Continuation and Conversion

Both state and federal law give certain individuals who would otherwise lose their group health care coverage under an employer or association plan, the right to continue their coverage for a period of time. The two laws are similar in some ways, but also have provisions that are very different. Most employers that have 20 or more employees comply with the federal law, while most group health insurance policies that provide coverage to Wisconsin residents must comply with the state law. When both laws apply to the group coverage, it is the opinion of the OCI that where the federal and state laws differ, the law most favorable to the insured should apply.

The state law also gives conversion rights to certain individuals who are covered under individual health insurance policies.

Federal Law (COBRA)

The Consolidated Omnibus Budget Reconciliation Act (COBRA) is a federal law that allows most employees, spouses, and their dependents who lose their health coverage under an employer's group health plan to continue coverage, at their own expense, for a period of time. This law applies to both insured health plans and self-funded employer-sponsored plans in the private sector and those plans sponsored by state and local governments. However, COBRA does not apply to certain church plans, plans covering less than 20 employees, and plans covering federal employees.

Under the federal law, employees who terminate employment for any reason other than gross misconduct, or who lose their eligibility for group coverage because of a reduction in work hours, and the covered spouses and dependents of the employees may continue the group coverage for up to 18 months. A spouse and dependents may continue coverage for up to 36 months if they lose coverage due to the death of the employee, divorce from the employee, loss of dependent status due to age, or due to the employee's eligibility for Medicare. If within the first 60 days of COBRA coverage an individual or dependent is determined to be disabled by Social Security, the disabled individual and other covered family members may continue coverage for up to 29 months.

Wisconsin Law (s. 632.897, Wis. Stat.)

Wisconsin's continuation law applies to most group health insurance policies that provide hospital or medical coverage to Wisconsin residents. The law applies to group policies issued to employers of any size. The law does not apply to employer self-funded health plans, or policies that cover only specified diseases or accidental injuries.

For questions about COBRA, contact:

U.S. Department of Labor - Regional Office
Employee Benefits Security Administration (EBSA)
230 S. Dearborn St., Suite 2160
Chicago, IL 60604
(312) 353-0900
http://www.dol.gov/dol/topic/health-plans/cobra.htm

For more information on continuation and conversion, call the OCI at 1-800-236-8517 and request a copy of Fact Sheet on Continuation and Conversion in Health Insurance Policies that describes both state and federal law. A copy is also available on OCI's Web site at http://oci.wi.gov/pub_list/pi-023.htm.