UNDERWRITING GUIDELINES

Transcription

1 UNDERWRITING GUIDELINES SMALL GROUP ACCOUNTS Anthem Blue Cross and Blue Shield And Its Affiliate HealthKeepers, Inc. For New Sales and Renewals Effective August

2 Changes Changes are in italics on the indicated pages: Possible changes to Docs for enrollment Page 5: Location of Group eliminated the exception for groups 15+ to have up to 70% out of state employees Page 5: Size Requirements Expands eligibility to groups of one subject to specified requirements Clarifies definition and ineligibility of sole prop groups Pages 6-7: Common Control (continued) places requirement on group to inform Anthem if it is part of a control group Page 7: Effective Date of Coverage New submission dates Restricts CDHP effective dates to 1 st of month only Explains that groups enrolling on SHOP in 2015 will be subject to Exchange requirements Page 8: Contribution Requirement clarifies that the contribution amount is set on the non-tobacco rate Pages 8-9: Participation Requirements Add enrollment in a Veterans Administration health care program as a valid waiver Clarifies that Individual coverage must be through an insurance plan explains requirements for on Exchange Page 9: HSA, HRA and High Deductible Plans explains that funding of the deductible will cause the plan not to be Guarantee Issue. Page 17: Eligible Employee Explains how an employer can use the look back period to determine the eligibility of variable hour employees, to include seasonal Page 17: Ineligible Employee adds variable hour and seasonal employees who work less than 30 hours per week Page 18: Eligible Dependents expands legal spouse to be spouse as recognized in state in which employee lives and children to be employee s spouse s children Pages 19-20: Classes of Employees- clarifies that union employees may be excluded from coverage Page 21: Rehires corrects rehire date from 63 to 62 days to avoid reserving the GIWP Page 27: Adds Improper Funding of Plan Deductible will result in non-guarantee issue. 2

3 Table of Contents Section I. Group Health Care Coverage Types of Organizations Eligible for Coverage... 5 Location of Group... 5 Size Requirement Types of Organizations Ineligible for Coverage... 6 Common Control... 6 Effective Date of Coverage... 7 Renewal Date... 7 Multi Option... 8 Employer Contribution... 8 Participation Requirements... 8 Optional Riders. 9 Sole Carrier... 9 HSA, HRA and High Deductible Plans...9 Section II. Documents Required to Establish Coverage Documents Required for Proprietorships...10 Documents Required for Partnerships Documents Required for Limited Partnerships Documents Required for Corporations Documents Required for S-Corporations Documents Required for Limited Liability Corporations Documents Required for Non-Profit Organizations Documents Required for Churches Documents Required for Agricultural Units Small Business Eligibility Form Section III. Requirements for Group Membership Eligible Employees Ineligible Employees Eligible Dependents Ineligible Dependents Early Retirees Professional Employment Organizations Classes of Employees Types of Coverage Available Medicare Supplement Effective Date of Coverage Termination of Group Membership Group-Imposed Waiting Period Late Entrants Open Enrollment Periods Special Enrollment Periods Other Enrollment Periods Section IV. Changes to the Group Benefit Changes Mid-year Election Changes to Sec. 125 Plans Area Changes Business Reorganizations

4 Mergers.25 Consolidations New Owner Buying Assets of Existing Group Group Name Changes New Business Entity with Same Employees Transfers between Lines of Business Splitting Groups Combining Groups Manipulation of Segments Changes in Enrollment Changes in Covered Dependents Section V. Termination of Group Coverage Minimum Enrollment Requirements Not Maintained Improper Funding of Plan Deductible...27 Non-Payment of Premium Employer Goes Out of Business Employer Requests Termination Conversion to Individual Products Section VI. Associations Enrolling in an Association Section VII. Audits Compliance Audits

5 Section I. Group Health Care Coverage Types of Organizations Eligible for Coverage Eligible groups are generally defined as: Organizations engaged in trade or business Religious institutions Charitable or non-profit institutions Educational institutions Governmental agencies and subdivisions The organization must be a legal entity established for a strong, mutual, and continuing interest other than for insurance purposes. In addition, the business must maintain a bona fide employer-employee relationship with all persons insured under the group's health care program. Each group must have a designated individual with contract signing authority and decision making authority for health care coverage who normally works at the group's location within Anthem Blue Cross and Blue Shield's service area. Location of Group The group must be physically located and headquartered within the service area of Anthem. Anthem's service area is defined as the State of Virginia with the exception of the area east of State Route 123 in Northern Virginia, the city of Fairfax and the town of Vienna. There is one exception. Groups headquartered out of area but with a separate branch office located within Anthem's service area may be considered separately. These groups can receive a quote for the in-area branch if decision making authority is delegated to an employee working in that branch. Enrollment in these cases is limited to the employees working in the in-area office. Employees must either work or reside within the HMO service area in order to enroll in the HMO plan. As a general rule, groups with more than 50% of their enrolling employees working out of the service area will not be quoted. Size Requirements A Small Group employer is an employer that employs no more than 50 full time and full time equivalent employees. The enrolled group can have between 1 and 50 enrolled employees. A one life group may be eligible if there is at least one common law employee who is eligible for coverage, i.e., works an average of 30 hours per week. A common law employee is any W-2 employee other than the spouse of the group owner(s). Proprietors, partners, LLC members, and owners of an S Corp are not common law employees and are eligible only if there is an eligible common law employee. 5

6 Children of owners are considered to be common law employees, regardless of their age. In a C Corporation both owners and their spouses are considered to be common law employees. Common law employees must appear on either the group s payroll or Wage and Tax Report in accordance with state regulations. A sole proprietor, as defined by the Affordable Care Act, is any employer with no common law employees who work enough hours to be eligible for coverage. Sole Proprietors, which include Husband-Wife groups, are not eligible for small group coverage. Consider the following examples: Example 1: Owner(s) of a non- C Corp business has no common law employees but wishes to enroll in a group plan. Conclusion: Since the group has no common law employees, it is a sole proprietor and not eligible. Example 2: Owner(s) of a non- C Corp business has one or more common law employees who work 30+ hours per week. All employees have valid waivers. Owner(s) only wishes to enroll in a group plan. Conclusion: Group is eligible because although only the owner(s) is enrolling, the group has common law employees who are eligible. Example 3: Owner(s) of a non- C Corp business has one or more common law employees who work 30+ hours per week. The owner and all employees, except one, have valid waivers. Owner wishes to set up a group for the one employee. Conclusion: Group is eligible because it has common law employees who are eligible. Example 4: Single owner of a C Corp who works 30+ hours per week has no other common law employees but wishes to enroll in a group plan. Conclusion: Group is eligible because the owner of a C Corp is a common law employee and he works enough hours to be eligible. Example 5: Owner(s) of a non- C Corp business has common law employees but none work 30+ hours per week. Owner wishes to enroll in a group plan. Conclusion: Since the group has no common law employees who are eligible, it is a sole proprietor and not eligible. Types of Organizations Ineligible for Coverage Any group failing to meet the requirements previously explained will be ineligible for coverage. In addition, the following are also ineligible for group coverage: A group comprised of members as opposed to employees, such as societies and clubs Trusts Groups engaged in seasonal business which reduces operations for a portion of the year to the extent that no employee meets the employee eligibility requirements defined on page 17, Eligible Employee Multiple employer groups and associations Groups that maintain only a Post Office Box residence in our service area Employee leasing groups/professional Employment Organizations (PEO s)(see PEO s on page 19) Groups having more than one health carrier, other than an Anthem Multi-Option program (see page 8) Common Control Companies with common ownership will be considered a single employer if the companies fall within the definition of common control provided under the Health Insurance Portability and Accountability Act (HIPAA). HIPAA states that all entities treated as a single entity under subsections (b), (c), (m) or (o) of section 414 of the Internal Revenue Code shall be considered as one employer. If such an account meets this definition, all entities must be written together in a single account. If they are not considered to be one employer, they may be written separately. 6

7 As a general rule there must be 80% common ownership between the companies for this requirement to apply. The account may have to consult with its attorney or accountant to see if it meets the requirements of common control as defined by HIPAA. It is the group s responsibility to inform Anthem if a common control group exists. See Location of Group on page 5 for exception on groups headquartered out of Anthem s service area. Underwriting will allow groups with more than 50% common ownership but less than 80% to be combined, if requested. Family or marital relationships do not imply common ownership of different businesses. The addition of an affiliate or subsidiary to the group policy subsequent to the initial enrollment of the group may be permitted with Underwriting approval if the affiliate or subsidiary has more than 50% common ownership. In all cases where subsidiaries or affiliates are to be included, they must be listed on the Employer Enrollment Application with the following information: the name of each company federal tax ID number of employees employed Unless there is a subsequent change in ownership that makes the combination of affiliates or subsidiaries ineligible, groups will not be allowed to split. Effective Date of Coverage With one exception groups may request a coverage effective date of the first or fifteenth of any month subject to the timely receipt of the following: For an effective date of the first of the month, the group and employee applications must be signed prior to the effective date and received at Anthem by the 5 th working day of the month. All issues must be resolved by the 15 th of the month to secure the requested effective date. Otherwise, the effective date moves to the next available effective date following resolution. (See Section II, Documents Required for Coverage.) For an effective date of the 15 th of the month, the group and employee applications must be signed prior to the effective date and received at Anthem by the 20th of the month or the next working day if the 20 th is a weekend or holiday. All issues must be resolved by the end of the month to secure the requested effective date. Otherwise, the effective date moves to the next available effective date following resolution. (See Section II, Documents Required for Coverage.) Unless specified otherwise, if the due date falls on a holiday or weekend, the due date will be the next work day. Exception: CDHP products are limited to a first of the month effective date. Beginning with 2015 effective dates, enrollment on the Healthcare Exchange (SHOP) will be administered by the Exchange and subject to Exchange requirements and enrollment deadlines. Renewal Date For groups with a first of the month effective date, the group s renewal date will the first of the same month in subsequent years. For groups with a 15 th of the month effective date, the group s renewal will be the first of the following month. Example: Coverage effective on September 1 will renew next September 1. Coverage effective September 15 will renew next October 1. 7

8 Multi-Option (formerly Blue Advantage) Multi-option refers to any product offering that is a combination of PPO and /or HMO products. Multi-option is available to all groups. The following requirements apply: 75% of the eligible employees must participate in the combined program Anthem and HealthKeepers must be the sole carriers Optional benefits, if purchased, must be purchased for all products Groups may offer three products Employees may select or change between multi-option products: upon initial enrollment on the group s renewal date if the group is adding, eliminating or changing a multi-option product mid-year and if the new product is a lower cost product than the product(s) currently being offered, employees enrolled in a higher or eliminated option will be allowed to transfer to one of the lower cost options when the employee or dependent becomes eligible for a special enrollment period (see page 22) if there is a significant disruption of the provider network (to be determined at the sole discretion of Anthem) when the member is no longer eligible to be enrolled in the HMO option Restricting products by class of employee is not allowed. Employer Contribution for Group Health The employer must contribute at least 50% of the Employee-Only non-tobacco cost for each enrolled employee. The contribution amount may vary based on for each employee s age. The group may also vary the contribution amount by class of employee. If multiple plans are offered, the employer may make the contribution based on the plan of choice. However, the contribution must be a minimum of 50% of the employee non-tobacco cost for the lowest priced option that is available to the employee. Participation Requirements for Group Health Off Exchange A minimum of 75% of the eligible employees must be enrolled in the group's health care program. Do not count those enrolled in COBRA or under the state continuation as part of the 75% enrolled. The formula to determine the number of eligible employees is: # Eligible = # Employees - # Excluded - # Ineligible Excluded Employees: Medicare Supplement/Medicare Advantage employees Medicaid employees TRICARE employees Federal Employees Program (FEP) employees Employees enrolled in a Veterans Administration (VA) health care program Employees enrolled in other group coverage, eg. spousal/domestic partner, retirement, parent Employees enrolled in Individual insurance coverage Employees ineligible for group health care coverage: Ineligible employment status (part-time, temporary, etc.) See definition of Eligible Employee in the Requirements for Group Membership Section on page 17 of this manual. Have not met group-imposed waiting period. 8

9 On Exchange Same as Off Exchange with two exceptions: Participation is a minimum of 70% Individual coverage is not a valid waiver Optional Riders If offered, optional medical riders must be applied to all products offered by the small employer. Sole Carrier Anthem and HealthKeepers must be the only group-sponsored health coverage offered. HSA, HRA and High Deductible Plans All HSA compatible or high deductible plans are stand-alone plans, without an employer self-funding or insuring the deductible. Employer funding could cause the plans not to meet Affordable Care Act rating requirements in the small group market. This means the plan will no longer be Guaranteed Issue if the employer self-funds or insures the deductible or other cost-share amounts. 9

10 Section II. Documents Required to Establish Coverage The requirements listed in this section are intended to confirm three requirements that must be met before a Small Group can enroll with Anthem. The three requirements are: 1. The group is a legal entity headquartered in the Commonwealth of Virginia. 2. Those enrolling are eligible owners or employees of the group. 3. A minimum of 75% of the eligible persons are enrolling. Enrollment packages submitted without documentation as outlined in these instructions are subject to delays while proper documentation is obtained. Although these requirements are intended to be comprehensive and will cover the most common situations encountered, there may exist situations that are not covered. In those cases submit documentation that can help verify the three requirements above. Each will be reviewed on a case by case basis. Additional documentation may be required. As a reminder, only paid employees are eligible for coverage. Spouses and children of owners must be able to document earned income in their own names sufficient for the hours worked in order to qualify as an eligible employee. Without documentation they must enroll as dependents of the owner. Proprietorship A proprietorship is an unincorporated business that is owned by one person. Anthem will recognize only one owner on a proprietorship. Also, see Types of Organizations Ineligible for Coverage on page 6. Each enrolling proprietorship will furnish: A completed Group Application A completed Employee Application for each enrolling and waiving person Check for first month s premium Employer s most recent Employer s Quarterly Tax Report* for operations in each state being covered For Virginia locations submit VEC-FC-20 and VEC-FC-21 For other states submit their corresponding reports, to include the portion that lists the employees by name Write in the owner and any employee not appearing on the tax report along with an explanation why the person does not appear, e.g., owner, new hire. Spouses and children of the owner must be able to document earned income in their own names sufficient for the hours worked in order to qualify as an eligible employee. Without documentation they must enroll as dependents of the owner. For each person not applying for coverage, write one of the following codes to indicate why he/she is not applying: T terminated P part time WP has not met group imposed waiting period *If the proprietorship has not previously filed an Employer s Quarterly Tax Report because it has recently begun operations, or if the proprietor has not filed Federal income taxes submit: Small Group Eligibility Form; and Copy of business license; or if not available IRS Form SS-4, Application for Employer Identification Number If the proprietorship has not previously filed an Employer s Quarterly Tax Report because it has only recently added employees and the proprietor has filed Federal income taxes, submit: 10

11 Copy of owner s most recent Schedule C (Form 1040); and Small Group Eligibility Form Partnership A general partnership is a relationship between two or more persons who join together to carry on a trade or business. For the purpose of group insurance eligibility, Anthem recognizes only legal partnerships in which a written partnership agreement exists. Each enrolling partnership will furnish: A completed Group Application A completed Employee Application for each enrolling and waiving person Check for first month s premium Employer s most recent Employer s Quarterly Tax Report* for operations in each state being covered For Virginia locations submit VEC-FC-20 and VEC-FC-21 For other states submit their corresponding reports, to include the portion that lists the employees by name Write in the partners and any employee not appearing on the tax report along with an explanation why the person does not appear, e.g., partner, new hire. Spouses and children of the partners must be able to document earned income in their own names sufficient for the hours worked in order to qualify as an eligible employee. Without documentation they must enroll as dependents. For each person not applying for coverage, write one of the following codes to indicate why he/she is not applying: T terminated P part time WP has not met group imposed waiting period *If the partnership has not previously filed an Employer s Quarterly Tax Report because it has recently begun operations or if the partnership has not filed Federal income taxes, submit: Small Group Eligibility Form; and Copy of business license; or if not available Copy of partnership agreement; or if not available IRS Form SS-4, Application for Employer Identification Number If the partnership has not previously filed an Employer s Quarterly Tax Report because it only recently added employees and if Federal income taxes have been filed, submit: Copy of each partners Schedule K-1 (Form 1065); and Small Group Eligibility Form Limited Partnership A limited partnership is created in most cases to obtain additional funds. General partners are actively involved in the partnership s daily business and retain control over management of the partnership. Limited partners invest money or property in the business in exchange for a share of the profits. Generally, limited partners are investors only and are not actively involved in the partnership s daily business. For enrollment purposes, see partnership. Corporation A corporation, also known as a C corporation, is an entity with a legal existence apart from its owners. A special type of corporation, a professional corporation (PC), can be organized to perform certain professional services. Each enrolling corporation will furnish: A completed Group Application 11

12 A completed Employee Application for each enrolling and waiving employee Check for first month s premium Employer s most recent Employer s Quarterly Tax Report* for operations in each state being covered For Virginia locations submit VEC-FC-20 and VEC-FC-21 For other states submit their corresponding reports, to include the portion that lists the employees by name Write in any employee not appearing on the tax report and provide an explanation why the employee does not appear, e.g., new hire. Spouses and children of the owner(s) must be able to document earned income in their own names sufficient for the hours worked in order to qualify as an eligible employee. Without documentation they must enroll as dependents of the owner(s). For each employee not applying for coverage, write one of the following codes to indicate why he/she is not applying: T terminated P part time WP has not met group imposed waiting period *If the corporation has not previously filed an Employer s Quarterly Tax Report because it has recently begun operations or recently added paid employees, submit: Small Group Eligibility Form; and Copy of business license; or if not available Copy of incorporation papers; or if not available IRS Form SS-4, Application for Employer Identification Number; or if not available If the corporation has not previously filed an Employer s Quarterly Tax Report because its only employees have been non-salaried stockholders, submit: Copy of documentation of dividends or other payments received by the stockholders from the corporation, e.g., Form 1099-Div, and Small Group Eligibility Form S Corporation (Subchapter S Corporation) An S corporation is a hybrid of a partnership and corporation that offers tax advantages to the corporation s shareholders while giving protection against personal liability. Each enrolling S corporation will furnish: A completed Group Application A completed Employee Application for each enrolling and waiving employee Check for first month s premium Employer s most recent Employer s Quarterly Tax Report* for operations in each state being covered For Virginia locations submit VEC-FC-20 and VEC-FC-21 For other states submit their corresponding reports, to include the portion that lists the employees by name Write in the stockholder(s) and any employee not appearing on the tax report and provide an explanation why the employee does not appear, e.g., owner, new hire. Spouses and children of the owner(s) must be able to document earned income in their own names sufficient for the hours worked in order to qualify as an eligible employee. Without documentation they must enroll as dependents of the owner. For each employee not applying for coverage, write one of the following codes to indicate why he/she is not applying: T terminated P part time WP has not met group imposed waiting period *If the S corporation has not previously filed an Employer s Quarterly Tax Report because it has recently begun operations, recently added paid employees or if the S corporation has not filed Federal income taxes, submit: Small Group Eligibility Form; and 12

13 Copy of business license; or if not available Copy of incorporation papers; or if not available IRS Form SS-4, Application for Employer Identification Number If the S corporation has not previously filed an Employer s Quarterly Tax Report because its only employees are nonsalaried shareholders and Federal income taxes have been filed, submit: Copy of each stockholders Schedule K-1 (Form 1120S); and Small Group Eligibility Form Limited Liability Company (LLC) A limited liability company is a business entity that is an unincorporated association of one or more members who own membership interests. A professional limited liability corporation (PLLC) is a variation of an LLC and is organized to perform a professional service. IRS Rev. Rul. 93-5, December 28, 1992, holds that a Virginia LLC is a partnership for federal tax purposes. For enrollment purposes, see Partnership. Non-Profit Organizations (except churches and other religious organizations) Non-profit organizations are those organizations that fall under Section 501 (c)(3) of the Internal Revenue Code. Each enrolling non-profit organization will furnish: A completed Group Application A completed Employee Application for each enrolling and waiving employee Check for first month s premium Employer s most recent Employer s Quarterly Tax Report* for operations in each state being covered For Virginia locations submit VEC-FC-20 and VEC-FC-21 For other states submit their corresponding reports, to include the portion that lists the employees by name List any employee not appearing on the tax report and provide an explanation why the employee does not appear, e.g., new hire. Spouses and children who enroll as eligible employees must be able to document earned income sufficient for the hours worked. Without documentation they must enroll as dependents of the owner(s) For each employee not applying for coverage, write one of the following codes to indicate why he/she is not applying: T terminated P part time WP has not met group imposed waiting period *If the non-profit organization has not previously filed an Employer s Quarterly Tax Report because it has recently begun operations or has been exempt from filing the Employer s Quarterly Tax Report, submit: Copy of a payroll report which lists all paid employees and that shows FICA and federal income taxes being withheld; or If a payroll has not been paid, a listing of all employees Copy of 501 (c)(3) exemption granted by the IRS On the payroll report and employee listing code non-enrolling employees as described above under the Employer s Quarterly Tax Report. 13

14 Churches and Other Religious Organizations Each enrolling church or religious organization will furnish: A completed Group Application A completed Employee Application for each enrolling and waiving employee Check for first month s premium Copy of a payroll report which lists all paid employees and that shows FICA and federal income taxes being withheld (clergy who are paid but are not subject to FICA or federal income tax withholding may be written in on the report and marked clergy ) or If a payroll has not been paid, a listing of all employees; For each employee not applying for coverage, write one of the following codes to indicate why he/she is not applying: T terminated P part time WP has not met group imposed waiting period Copy of 501 (c)(3) exemption granted by the IRS Agricultural Units Each enrolling agricultural unit will furnish: A completed Group Application A completed Employee Application for each enrolling and waiving employee Check for first month s premium Employer s most recent Employer s Quarterly Tax Report* for operations in each state being covered For Virginia locations submit VEC-FC-20 and VEC-FC-21 For other states submit their corresponding reports, to include the portion that lists the employees by name List any employee not appearing on the tax report and provide an explanation why the employee does not appear, e.g., new hire. Spouses and children who enroll as eligible employees must be able to document earned income sufficient for the hours worked. Without documentation they must enroll as dependents of the owner(s) For each employee not applying for coverage, write one of the following codes to indicate why he/she is not applying: T terminated P part time WP has not met group imposed waiting period *If the agricultural unit is not required to file an Employer s Quarterly Tax Report, submit: Copy of a payroll report (or Small Business Eligibility Status Form if a payroll has not yet been paid) which lists all paid employees and that shows FICA and federal income taxes being withheld; and If a proprietorship, most recent Schedule C or F (Form 1040) If a partnership, S corporation or LLC, most recent Schedule K-1 for each owner If a C corporation, copy of incorporation papers If the agricultural unit has not yet filed federal income taxes, submit one of the following along with the payroll report (or Small Group Eligibility Status Form if payroll has not been paid): Proprietorship written statement naming the proprietor on the payroll report Partnership partnership papers and a written statement naming the partners on the payroll report 14

15 On the payroll report, code non-enrolling employees and owners as described under the Employer s Quarterly Tax Report. Note: If the agricultural unit is a corporation, active employees/stockholders are expected to be on the payroll report. If not, provide an explanation and include a list of all active stockholders with the payroll report. 15

16 SMALL GROUP ELIGIBILITY FORM (To be used when an Employer s Quarterly Tax Report has not been filed) The following is a list of all employees and owners for (Name of Group) Social Security Number Name Owner (O) or Employee (E) Percentage of Ownership Reason Not Enrolling Continue listing on back if necessary I certify that each employee named above is a paid employee who is paid at least the Federal minimum wage and whose wages are reported to the IRS on Form W-2. In addition, each employee s wage will be verifiable either through my Employer's Quarterly Tax Reports or through payroll records. These same requirements apply to spouses or other family members who are not partners, members or stockholders in the company. Owners who do not appear on Employer s Quarterly Tax Reports will be able to validate ownership/compensation either through tax documentation or payroll records upon request. By signing this statement, I understand that this information is used to determine both the eligibility of my group and of each employee in my group for coverage. I understand that claims may be denied and coverage voided if any of the above information needed to determine eligibility has been misrepresented. If so terminated, I further understand that the group and/or individual(s) named above may be Liable for repayment of any claim paid on behalf of this policy. Printed Name of Group Executive: Signature: Date: Anthem Health Plans of Virginia, Inc. trades as Anthem Blue Cross and Blue Shield in Virginia, and its service area is all of Virginia except for the City of Fairfax, the Town of Vienna, and the area east of State Route 123. Anthem Blue Cross and Blue Shield and its affiliate HealthKeepers, Inc. are independent licensees of the Blue Cross Blue Shield Association. ANTHEM is a registered trademark of Anthem Insurance pdf (8/13) 16

17 Section III. Requirements For Group Membership Eligible Employees Unless otherwise agreed to in writing by Anthem, an employee is eligible for a group plan if he or she is: An active employee of the policyholder, or a related company of the policyholder (if covered under the same policy) who works an average of 30 hours per week If an employer uses a look back period to determine the eligibility of a variable hour or seasonal employee and determines the employee worked an average of 30 or more hours per week, the employee will be eligible regardless of the current hours worked. The look back period is defined as a period of time of at least 3 but not more than 12 consecutive months, as chosen by the employer. Eligibility will be for at least 6 months up to a maximum equal to the length of the look back period. Has satisfied any applicable group imposed waiting period requirement, Not a temporary employee Paid at least Federal minimum wage reportable to the IRS on Form W-2 (documentation for owners may be different); or Eligible for continuous coverage under state or federal laws, e.g., COBRA The term active employee used above includes an owner, partner, director, or officer of the policyholder or related company who works the requisite time period described above. Owners, partners and proprietors must work for pay or profit verifiable from tax reports. Salary or wages paid to non-owner officers and directors must be reportable on Form W-2. The term active employee also includes an enrolled employee who is not currently working due to illness, injury or leave of absence. During the disability or leave of absence period, the employer is required to contribute to the employee s premium in the same amount as for other active employees. See time restrictions for Ineligible Employee below. Employees in an HMO plan must either work or live within the HMO service area. Dependents of a full-time active employee can be enrolled as Employee-Only or Employee-Child(ren) if the employee is eligible for and is covered under an Anthem Medicare supplement or Medicare Advantage policy. Ineligible Employees Employees not eligible for group health coverage include Part-time employees who, for example, work less than 30 hours per week Temporary employees Variable hour or seasonal employees who average less than 30 hours per week during the look back period Partners, owners, directors, officers (except as defined above) Independent contractors (persons compensated on IRS Form 1099) Unpaid workers/volunteers Employees not having satisfied the group-imposed waiting period Early retirees, unless the group has been approved for early retiree coverage Employees on Long Term Disability 17

18 Employees who have not worked full time for six months due to illness or injury (even if the person is covered by Workers Compensation) or for 12 weeks due to leave of absence (LOA) or temporary layoff. o A person must be back at work full-time for 2 consecutive weeks and released by his/her attending physician to return to full-time work before the six months recovery period can be restored. Otherwise, any related absences that occur will be considered part of the same absence. o A total of 12 weeks LOA or temporary layoff can be taken during any rolling 12 month period. Employees not scheduled to return to work Eligible Dependents An eligible dependent is defined as: The employee s spouse as recognized under the laws of the state where the employee lives The employee s or employee s spouse s unmarried or married child under the age of 26 which includes: o the employee s newborn, natural child, legally adopted child, or child placed in the home for adoption o the employee s stepchild o any other child for whom the employee is the legal guardian or has court ordered custody The employee s or employee s spouse s child 26 years of age or older who is incapable of self-support because of intellectual disability or a physical handicap which commenced prior to the child reaching age 26. The Company may require a periodic certification as to the child's disability. Coverage for the employee's non-handicapped child ends on the last day of the month in which the child reaches age 26. Ineligible Dependents Ex-spouse Domestic Partners Children of Domestic Partners Any child living with the employee who does not meet the requirements of an Eligible Dependent Early Retirees Early Retirees are defined as employees who retire between the ages of 55 and 65. Early Retiree coverage can be offered subject to the following requirements if written approval is received from Underwriting: The group must submit for review its Employee Handbook, Summary Plan Description, or other documentation deemed suitable by Anthem that gives the requirements to continue enrollment as an Early Retiree. Requirements that are a combination of age and years of service will be considered Coverage can be added at the group's initial enrollment or at renewal only Early Retiree coverage that was part of the group s benefit plan at the time of enrollment but was not submitted for approval can be approved retroactively upon receipt of appropriate documentation Coverage is available only to employees who were enrolled in the group s plan immediately prior to becoming an early retiree The employer must continue to pay at least 50% of the Employee-Only premium for the Early Retiree class At age 65 the Early Retiree's coverage, including any covered dependents, will terminate 18

19 Professional Employment Organizations (PEOs) If the group provides employee leasing services or is a Professional Employment Organization (PEO), a distinction must be made between employees of the group, leased employees, and temporary employees. Eligibility for health coverage is dependent on the classification of the employee. Employee Leasing Services: Personnel service organizations that provide substantial support to a recipient employer through leased employees. Substantial support: Support is substantial if 50% or more of the staff are leased employees. Recipient employer: Organization for which the employee furnished by the personnel service organization performs services. Leased employee: any person who is not an employee of the recipient employer and who performs services for the recipient employer under the following conditions: the services are provided subject to an agreement between the leasing organization and the recipient employer; the personnel perform such services for the recipient on a substantially full time, permanent basis that would meet Anthem s requirements for eligibility for health care or dental coverage; such services are performed under the primary direction and control of the recipient employer. Temporary Employee Services: Personnel service organizations that provide employees for incidental support to a recipient employer. Incidental support: Support is incidental if less than 50% of the staff is supplied by the temporary employee service organization or if the support is temporary in nature. Available Coverage Leased Employee from Employee Leasing Service: Eligible for the health or dental plan issued to the recipient employer Not eligible for coverage under the Employee Leasing Company plan Employee of Temporary Employee Service: Eligible for the health or dental plan of the Temporary Employee Services organization if the employee meets Anthem s requirements for eligibility Not eligible for coverage under the recipient employer plan Enrollment of Recipient Employer/PEO Client Group Group coverage is available to PEO client groups on the same basis as non-client groups, however documentation to enroll may differ. (See Section II. Documents Required to Establish Coverage.) While a VEC for the client group is encouraged, it may not be available if the PEO submits a combined VEC for all of its clients. If not available, follow the requirements for employers who have not previously filed a VEC. Classes of Employees A "class of employee" is a defined segment of employees of a single employer where the classes are differentiated based on employment related factors. For purposes of healthcare coverage, Anthem will approve the following classes: Management/non-management Union/non-union Salaried/hourly Job title Physical location of facility 19

20 Requests for approval of other classes of employees must be submitted to Underwriting. All classes must be offered health coverage unless the class is a union class excluded as part of the union agreement. Employer contributions and group imposed waiting periods can be administered by class. Types of Coverage Available Employee - Only Available to individual employees who do not cover any dependents and who do not qualify for Medicare supplemental coverage. Two policies for Employee-Only coverage cannot be written for an employee and spouse, unless the spouse is also an eligible employee of the group. Employee Child(ren) Available to individual employees and eligible dependent child(ren). Employee -Spouse Available to employees who will only cover their spouses and no other dependents. Employee - Family Available to employees who will cover their spouses and all other eligible dependents. Medicare Supplement Available to retirees, employees, and spouses over age 65 who are enrolled in both Part A and Part B of Medicare. Medicare Supplement plans are sold through Senior Markets and will not appear on group bills. Medicare Carve-Out Carve-Out is a group Medicare supplement secondary payment category that is no longer offered. Beginning in 2014 Carve-Out policies will be canceled at renewal. Members previously enrolled in Carve-Out must enroll in a standard Medicare Supplement plan. Effective Date of Coverage The effective dates of coverage for employees will be: The effective date of group coverage if enrolling with the group's initial enrollment The date requested by the group consistent with the group s waiting period and for whom premiums are paid Also, see effective dates of coverage under Special Enrollment Periods. Termination of Group Membership Coverage for members can end for a variety of reasons, such as an employee leaves the company; an employee becomes ineligible for regular group coverage (i.e., goes from full-time to part-time); divorce, if spouse was covered 20

21 The effective date of termination will be: the last day of the month in which the member becomes ineligible or requests termination the date requested by the group, if other than end of month Continuation of coverage options available to the member depend on the number of people the company employs. Companies should follow the federal guidelines concerning company size requirements when determining whether to offer qualified beneficiaries coverage under the Consolidated Omnibus Budget Reconciliation Act of 1985 (COBRA) or the Virginia 12 month continuation option. It is the responsibility of the group administrator to notify Anthem immediately of any change in the eligibility status of a member, dependent, or the company itself. Group-Imposed Waiting Period The group-imposed waiting period is a length of time determined by the employer that all employees of the group must serve prior to becoming eligible for coverage in the group's health care program. The waiting period can be waived at the group s initial enrollment, if requested. If waived, the waiver applies to all eligible owners and employees. In general, it is possible to have multiple waiting periods as long as they are administered along class distinctions, such as management and non-management or salaried and hourly. Requests for exceptions to the group-imposed waiting period for owners, key employees or special circumstances cannot be honored. For example, new owners of an entity, such as an incorporated business, whose legal status is unaffected by the change in ownership must serve the GIWP. See page 25 under New Owner. Limitations GIWPs can range from (1) first of month following date of hire to first of month following 60 days of continuous employment or (2) date of hire up to 90 days from date of hire in 30 day increments. A GIWP cannot exceed 90 days. Changing GIWP Can be changed at renewal and one other time during the contract year Changes will not be retroactive. The effective date of the change will be on or after the date of receipt by Anthem An employee s GIWP will be the GIWP in effect on the employee s date of hire and will not be changed Changes for first of month effective dates to other than first of month effective dates (odd effective dates) can be made only at renewal Adding a new GIWP for a new class of employee will count as a mid-year change Rehires former employees who are re-hired within 62 days and who were enrolled at the time of termination can reenroll without serving the GIWP. Changing from Ineligible Class to Eligible Class GIWP will be applied from the date of eligibility. Exception: formerly eligible employees who were changed to an ineligible class and then back to an eligible class within 62 days of becoming ineligible and who were enrolled immediately prior to becoming ineligible can re-enroll without serving the GIWP. Mergers and Acquisitions Employees already enrolled in the acquired company s health plan will be enrolled in the acquiring company s plan without serving the GIWP. The acquired employees still in the GIWP will serve the GIWP of the acquiring company. Late Entrants An employee or dependent who is not enrolled within 31 days after becoming eligible: will be permitted to enroll at the group's open enrollment period will be allowed to enroll during a special enrollment period, as described below 21

22 Open Enrollment Period An open enrollment period is the time during which employees select their health benefits for the upcoming year. Open enrollment usually coincides with the date of the group s renewal. Special Enrollment Periods. Special enrollment periods are allowed due to: loss of eligibility for other qualifying coverage; and changes in family status A special enrollment period is allowed due to a loss of eligibility for other qualifying coverage if the employee or dependent: declined coverage when he/she was first eligible for it; later loses the other qualifying coverage; and requests enrollment within 31 days thereafter. During a special enrollment period the employee may change to any medical plan offered by the employer. Loss of eligibility for other qualifying coverage includes (but is not limited to): group health coverage which ended because the employer ceased paying the contributions group health coverage which ended due to a loss of eligibility caused by legal separation, divorce, death, termination of employment, a reduction in work hours, or cessation of dependent status. Termination of a policy with a fixed time period is not loss of eligibility and does not give rights to a special enrollment period. COBRA continuation coverage which has been exhausted loss of benefits because the individual no longer lives or works in the HMO service area, and if covered under a group HMO plan, no other coverage is available a situation in which a plan no longer offers any benefits to the class of similarly situated individuals For eligible employees enrolling during a special enrollment period due to loss of eligibility for other qualifying coverage, coverage will begin on the effective date of the loss. A special enrollment period is allowed due to a change in family status if the eligible employee gains a dependent through: marriage, birth, adoption, placement for adoption When the eligible employee gains a dependent, the special enrollment period is allowed for the eligible employee and all of his or her eligible dependents. The special enrollment period will be the 31 days beginning on the date the eligible employee gains at least one eligible dependent for one of the reasons listed above. For persons enrolled during a special enrollment period due to a change in family status, coverage will begin: on the date of marriage or the first day of the month following marriage, if the special enrollment period is due to marriage. on the date of birth of the newborn, if the special enrollment period is due to the birth of a child. on the date of adoption or date of placement for adoption, if the special enrollment period is due to adoption or placement for adoption. 22

23 Other Enrollment Periods Enrollment other than during open enrollment or a special enrollment period will also be allowed in certain limited circumstances. These circumstances include: the issuance of a Qualified Medical Child Support Order requiring an employee to provide health coverage for his or her children. In order for the child to enroll, the employee parent must also enroll or already be enrolled. changes necessitated by the provisions of the cafeteria plan of the employee s spouse. Certain changes in coverage or cost of benefits provided under a cafeteria plan may permit election changes under that plan by the employee s spouse. Anthem or HealthKeepers will accommodate these situations by allowing enrollment changes by the affected employee that are consistent with the change made by the spouse. For example, a spouse s employer cafeteria plan may provide that elections may be changed if there is a significant change in the amount participants must contribute. If the spouse changes his or her election for one of these reasons, Anthem will allow the employee to make a corresponding enrollment change. other enrollment opportunities as permitted under IRS regulations covering cafeteria plans. enrollment in FAMIS Select, a state sponsored program for uninsured children. Under the FAMIS Select program financial assistance is provided to families to apply toward the purchase of health care coverage. Uninsured children will be allowed to enroll in the parent s health plan if enrolling within 31 days of enrollment in FAMIS Select. Additionally, if the parent is not currently enrolled and if the financial assistance under FAMIS makes coverage affordable for the rest of the family, all family members may enroll. Children may not enroll without the parent/employee. 23