Conversion Options for Continuing Your Health Insurance Coverage
Part 4, Chapter 12: Specialized Situations: Extending Coverage through COBRA, the Portability Act, and Conversion Options Page 7
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Conversion Options
Neither COBRA nor the Portability and Accountability Act is likely to be of much value in cases in which an individual has reached the lifetime benefit maximum provided for in a health insurance policy. However, exercising a conversion option -- an option included in some group health insurance plans -- may be of enormous value in such situations. Exercising a conversion option allows an individual to convert from a group plan to an individual policy, thus providing for the possibility of a series of additional benefits.
For example, let's assume that an individual has a serious disease or condition-cancer, AIDS (acquired immune deficiency syndrome), MS (multiple sclerosis), a serious heart problem -- that has resulted in extremely high medical bills over a period of years, and that the individual's group health insurance plan has a lifetime benefit maximum of $250,000. If the individual's total medical expenses are approaching that life time benefit maximum -- for example, if they have reached $225,000 -- the individual may soon reach a point where he will officially continue to be covered by the health insurance plan, but no additional benefits will be available. However, if the group plan allows for conversion to an individual policy, acting on that option may allow for significant additional benefits.
Although the exercise of a conversion option may not represent a policy extension from a technical point of view, since the original policy is still officially available, on a practical basis it may serve the same purpose. The amount of reimbursement available after the conversion to an individual policy takes place depends on the particular policy. In some cases, conversion to an individual policy may provide a wide range of additional benefits. In other cases, both the benefits and the lifetime benefit maximum may be quite limited.
If you have a serious disease or condition and your medical bills are approaching the lifetime benefit maximum under your health insurance plan, check with your insurer or with your employer's benefits representative to determine if a conversion option is available. If such an option is available under the rules of your health insurance plan, check to determine what specific benefits will be available once the conversion from the group plan to an individual policy occurs.
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