UNDERWRITING GUIDELINES FOR PRODUCERS ID mynmhc.org

Transcription

1 UNDERWRITING GUIDELINES FOR PRODUCERS ID mynmhc.org

2 Table of Contents Purpose and Overview I. Group and Employee Eligibility Requirements 1. Employer Eligibility 2. Ineligible Groups 3. Eligible Employees and Full Time Equivalent 4. Ineligible Employees 5. Eligible Dependents 6. Ineligible Dependents 7. COBRA 8. Retirees 9. Affiliated Companies 10. Guarantee Issue 11. Virgin Groups 12. Residence Criteria 13. Special Enrollees II. Employer Group Size, Contribution and Participation 1. Group Size 2. Participation Calculation 3. Employer Contributions III. Rating Methodology 1. Class and Segmentation 2. Rate Structure 3. Multi year Rate Guarantees IV. Dual Option and Multiple Carriers 1. Slice or Option Sales 2. Out of Area Subscribers V. Effective Dates and Enrollment 1. Effective Date 2. Change of Renewal Date Page 2 of 18

3 3. Waiting Periods: Employee and Dependent Enrollment VI. Underwriting Workflows, Procedures and Forms 1. Information Required to Quote: Checklist 2. Sold Group Requirements and Process 3. Turn Around Times 4. Broker Support Contact Information 5. Forms i. RFP : Request for Proposal Form ii. Employee/Dependent Medical Disclosure Form: (used for size groups without experience, and virgin groups) Page 3 of 18

4 Large Group Definition and Purpose of the Guidelines: This New Mexico Health Connections (NMHC) Large Group Underwriting Guide is designed to provide you with information needed and required for large group (51+ eligible) fully funded benefit plan requests, quote proposals, and new case submissions. We appreciate your support of NMHC. Our goal is to supply you with information and guidelines which clarify the underwriting requirements for new business and renewals, ensuring these comply with the federal Affordable Care Act (A.C.A) and New Mexico statutes. By definition, these large group plans will be sold to Employers that are not subject to the requirements of the New Mexico Small Group Rate and Renewability Act (Chapter 59A, Article 23C NMSA 1978.) Any eligible large group may apply for and purchase health coverage with NMHC, subject to these underwriting requirements. These guidelines apply to groups with more than 50 employees, including full time equivalent employees as defined by the federal Shared Responsibility guidance, IRS, and the A.C.A. These guidelines are not intended to be an exhaustive list of all possible situations, but to provide you with a general overview and guidance regarding NMHC s requirements for large group underwriting. At NMHC s discretion, as well as due to any revisions or requirements of the A.C.A., these guidelines may be revised and changed without pre notice. I. Group and Employee Eligibility Requirements: 1. Employer Eligibility The following guidelines apply to large groups (those with > 50 employees): a. Corporations, Partnerships and Sole Proprietorships with a direct employee/employer relationship are eligible for coverage. The organization must be of a permanent nature and must not have been formed for the sole purpose of obtaining insurance. b. Owner only groups: Owner only groups enrolling, such as a husband and wife enrolling with or without children, must qualify as a business by providing the Group Application and one additional document, including but not limited to the following: i. Business License Page 4 of 18

5 ii. Contractor's license Business license iii. DBA fictitious business name statement iv. Seller's permit c. Sole proprietorship: If the group is a sole proprietorship, the following must be submitted, along with the Group Application: i Schedule C for the preceding calendar year d. Corporation: For corporations, submit the Group Application and one additional document, including but not limited to the following: i. Articles of incorporation including officers and Schedule K 1 ii. Statement of Information by Domestic Stock Corporation iii. Shareholder/Stock certificates iv. Tax Form (first page with EIN) e. Associations (non Employer based), are eligible if its meets all of the following criteria: i. Has been actively in existence for at least five years. ii. Has been formed and maintained in good faith for a purpose other than obtaining insurance. iii. Does not have any membership requirements conditioned on health status relating to any individual or dependent. iv. Does not offer health insurance coverage to anyone who is not a member of the association. v. Meets all other legal requirements. 2. Ineligible Groups The following types of groups are not eligible for coverage: a. Fraternal Organizations b. Multiple Employer Trusts or Multiple Employer Welfare Trusts (METS or MEWAs) c. Groups previously canceled for non payment of premium must wait at least 12 months before reapply after cancellation. d. Groups who are not financially viable or out of the service area. e. Groups with more than 30% of enrolled employees living outside the New Mexico Health Connections network area where there are no providers. (Note: does not apply to areas where NMHC has out of state perimeter providers in its network, such as in the areas of Lubbock, Durango, and El Paso.) f. Groups not physically located within the New Mexico Health Connections service area. g. Employee Leasing Companies and PEO s (except for those actually working for the Leasing Company). Page 5 of 18

6 h. Non Guaranteed Associations, Professional Employer Organizations (PEOs)/employee leasing firms and closed groups (groups that restrict eligibility through criteria other than employment) are generally ineligible for coverage. 3. Eligible Employees and Full Time Equivalents The following requirements must be met for an Employee to be eligible for coverage within the group. a. Any permanent employee who is actively engaged on a full time basis in the conduct of the business of the group with an average workweek of at least 30 hours, or 120 per month in the group s regular place of business, who has met any applicable waiting period requirements. The term does not generally include employees who work on a part time, temporary, or substitute basis. Under the definition in federal Section H 1, a leased employee is not considered to be an Employee of the Employer. When determining the number of eligible employees, the number of part time employees are counted together to determine the full time equivalent (FTE) number, per the A.C.A. To identify the full time equivalents, the Employer is responsible to sum the number of service hours by all employees who are not full time, and divide by 120. No more than 120 hours may be counted for any one employee. For example, disregard hours greater than 120 hours for any employee who may have worked overtime. This calculation should be done for every month in the prior calendar year. In addition, the A.C.A. s Shared Responsibility rule indicates that service hours, rather than work hours must be used for this calculation. Therefore, if an Employer pays a part time employee vacation time, those hours of service would also count toward the FTE calculation. The Seasonal Employee exception indicates that Employers are not considered Large if they exceed the 50 employee count for 120 days, or for four months or less, during the preceding calendar year (and the 120 days or four months do not have to be consecutive.) b. A permanent employee who works at least 20 hours but not more than 29 hours may be deemed to be an eligible employee if the following apply: i. The employee otherwise meets the definition of an eligible employee except for the number of hours worked. Page 6 of 18

7 ii. The employer offers the employee health coverage under a health benefit plan. iii. All similarly situated individuals are offered coverage under the health benefit plan. iv. The existing employee must have worked at least 20 hours per normal work week for at least 50 percent of the weeks in the previous calendar quarter. The insurer may request any necessary information to document the hours and time period in question, including, but not limited to, payroll records and employee wage and tax filings. c. Spouses working at the same company may each enroll as an Employee, or may be dependents on one another s coverage. 4. Ineligible Employees a. Contracted, leased or 1099 individuals are not eligible for group coverage. b. Any employee, board member, director, relative, friend or associate, who is not actively working full time in the employer s business for the required minimum number of hours per week. 5. Eligible Dependents a. Legally married spouse and Domestic Partner b. Natural born children, stepchildren, and legally adopted children to age 26. c. Disabled and dependent adult children age 26 and beyond may be eligible for coverage with proper documentation (see Certificate of Coverage for definitions.) d. Newborn infants of the Subscriber, legal Spouse, or Domestic Partner are automatically covered for the first 31 days after the birth. e. A child placed for, or pending adoption will be eligible immediately upon the date the Subscriber, Spouse or Domestic Partner has the right to control the child s health care. Enrollment requests for children who have been placed for adoption must be accompanied by evidence of the Subscriber s, spouse s or Domestic Partner s right to control the child s health care. Evidence of such control includes a health facility minor release report, a medical authorization form, or a relinquishment form. In order to have coverage continue beyond the first 31 days without lapse, an application must be submitted to and received by the New Mexico Health Connections Plan within 31 days of the birth or placement for adoption. Page 7 of 18

8 f. A child acquired by legal guardianship will be eligible on the date of the court ordered guardianship, if an application to add the child is submitted within 31 days of eligibility. g. Dependents may be added to coverage by submitting an application within 31 days from the date of acquisition of the Dependent: i. to continue coverage of a newborn or child placed for adoption; ii. to add a spouse after marriage or add a Domestic Partner after establishing a domestic partnership; iii. to add yourself and spouse following the birth of a newborn or placement of a child for adoption; iv. to add yourself and spouse after marriage; v. to add yourself and your newborn or child placed for adoption, following birth or placement for adoption. h. If both partners in a marriage or domestic partnership are eligible Employees/Subscribers of the same Employer Group, the eligible dependent children may be enrolled as Dependents of either parent/employee, but not covered under both parent s/employee s coverage. 6. Ineligible Dependents a. Parents, grandparents, brothers, sisters, nieces, and nephews are not eligible dependents, unless legal guardianship is in effect. b. Children beyond the age of 26 years are ineligible unless certified as a disabled eligible adult dependent. c. Children for whom the Employee has temporary custody or for whom the Employee is acting as a foster parent are ineligible. d. Dependents of an Employee who has elected not to be covered under the Employer s group coverage are ineligible. 7. COBRA 8. Retirees A group may have up to 10% of its total enrollment covered by COBRA continuation, or else additional rating factors may be applied. The total COBRA count includes those currently enrolled in COBRA, as well as any former Employees who are in their COBRA election period. Coverage may be offered to early (< age 65) retirees and Medicare eligible retirees of a Large Group when all of the following apply: i. The active employees are also covered by New Mexico Health Connections and ii. The total number of enrolled retiree Subscribers comprise no greater than 20% of the total number of enrolled Employees, and Page 8 of 18

9 iii. The offer is coverage is applied consistently and without bias or selection by the Employer 9. Affiliated Companies Employers with more than one business under common ownership with different tax identification numbers may be eligible and therefore required to enroll as one group. One owner must have control of at least 50% of all companies to be included, and must have the ability to file a combined tax return for both companies. Common ownership requires the combination of Employer groups for rating and regulation purposes. An Employer may not choose to sub divide the total affiliated companies into small group segments. All Employees of a controlled group or an affiliated service group are to be taken into account (Under 414 (b), (c) or (m) of the Internal Revenue Code) as one employer group. 10. Guarantee Issue Large group coverage is guaranteed available, per the interpretation of the A.C.A. Reasons to decline to offer coverage to a group may include the Employer s financial inability to offer and contribute to the required cost of coverage (typically at least 50% of the single premium) and the Employer and Employees residing outside of the benefit plan service area. The issuance of the rate offer for group coverage is subject to all underwriting guidelines and may include a load or surcharge based upon the percentage of employee participation. The Employer group must be located within the New Mexico Health Connections service area. 11. Virgin Groups: First Time Coverage and Newly Formed Businesses a. Newly incorporated Employer groups with a direct employee/employer relationship may be eligible for group coverage if the group was not formed for the sole purpose of obtaining health insurance. b. Required documentation is necessary, such as: Proof of incorporation, including articles of incorporation The most recent quarterly Tax/Wage statement. Or if the first quarterly Tax and Wage statement has not yet been filed, the statement is required as soon as it is available. Page 9 of 18

10 c. For virgin groups, defined as those that have not offered coverage ever before (or not covered in most recent last two years), the Employee/Dependent Medical Disclosure Forms are required to provide binding rates. 12. Residence Criteria Subscribers must live and/or work within the New Mexico Health Connections network area. There are certain exceptions that are allowed, such as Dependents who are attending school or a college is out of area, and Employees who may live out of area. The Group s plan design should address coverage for these insureds (PPO or POS, etc.) and have no more than 10% of the enrollees out of area. 13. Special Enrollment An eligible Employee or Dependent may enroll as a special enrollee in the following situations. The effective date will be the first day of the month following notification, except as otherwise indicated in subparagraphs (b) and (d) below. a. The employee or dependent: i. Was covered under another plan at time of initial eligibility; ii. Declined coverage in writing during initial eligibility stating that other coverage was in effect; iii. Lost coverage under another plan due to termination of employment, reduction in hours making them ineligible, the other plan s termination, the termination of employer contributions, or the death or divorce of a spouse; and iv. Requests enrollment no later than 31 days after the coverage under the other plan terminates. b. The individual is employed by an Employer that offers multiple health benefits plans and the individual merely elects a different health benefits plan during an open enrollment period. In this case, coverage will be effective after open enrollment (i.e., the anniversary date). c. A court has ordered coverage to be provided for a Spouse under a covered Employee s plan and request for enrollment is made no later than the 31st day after the date on which the court order is issued. d. A court has ordered coverage to be provided for a child under a covered Employee s plan and the request for enrollment is made no later than the 31st day after the date on which the court order is issued. In this case, coverage will be effective on the day of notification. Refer to Dependent Eligibility for more information. Page 10 of 18

11 Note: The Employee or Dependent will be treated as a late enrollee if enrollment is not properly requested within the time frames specified (e.g.: within 31 days or during an open enrollment as indicated.) The Employee or Dependent will be required to wait the earlier of 12 months or until the next open enrollment period. II. Employer Group Size, Contribution & Participation: 1. Group Size a. Group is any Employer group that averaged at least 51 eligible employees during the preceding calendar year. The eligible Employee count includes the Full Time Equivalents (FTEQ), determined by the federal Shared Responsibility rule. The calculation of the FT EQ requires that the Employer add up all service and work hours of all part time employees, then divide by 120. The end result is the number of Full Time Equivalent Employees. This number is added to the full time employees, and if the result is > 50 total employees, then the group is technically considered a Large Group for rating and underwriting purposes. b. Groups are required to re certify eligibility as a Large Group prior to renewal, or at any time as may be requested. Should a Group fall below 51 eligible employees, the Group will be reclassified as a Small Group upon time of notification or renewal. c. Proof of group size and qualification for large group status may be requested. Proof may consist of the most recent Quarterly Wage and Tax Statement, or an affidavit certifying the current Employees and the total number of hours worked per week, month and year. Page 11 of 18

12 2. Participation Requirements The typical minimum Employee participation requirement that exempts the group from the possibility of a participation load, excludes those employees with valid Waivers due to other creditable group coverage (say through a Spouse s group plan), or Medicaid, Medicare, Tricare, or Indian Health Services, as well as Individual coverage is: 50% of the total net eligible employees The net eligible number excludes the number of valid waivers, which does not include reasons such as does not want coverage or cannot afford, thus these Waivers are not exempt from the minimum participation calculation. For example: Employer group has 200 Eligible Employees Of the 200: 150 enroll for coverage 50 waive coverage The reasons for the Waivers (50) are: 30 have coverage through a Spouse group plan 10 have coverage under an individual plan 10 do not want coverage The minimum participation calculation is: 50% x 190 (net eligible: do not want coverage ) = 95 enrollees. Since 150 eligible Employees have enrolled, this group meets the minimum required participation and would not receive a participation load as part of the premium offer. 3. Employer Contributions a. The Employer contribution is typically at least 50% of the Single or Employee rate tier. Defined dollar contributions are allowable provided they meet the guideline of contributing a minimum of 50% of the total Employee only premium. Fixed dollar contributions, or defined contributions will be reviewed annually to confirm compliance. b. In a multiple plan / offering choice scenario, the low option plan contribution must meet the minimum contribution of at least 50% of Single Page 12 of 18

13 tier premium. The buy up option or additional premium may be allocated to the Employee. c. There is no minimum Employer contribution for the incremental Dependent (Spouse, Child, Family) tiers. III. Rating Methodology 1. Class and Segmentation Rating by Class or Segmentation is defined as establishing an Employer s group health benefits plan based upon a classification of employees, such as with a Union or Management segmentation. The Affordable Care Act (A.C.A.), includes significant requirements that prohibit class discrimination in health benefit plans. These rules prohibit an Employer from segmenting the group in order to offer benefits to only a portion of the eligible Employees, a certain class, or to offer materially different rates or Employer contributions. 2. Rate Structure The rating structure for Large Group is defined as composite rating by tier. The total Group premium is calculated, then the premium is spread among the tiers. Large groups may be quoted with two, three, four or up to five tiers: EE, EE+Spouse, EE+1, EE+2, and EE+Family. In the case of a dual carrier offering (e.g.: slice, or option sale between another carrier and New Mexico Health Connections, the Tier structure between the carriers is preferably identical to mitigate adverse selection.) 3. Multi Year Rate Guarantees a. Large Group premiums and rates will be guaranteed for a period of 12 months from the quoted and sold effective date. Material changes to the Group s benefit plan, or a change in the Group s status or characteristics (e.g.: acquisition, merger or layoff) during the contract period may result in a change in rates mid year, or prior to the renewal. For any material changes or benefit plan requests, the Group should contact NMHC as soon as possible so that a revised rate may be developed if necessary. Any changes to a rate will include at least a 30 day pre notification to the group. b. Multiple year renewal rate guarantees are not allowed. Page 13 of 18

14 IV. Dual Option and Multiple Carriers: 1. Slice or Option Sales The expectation is that NMHC will offer an Employer group full replacement coverage, and there is less likelihood that NMHC will be offered as a slice or multiple carrier offering. However, if requested, NMHC plans may be sold alongside, or co exist with another carrier, if the following requirements are met and maintained (to be reviewed and verified at any time by Underwriting, including renewal): a. For groups with eligible Employees, at least 50% of the Employees must enroll w New Mexico Health Connections b. For groups with 100+ eligible Employees, at least 33% of the Employees must enroll with New Mexico Health Connections. c. The New Mexico Health Connections benefit plan should not be the richer of the plan designs, and should not be the buy up option. The benefits and plan designs must be substantially similar (if not identical), with < 5% benefit relative benefit differential between New Mexico Health Connections and the other carrier. d. The relative tier structure, rate relativities, and assumed average contract size should match between New Mexico Health Connections and the other carrier. (e.g.: assumed average contract size for single, spouse, and family, etc.) e. New Mexico Health Connections should not be disadvantaged in regard to the Employee contribution requirements. The total monthly Employee contributions (including dependent contributions) may not vary by more than 10% between the carriers. For example, if the Employee contribution is projected to be $200/month for the Single tier of the other carrier, then the Employee s monthly Single tier contribution toward the New Mexico Health Connections plan must not be more than $220/month. Maintaining contribution relativities between the carrier offerings mitigates the inherent adverse selection that is created when offering multiple carriers and multiple plan designs. 2. Out of Area Subscribers New Mexico Health Connections may offer coverage to Employees located outside the network area ( OOA ) through a rental network arrangement. Plan restrictions and enrollment limitations include: Out of Area enrollment generally will be limited to: i. 10% of total enrolled subscribers for Groups of size Page 14 of 18

15 ii. 20% of total enrolled subscribers for Groups of size iii. 30% of total enrolled subscribers for Groups of size 501+ V. Effective Dates and Enrollment: 1. Effective Date: The Effective Date is the date that the insurance policy or employee coverage goes into effect. The date will be determined as follows: a. Anniversary / renewal / open enrollment dates are the same as the effective date in succeeding years. b. The Group may select an Effective Date that is the 1 st of the month. (As an exception, other dates may be requested by the Group and considered on a case by case basis. c. If additional information is required to complete the Underwriting process, the Group will have three days after notification of missing information to resubmit the required information. If the information is not received during the period, the following will occur: For New Business i. If the information is received within 30 days, underwriting will be resumed and if guidelines are met, coverage may be offered to be effective the 1st of the following month. ii. If the information is received more than 30 days after requested, the entire group will need to be resubmitted to underwriting, and there will be no back dating of the effective date. For Renewals i. If the information is received within 30 days after the renewal date and meets underwriting requirements, the Group s coverage will continue without a lapse in coverage. ii. If the information is still outstanding after 30 days after the renewal date, the Group will terminate as of its renewal date and the Group will be required to reapply and there will be lapse in coverage, if coverage is subsequently approved.. d. All eligible employees must enroll or waive coverage as of the Group s effective date. Subsequent hires must fulfill their eligibility waiting period before coverage is effective. e. Quoted rates are only valid for the requested effective date. 2. Change of Anniversary or Renewal Date The Employer Group may change its Renewal or anniversary dates for valid business reasons (e.g.: to align with a collective bargaining agreement, to change the fiscal year, etc.). Any request to change must be approved by Page 15 of 18

16 Underwriting in advance, and rates will be subject to recalculation and adjustment based on the new renewal date. 3. Waiting Periods: Employee & Dependent Enrollment The initial enrollment process applies to all Employees and their eligible dependents. The following requirements apply for enrollment of all eligible group participants: a. Benefit Waiting Periods: i. Waiting Periods may be 0, 30, or 60 days after the first of the following month (90 days is the maximum number of days allowed under the A.C.A.) ii. The effective date of coverage may be immediately following the iii. Waiting Period or the 1st of the month following the Waiting Period. Waiting Periods can only be changed at renewal, and must be the same for all individuals within the Group and applied consistently. b. Late enrollees Eligible employees who do not enroll at the time of hire or the initial enrollment of the Group generally must wait until the Group s Annual Open Enrollment period in conjunction with the next renewal date. However, there are several special circumstances (Qualifying Events) during which time an individual may obtain coverage other than during the Open Enrollment period. c. COBRA Employees on COBRA at the time of initial enrollment must complete an application and will be underwritten with the Group. VI. Underwriting Workflows and Procedures: 1. Information Required to Quote a Large Group Quote requests for Large Groups require submission of the following information: a. Current employer census (including all COBRA & retirees if to be covered), including each employees zip code b. Current carrier bill c. Claim experience (last 24 months) provided by incumbent or prior carrier (for 100+ group size or previously self funded.) d. Short form Employee risk questionnaire (for group size) e. Current and Renewal rates f. Employer current and planned contributions g. Current and requested plan design h. Large claim report (for 100+ group size, or previously self funded.) Claims at 50% of pooling or specific threshold or $25k and above with diagnosis and prognosis, if available. Page 16 of 18

17 2. Sold Group Requirements and Process a. Group Application: signed and dated b. Employee applications or Waivers: signed and dated c. Tax and Wage Statement (for group size) New Mexico Health Connections Sales will receive all required submitted documents and conduct a review, or scrub of the documents to determine if any information is missing before electronic submission (FTP site) to Underwriting. Underwriting will utilize all submitted information to analyze the group, determine if any additional information is needed, and finalize the premium offer. Any changes to enrollment or benefits or risks once the proposed premiums are offered will require that the new information be submitted by the Group to New Mexico Health Connections Underwriting Department, who will then scrub and forward the information to the assigned Underwriter for review and rate calculation. Any changes in the group demographics or risks may result in a modification to the proposed rates. 3. Turn Around Times a. Large Group quote requests should preferably be requested to Underwriting at least 60 days prior to the requested effective date in order to allow for quote development, sale of proposal, and open enrollment prior to the effective date. Proposal requests may be requested with less than 60 days on a case by case exception. b. New business quote and proposals will be released within 5 business days of receipt of all information required to quote. Incomplete information with the submission may result in a delay in Underwriting and a delay in the final rate development. It is imperative to include all information with the initial submission. c. Renewals will be released on average 90 days prior to the group s renewal date, or earlier upon approved exception. (The minimum required lead time per the NM statute is at least 60 days prior to the renewal date.) 4. Broker Support Contact Information The following telephone numbers, s and faxes may be used by Brokers to check the status on a new business proposal or sold case paperwork while pending in Underwriting. Any other requests or inquiries including Sales support, benefit /rate option questions, or benefit related questions will be handled or transferred to the NMHC Sales Team through their specific contact information. Page 17 of 18

18 a. Phone contact: Albuquerque b. Phone contact: Outside of Albuquerque: c. address for Proposal submission: quote.enroll@mynmhc.org d. E Fax for Proposal submission: Forms a. Employee/Dependent Medical Disclosure Form : used for size new groups without experience, and virgin group quotes b. RFP : Request for Proposal Form: used to provide group characteristics, incumbent plan design and rates, and benefit plan request to Underwriting for quote development Page 18 of 18