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A Service of OnQue Technologies, Inc. |
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California's New Conversion Policy Requirements
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January 27, 2003
Santa Rosa,
CA |
In our COBRA Tip of
January 10, 2003, we explained how the recently passed California Assembly Bill
1401 extends continuation coverage benefits under Cal-COBRA. Here is a
follow-up to that earlier Tip, explaining how the provisions of this new law
and its companion, Assembly Bill 424, affect individual conversion
coverage.
When do the conversion coverage terms of A.B.
1401 become effective?
The provisions of A.B. 1401 that relate to
individual conversion coverage become operative on September 1, 2003. They
apply to every group policy entered into, amended, or renewed on or after
September 1, 2003 that provides hospital, medical or surgical expense benefits
for employees and other members of the group plan. The law does not apply to
self-insured plans, or specialized plans such as dental or vision, but does
include full service plans that contract with such specialized
plans.
NOTE: Plans entered into, amended or renewed
before September 1, 2003 are subject to the law governing conversion policies
as it existed before being amended by A.B. 1401.
Is conversion coverage
required in California?
Yes. California requires that insured plans make
available to employees who become ineligible for group health plan benefits
access to individual conversion policies without limits due to pre-existing
conditions. (The law does not apply to self-funded plans.) California Health
& Safety Code section 1373.6 defines conversion coverage as "health
insurance benefits providing hospital, surgical, major medical, or
comprehensive medical coverage issued to an individual under a converted
policy." These benefits do not include vision-only and dental-only plans,
Medicare supplement insurance and other specified
insurance.
Who is entitled to conversion
coverage?
When coverage under an insured group health plan
terminates, covered employees and members must be entitled to convert to
nongroup membership, without evidence of insurability. For purposes of this
law, group coverage is considered terminated when any continuation coverage
benefits expire.
How is conversion coverage
obtained?
Under A.B. 1401, written applications for
conversion coverage and payment of the first premium must be made no later than
63 days after termination from the group health plan, unless this requirement
is waived in writing by the plan. Eligibility is lost if these terms are not
complied with. (Termination of group coverage occurs when all rights to
continuation coverage under the group plan are
exhausted.)
What are employers' obligations under the new
law?
If written application and the first premium
payment for the conversion contract is made not later than 63 days after
termination from the group (unless this requirement is waived in writing by the
plan), insurers must offer conversion policies. Such policies become effective
on the day following the termination of coverage under the group plan. Although
notification of the availability of the conversion coverage must be included in
each evidence of coverage provided by the insurer, it is the sole
responsibility of the employer to notify its employees of the availability,
terms and conditions of individual conversion coverage. Employers satisfy this
responsibility by providing accurate notification within 15 days of termination
of group coverage.
Click here for the complete text of A.B. 1401:
A.B. 1401
Click here for the complete text of A.B. 424:
A.B. 424
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This information is provided by
OnQue Technologies, Inc. for educational purposes only and does not constitute
legal advice. If legal advice or other professional assistance is required, the
services of a competent professional should be sought.
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