A covered employee had heart disease that was fully covered under his employer's group health policy. After the group coverage terminated, he timely converted to an individual policy. During the first policy year, how may the converted policy treat the heart condition?

Why A is correct

Under G.S. 58-53-85, the converted policy may not exclude as preexisting any condition that was covered under the prior group policy; the statute permits offsetting benefits still payable under the group policy and allows benefit coordination during the first policy year. The conversion privilege therefore preserves coverage for conditions the group policy already covered, which is its core consumer protection.

Why the other options are wrong

• B) The 12-month exclusion cap of G.S. 58-51-15(a)(2)b governs ordinary individual policies; it cannot be used to re-exclude a condition the group policy covered.
• C) A look-back exclusion of this kind would defeat the conversion right; G.S. 58-53-85 forbids excluding conditions the group policy covered.
• D) A permanent exclusion of previously covered conditions is exactly what G.S. 58-53-85 prohibits.

Memory hook

What the group covered, the converted policy cannot un-cover.