explains all of the details. You may also contact the U.S. Department of Labor, Employee Benefits Security Administration at 866-444-3272 or on the Internet at www.dol.gov/ebsa (http://www.dol.gov/ebsa). More information at: COBRA FAQs

Other Than COBRA Continuation of Coverage
If you lose your employer group coverage and the Michigan employer has fewer than 20 employees, you do not have COBRA rights. However, you do have the option to purchase individual coverage from a health carrier either through the Health Insurance Marketplace or directly from the carrier.

Moving From One Employer Group Plan to Another Employer Group Plan
The federal Health Insurance Portability and Accountability Act (HIPAA) applies if you are covered by your employer’s group health plan and you move to a different employer that also offers health coverage. Your new employer’s group health plan must cover any dependent that was covered under the plan with the old employer, if the new employer’s group plan provides dependent coverage. Your new employer’s group health plan may cost more and provide different coverage. If the new employer health plan offers dependent coverage, it must have a special enrollment period for you to add a dependent because of marriage, birth, adoption or loss of other coverage. Note: group health plans may not include pre-existing condition exclusions under PPACA. This includes grandfathered and transitional plans.

Affiliation Period
If you work for a small employer (from 2-50 employees), and coverage is provided by an insurance company, the law allows an affiliation waiting period of not more than 90 days, at the employer’s option before coverage is effective.

Moving from an Employer Group Plan to an Individual Plan
In Michigan, if you have lost your employer group coverage and still want to maintain health coverage, you can purchase individual coverage from a health carrier either through the Health Insurance Marketplace or directly from a carrier. The Health Insurance Marketplace has an annual open enrollment period; however, loss of employer group coverage outside of open enrollment would qualify you for a special enrollment period of 60 days during which you could purchase coverage in the Marketplace.