How group health coverage works is covered in the national Group Health Insurance guide: master policies and certificates, eligibility, contributory plans, coordination of benefits, and federal COBRA and HIPAA rules. Kentucky adds its own state continuation and conversion rights (KRS 304.18-110, 304.18-114). It also has rules for discontinued and replaced group policies and a definition of blanket coverage.

State continuation (KRS 304.18-110)

Eligibility. A member whose group coverage ends may continue it if they were covered for at least three months. The member gives notice and pays the group rate within 31 days after receiving notice of the right.

Duration. Continuation ends at the earliest of:

• 18 months after coverage would otherwise have ended
• failure to pay premium
• termination of the group policy without replacement within 31 days

Divorce. When coverage ends because of a divorce, continuation is available to the former spouse and the children awarded to that spouse's custody.

No right to continue for someone who is or could be covered by Medicare or by another group plan.

Conversion (KRS 304.18-114)

• A terminated member covered for at least three months may buy an individual conversion policy without evidence of insurability.
• The written application and premium are due within 31 days after notice of the conversion right.
• Conversion need not be offered to someone who is or could be covered by Medicare, has other group or similar individual coverage, or would be overinsured.
• If a group policy is cancelled, the insurer notifies each member of the conversion right within 15 business days after the grace period ends (304.17A-245(3)).

When group coverage ends or changes hands

Extension of benefits (304.18-126). If a group major medical policy is discontinued while a member is hospitalized, benefits for that confinement continue until the earliest of:

• discharge
• exhaustion of the maximum benefit
• at least 12 months

Replacement of a group policy (304.18-127). When one insurer's group plan replaces another's, the new insurer credits deductible expenses incurred under the old plan during the prior 90 days.

Blanket health insurance (304.18-060)

Blanket coverage insures a changing group without naming individuals. One example is a policy issued to a school or college covering its students, teachers or employees.

Related Kentucky rules

• Group plans covering dependents must offer coverage of unmarried dependent children to age 25, either for all children or as age 19 plus full-time students to 25 (304.17A-256). Federal law separately requires dependent coverage to 26.
• Health benefit plans have a 30-day grace period and need 30 days' written notice of cancellation by first-class mail (304.17A-243, -245). Details are in the Kentucky Medical Plans guide.

Common exam traps

• State continuation requires three months of prior coverage and lasts up to 18 months at the group rate.
• The election and payment deadline is 31 days.
• Medicare eligibility or other group coverage blocks continuation and conversion.
• A former spouse after a divorce may continue coverage, along with the children in that spouse's custody.
• Members get notice of conversion within 15 business days after a group policy is cancelled.
• A succeeding insurer credits the prior 90 days of deductible expenses.
• A hospital confinement is extended for at least 12 months after a major medical policy is discontinued, unless the patient is discharged or the maximum benefit is used up first.