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 three options:
- Convert to an individual policy with the same insurer that provided the Michigan employer group coverage
- Temporarily continue the same group plan under COBRA
- Purchase individual coverage from a health carrier either through the Health Insurance Marketplace or directly from the carrier
Group Conversion Rights
If your Michigan employer-provided group health coverage is not a self-funded health care plan and you were continuously covered under the policy for at least 3 months, you may have the right to convert your group health coverage into individual coverage provided by the group's health carrier. This is called group conversion. Your Michigan employer must give you written notice of your right to the group conversion option and you must apply for group conversion coverage within 30 days of losing the employer group coverage. Your coverage under group conversion may not be the same coverage as the employer group coverage. The group conversion policy must be issued with no pre-existing condition exclusions. Premiums will likely be higher and benefits are likely to be less. However, you can keep the group conversion coverage as long as you pay premiums.
You have the right to convert your Michigan employer group policy to an individual policy with the same health carrier if you have been continuously insured for at least three months in the employer group plan 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, or
- You are a covered family member of a certificate holder who has died, or
- You have reached the age limit for coverage under your parent's group coverage, or
- You divorce or separate from the certificate holder or you cease to be a qualified family member under a group plan.
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 1-866-444-3272 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 following options for continuation of health coverage
- Convert to an individual policy with the same insurer that provided the Michigan employer group coverage, or
- 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.
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 the 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.