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Extension of benefits

Extension of benefits is an insurance term it pays to understand. Bankrate explains it.

What is extension of benefits?

Extension of benefits is a provision of some health insurance plans that allows benefits to be extended past the policy expiration date in special circumstances.

Deeper definition

When insurance lapses because the policyholder fails to pay the premiums, he or she might not lose benefits immediately. There may be a grace period in which the policyholder can maintain coverage while getting caught up on payments. If the policyholder misses the grace period, he still may be eligible for an extension of benefits if he needs immediate medical treatment. If the policyholder or his dependent is not being treated for a medical condition, insurers won’t grant an extension.

The policyholder or dependent must be receiving treatment in a hospital, rehabilitation center, hospice or other medical facility. In addition, benefits are extended only if there is a treatment plan for that person’s ongoing care. When the patient is discharged, he is no longer eligible for an extension of benefits unless he pays the premiums.

The extension of benefits will be lost if the patient recovers and no longer qualifies as chronically ill.

In the case of benefits being extended to a worker who leaves a job where he had a group health plan, he will lose the benefit extension when he gets another job.

Extension of benefits example

Bob quit a job with health insurance benefits because he had to work nights and it involved too much travel. On the day his employer-sponsored insurance expired, his son had a car accident that put him in the hospital for two weeks. Thanks to an extension of benefits provision in Bob’s employee health plan, his son’s care was covered by insurance.

When his son recovered and was discharged from the hospital, the extension of benefits ended.

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