South Carolina Life and Health Practice Exam

If Tim, covered under a group plan, wants to switch to an individual policy after employment termination, what is the change called?

1. Reinstatement

2. Conversion

3. Continuation

4. Cancellation

The correct answer is: Conversion

When an individual who is covered under a group health plan decides to switch to an individual policy after their employment has ended, this process is referred to as conversion. This allows the individual to maintain health insurance coverage without having to prove insurability, which is beneficial since they may have pre-existing conditions. The conversion option is significant because group plans often provide coverage that includes certain benefits and protections that might not be available or may be more difficult to obtain in the individual market. Therefore, this mechanism ensures a smoother transition between group and individual health insurance, protecting the insured from losing coverage entirely due to a change in employment status. This process typically follows specific regulations that govern how individuals can convert their group insurance to an individual policy, often having time limits within which the conversion must be requested. The term encompasses both the right to obtain an individual policy and the procedures involved in making that transition from a group to an individual plan.