COBRA Federal and State Regulations

Title 56, Chapter 7, Sections: 56-7-2312 through 56-7-2322.

56-7-2312. Continuation of terminated group coverage — Conversion. 

(a)  A group policy delivered or issued for delivery in this state that provides hospital, surgical or major medical expense insurance, or any combination of these coverages, on an expense incurred basis, but not a policy that provides benefits for specific diseases or for accidental injuries only, shall provide that an employee or member whose insurance under the group policy has been terminated for any reason, except discontinuance of the group policy in its entirety or with respect to an insured class, and who has been continuously insured under the group policy, and under any group policy providing similar benefits that it replaces, for at least three (3) months immediately prior to termination, shall be entitled to have the coverage nonetheless continued under the group policy for the fractional policy month remaining at termination, plus three (3) additional policy months upon payment in advance to the employer of the full group premium for this continuation of coverage, including any portion of the premium usually paid by the person’s former employer on or before the beginning of each month’s coverage.

(b)  At the end of the period of continuation, the person shall be entitled to have issued to the person by the insurer a policy of health insurance that conforms to the applicable requirements specified in this chapter.

(c)  An employee or member shall not be entitled to have coverage continued if the group policy was terminated in its entirety or was terminated with respect to an insured class of which the employee was a member, but the employee shall have the right of conversion upon termination of the group policy. An employee or member shall not be entitled to have coverage continued or a converted policy issued to the employee if termination of the employee’s insurance under the group policy occurred because:

     (1)  The employee failed to pay any required contribution;

     (2)  The employee is eligible for medicare under Title XVIII of the federal Social Security Act, compiled in 42 U.S.C. § 1395 et seq.; or

     (3)  Any discontinued group coverage was replaced by similar group coverage within thirty-one (31) days.

(d)  (1)  This section shall apply to individuals who are terminated from group coverage because of divorce or because of the death of the insured spouse, except that an individual to whom any of the foregoing applies shall be entitled to have the coverage continued under the group policy for the fractional policy month remaining at termination plus up to fifteen (15) additional policy months upon payment in advance to the employer the full month’s group premium for this continuation of coverage on or before the beginning of each month’s coverage, including any portion of the premium usually paid by the employer. This subsection (d) does not prohibit a group policy from granting a longer period of continued coverage than provided in this subsection (d), nor from offering broader coverage than provided in this subsection (d), nor from granting coverage after the death of the insured spouse as otherwise provided. Individuals whose group coverage is terminated during pregnancy shall be entitled to have their coverage continued under the group policy for the fractional month remaining at termination plus a period of not less than six (6) months after the pregnancy ends and not more than the end of the second three-month period following the three-month period within which the pregnancy ends.

     (2)  Subdivision (d)(1) is applicable to all health benefits policies, plans, programs or contracts offered by commercial insurance companies, nonprofit insurance companies, prepaid plans, including health maintenance organizations, and to all health benefit programs provided state government employees.

[Acts 1980, ch. 537, § 1; 1986, ch. 716, § 1; 1992, ch. 984, § 1; T.C.A., § 56-7-1501; 2008, ch. 935, §§ 1, 2.]

56-7-2313. Converted policy — Conditions. —

Issuance of a converted policy shall be subject to the following conditions:

     (1)  Written application for the converted policy shall be made and the first premium paid to the insurer not later than thirty-one (31) days after the termination under the group policy;

     (2)  The converted policy shall be issued without evidence of insurability;

     (3)  The initial premium for the converted policy for the first twelve (12) months and subsequent renewal premiums shall be determined in accordance with the insurer’s table of premium rates applicable to the age and class of risk of each person to be covered under the converted policy and to the type and amount of insurance provided;

     (4)  The effective date of the converted policy shall be the day following the termination of insurance under the group policy; and

     (5)  The converted policy shall cover the employee or member and the person’s dependents who were covered by the group policy on the date of termination of insurance. At the option of the insurer, a separate converted policy may be issued to cover any dependent.

[Acts 1980, ch. 537, § 1; 1992, ch. 984, § 1; T.C.A., § 56-7-1502.]

56-7-2314. Conditions exempting insurer from conversion requirement. —

The insurer shall not be required to issue a converted policy covering any person if the person is or could be covered by medicare under Title XVIII of the federal Social Security Act, compiled in 42 U.S.C. § 1395 et seq.; furthermore, the insurer shall not be required to issue a converted policy covering any person if:

     (1)  (A)  The person is covered for similar benefits by another hospital, surgical, medical or major medical expense insurance policy or hospital or medical service subscriber contract or medical practice or other prepayment plan or by any other plan or program;

          (B)  The person is eligible for similar benefits, whether or not covered for the benefits, under any arrangement of coverage for individuals in a group, whether on an insured or uninsured basis; or

          (C)  Similar benefits are provided for or are available to the person, pursuant to or in accordance with the requirements of any state or federal law; and

     (2)  The benefit provided under the sources referred to in subdivision (1)(A) for the person or benefits provided or available under the sources referred to in subdivisions (1)(B) and (C) for the person, together with the benefits provided by the converted policy, would result in overinsurance according to the insurer’s standards. The insurer’s standards must bear some reasonable relationship to actual health care costs in the area in which the insured lives at the time of conversion and must be filed with the commissioner prior to their use in denying coverage.

[Acts 1980, ch. 537, § 1; 1992, ch. 984, § 1; T.C.A., § 56-7-1503.]

56-7-2315. Requests for information from insured persons — Grounds for nonrenewal of policy. —

(a)  A converted policy may include a provision whereby the insurer may request information in advance of any premium due date of the policy of any person covered under the policy as to whether:

     (1)  The person is covered for similar benefits by another hospital, surgical, medical or major medical expense insurance policy or hospital or medical service subscriber contract or medical practice or other prepayment plan or by any other plan or program;

     (2)  The person is covered for similar benefits under any arrangement of coverage for individuals in a group, whether on an insured or uninsured basis; or

     (3)  Similar benefits are provided for or available to the person, pursuant to or in accordance with the requirements of any state or federal law.

(b)  The converted policy may provide that the insurer may refuse to renew the policy or the coverage of any person insured under the policy for the following reasons only:

     (1)  Either the benefits provided under the sources referred to in subdivisions (a)(1) and (2) for the person or benefits provided or available under the sources referred to in subdivision (a)(3) for the person, together with the benefits provided by the converted policy, would result in overinsurance according to the insurer’s standards on file with the commissioner, or the converted policyholder fails to provide the requested information;

     (2)  Fraud or material misrepresentation in applying for any benefits under the converted policy;

     (3)  Eligibility of the insured person for coverage under medicare under Title XVIII of the federal Social Security Act, compiled in 42 U.S.C. § 1395 et seq., or under any other state or federal law providing for benefits similar to those provided by the converted policy; or

     (4)  Other reasons approved by the commissioner.

[Acts 1980, ch. 537, § 1; 1992, ch. 984, § 1; T.C.A., § 56-7-1504.]

56-7-2316. Ceiling on converted policy benefits. —

An insurer shall not be required to issue a converted policy that provides benefits in excess of those provided under the group policy from which conversion is made.

[Acts 1980, ch. 537, § 1; 1992, ch. 984, § 1; T.C.A., § 56-7-1505.]

56-7-2317. Preexisting conditions — Converted policy benefits in first policy year limited by group policy benefits. –

The converted policy shall not exclude a preexisting condition not excluded by the group policy. However, the converted policy may provide that any hospital, surgical or medical benefits payable under the policy may be reduced by the amount of the benefits payable under the group policy after the termination of the individual’s insurance under the group policy. The converted policy may also include provisions so that during the first policy year the benefits payable under the converted policy, together with the benefits payable under the group policy, shall not exceed those that would have been payable had the individual’s insurance under the group policy remained in force and effect.

[Acts 1980, ch. 537, § 1; 1992, ch. 984, § 1; T.C.A., § 56-7-1506.]

56-7-2318. Optional coverage. —

(a)  (1)  Subject to the provisions and conditions of §§ 56-7-2312 — 56-7-2317, this section and §§ 56-7-2319 — 56-7-2322, the employee or member shall be entitled to obtain a converted policy providing, at the option of the employee or member, coverage on an expense incurred basis under any one (1) of the plans meeting the following requirements:

          (A)  Plan A:

                (i)  Hospital room and board daily expense benefits in a maximum dollar amount approximately the average semiprivate rate charged in metropolitan areas of this state, for a maximum duration of seventy (70) days;

                (ii)  Miscellaneous hospital expense benefits of a maximum amount of ten (10) times the hospital room and board daily expense benefits; and

                (iii)  Surgical operation expense benefits according to a surgical schedule consistent with those customarily offered by the insurer under group or individual health insurance policies and providing a maximum benefit of eight hundred dollars ($800);

          (B)  Plan B:

                (i)  Hospital room and board daily expense benefits in a maximum dollar amount equal to seventy-five percent (75%) of the maximum dollar amount determined for Plan A, for a maximum duration of seventy (70) days;

                (ii)  Miscellaneous hospital expense benefits of a maximum amount of ten (10) times the hospital room and board daily expense benefits; and

                (iii)  Surgical operation expense benefits according to a surgical schedule consistent with those customarily offered by the insurer under group or individual health insurance policies and providing a maximum benefit of six hundred dollars ($600); or

          (C)  Plan C:

                (i)  Hospital room and board daily expense benefits in a maximum dollar amount equal to fifty percent (50%) of the maximum dollar amount determined for Plan A, for a maximum duration of seventy (70) days;

                (ii)  Miscellaneous hospital benefits of a maximum amount of ten (10) times the hospital room and board daily expense benefits; and

                (iii)  Surgical operation expense benefits according to a surgical schedule consistent with those customarily offered by the insurer under group or individual health insurance policies and providing a maximum benefit of four hundred dollars ($400).

     (2)  The maximum dollar amounts in Plan A shall be determined by the commissioner and may be redetermined by the commissioner from time to time as to converted policies issued subsequent to the redetermination. The redetermination shall not be made more often than once in three (3) years. The maximum dollar amounts in Plans A, B, and C shall be rounded to the nearest multiple of ten dollars ($10.00).

(b)  The insurer may also, in lieu of the plans of benefits set forth in subsection (a), provide alternate plans with benefits exceeding those in Plan A, B, or C, with the approval of the commissioner.

(c)  If the benefits level required in subsections (a) and (b) exceeds the benefits level provided under the group policy, the conversion policy may offer benefits that are substantially similar to those provided under the group policy in lieu of those required in subsections (a) and (b).

(d)  The insurer may, at its option, also offer alternate plans of group health conversion in addition to those required by this part.

[Acts 1980, ch. 537, § 1; 1992, ch. 984, § 1; T.C.A., § 56-7-1507.]

56-7-2319. Optional election of retirement conversion rights. —

In the event coverage would be continued under the group policy on an employee following retirement prior to the time the employee is or could be covered by medicare, the employee may elect, in lieu of the continuation of group insurance, to have the same conversion rights as would apply had the employee’s insurance terminated at retirement by reason of termination of employment or membership.

[Acts 1980, ch. 537, § 1; 1992, ch. 984, § 1; T.C.A., § 56-7-1508.]

56-7-2320. Medicare eligibility as affecting coverage — Persons who may claim conversion privilege. —

(a)  The converted policy may provide for reduction of coverage on any person upon the person’s eligibility for coverage under medicare under Title XVIII of the federal Social Security Act, compiled in 42 U.S.C. § 1395 et seq., or under any other state or federal law providing for benefits similar to those provided by the converted policy.

(b)  Subject to the conditions set forth in subsection (a), the conversion privilege shall also be available to:

     (1)  The surviving spouse, if any, at the death of the employee or member, with respect to the spouse and the children whose coverage under the group policy terminates by reason of the death, otherwise to each surviving child whose coverage under the group policy terminates by reason of the death, or, if the group policy provides for continuation of dependents’ coverage following the employee’s or member’s death, at the end of the continuation;

     (2)  The spouse of the employee or member upon termination of coverage of the spouse, while the employee or member remains insured under the group policy, by reason of ceasing to be a qualified family member under the group policy, with respect to the spouse and the children whose coverage under the group policy terminates at the same time;

     (3)  A child, solely with respect to the child, upon termination of the child’s coverage by reason of ceasing to be a qualified family member under the group policy, if a conversion privilege is not otherwise provided with respect to the termination; and

     (4)  The spouse of the employee upon termination of coverage of the spouse by reason of termination of coverage of the employee or member because of eligibility for medicare.

[Acts 1980, ch. 537, § 1; 1992, ch. 984, § 1; T.C.A., § 56-7-1509.]

56-7-2321. Provision of group coverage in lieu of converted individual coverage. —

The insurer may elect to provide group insurance coverage in lieu of the issuance of a converted individual policy.

[Acts 1980, ch. 537, § 1; 1992, ch. 984, § 1; T.C.A., § 56-7-1510.]

56-7-2322. Notice of conversion privilege. —

A notification of the conversion privilege shall be included in each certificate of coverage.

[Acts 1980, ch. 537, § 1; 1992, ch. 984, § 1; T.C.A., § 56-7-1511.]

All copyrights and other rights to statutory text are reserved by the State of Tennessee.

Tennessee’s Cobra  Summary

Cessation of Coverage

Group policies should allow employees and dependents to continue group coverage if insurance ends for any reason except termination of the entire group plan or coverage for the entire insured class.

Coverage has to continue for the remainder of the month during which coverage ended, plus additional 3 months.

To elect coverage, individuals must apply in writing and pay the premium to the insurer within 31 days.

Members are ineligible for continuation or conversion rights if:

• Group coverage ended due to missing premium payments
• Individuals obtain Medicare eligibility
• The plan is discontinued and replaced with another plan within 31 days

Employers should include the following phrase in the COBRA notices:

“You may be entitled to have the state of Tennessee pay the premium for your ongoing heath insurance. For more information, contact your local Department of Human Services.”

The labor department should notify each employer of this requirement; otherwise the employer is not obligated to provide the above provision to the employees.

Pregnancy

If you’re pregnant and your coverage ends, you can continue your coverage until at least 6 months after the end of pregnancy.

Death or Divorce

When individuals lose coverage due to death or divorce of an insured spouse, they can continue coverage for the month remaining plus another 15 months. In the case of an extension, beneficiaries may be obligated to pay 3-month premium.

Conversion Rights

Insurers have to allow conversion from group to health plans without evidence of insurability when:

• Continuation coverage ends
• Group coverage is discontinued
• Coverage ends due to an employee’s death or Medicare eligibility
• Family or dependant status ends

Converted policies are prohibited from excluding coverage of pre-existing conditions.

Individuals must apply for conversion and pay premium within 31-days after losing group insurance.

Insurers are not obligated to extend conversion rights when:

• Individuals who are covered or eligible for Medicare or a policy that’s similar in coverage
• Similar benefits are provided to the individuals under federal or state law
• Individuals would be over insured if they have both the converted policy and additional coverage

Employees who retire before becoming eligible for Medicare can choose conversion coverage instead of continuation coverage.

Federal regulation

Employers who offer group health plans to a minimum of 20 employees need to comply with the Employee Retirement Income Security Act of 1974 (ERISA). The amendment, the Consolidated Omnibus Budget Reconciliation Act of 1986 (COBRA), requires that most group health plans provide temporary continuation of coverage.

You can find the COBRA regulation in the Federal Code section and the Official Employer’s Guide to COBRA in the Guides section.