FREQUENTLY ASKED QUESTIONS (FAQ) FOR ALL FULLY INSURED GROUPS

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1 PATIENT PROTECTION and AFFORDABLE CARE ACT Expanded Coverage for Young Adults Coventry Health Care and our affiliated health plans, including HealthAmerica, are providing uninterrupted coverage for all young adult dependents under age 26 currently covered under their parents policies for our fully insured group health plans. This decision took effect April 23, 2010, and well in advance of the new health reform requirements. Expanded coverage for dependents under age 26 means recent college graduates and other young adult members can avoid a gap in coverage even before the new requirements of the law are effective. At Coventry, we know the importance of maintaining continuous affordable health coverage for young adults and people of all ages. Moving up the timetable provides assurance to parents that their children will continue to receive high quality health care coverage at an affordable cost. FREQUENTLY ASKED QUESTIONS (FAQ) FOR ALL FULLY INSURED GROUPS Under the Patient Protection and Affordable Care Act (PPACA), health insurers and group health plans are required to allow dependents up to age 26 to remain on a parent s health insurance plan. This requirement takes effect for plan years that start on or after September 23, 2010, and applies to both new plans and grandfathered plans. When will Coventry stop automatically dis-enrolling dependents under age 26? Effective April 23, 2010, Coventry will not dis-enroll any dependent under age 26 currently covered under a fully insured contract with a Coventry Health Care or affiliate health plan. Dependents whose termination was to be effective April 23, 2010, or later, will not be dis-enrolled and will enjoy extended benefits until age 26. Are all employer customers required to follow Coventry s decision to stop automatically dis-enrolling dependents under age 26? Yes. This FAQ describes Coventry s policy for all fully insured group health customers. In preparation for the new legislation, some aspects of the law were implemented early and without exception for our fully insured membership. Self insured clients may choose to wait and implement these changes at their next renewal that begins on or after September 23, All group policies except retiree-only groups, however, must ultimately comply with the new requirement. Are current members required to do anything to take advantage of the extended benefits? No. To maintain benefits under age 26, there is nothing for our fully insured employers or members to do. If a member already received a letter stating the dependent will no longer be eligible for coverage, does the member need to do anything? It is possible that some members received letters on or after April 23, 2010, advising them that their dependent was no longer eligible since some letters were prepared and sent before we implemented the Page 1 of 5 Rev

2 change. Dependents whose termination was to be effective April 23, 2010, or later will now automatically remain on the benefit plan with no disruption. Are dependents covered up to age 26 only if they are in school? No. Many young adults are enjoying the graduation season and are not considered full-time students now. Currently covered dependents are no longer required to be full-time students in order to continue their in-force coverage until age 26. Should employers notify their employees of this change? Yes, we ask that employers notify their employees of the change to the dependent eligibility requirements and have tools to help with this process. Coventry will not send letters informing members of the change. If a dependent is enrolled in an ancillary product through Coventry, such as dental or vision, will coverage continue with these ancillary product(s) to age 26? Yes. These dependents will also have extended coverage for dental, vision, or other ancillary benefits if the dependent is enrolled in the Coventry medical plan. When can employees enroll or re-enroll dependents not currently covered by a Coventry plan? A dependent under age 26 who becomes eligible for coverage under their parent s plan as a result of the new law, but is not currently enrolled, may enroll or re-enroll during the group s open enrollment period for the next plan year that begins on or after September 23, In addition, there are specific situations in which Coventry will accept new dependents prior to September 23, EXISTING SUBSCRIBERS with FULL-TIME STUDENTS: Prior to September 23, 2010, new subscribers with a dependent under age 26 who is a full-time student may enroll their dependent if they meet two criteria: (1) the under age 26 dependent must be within the age limits under the policy; and (2) the dependent must provide proof of full-time student status. As described above, as benefit plans renew on or after September 23, 2010, dependents under age 26 can enroll or re-enroll regardless of student status. NEW POLICIES/SUBSCRIBERS: To ensure uninterrupted coverage when changing health insurance carriers prior to September 23, 2010, Coventry will also accept dependents under age 26 who are over the policy age limits for newly effective policies and subscribers under the following criteria: If the dependent is not within Coventry s benefit plan age limits but the under age 26 dependent is currently covered under a parent's group plan, the dependent under age 26 can be enrolled so long as there is no gap in coverage. The prior carrier Certificate of Creditable Coverage is required. If the dependent under age 26 is not within the benefit plan's age limit and has an individual policy or a COBRA policy, the dependent will not be eligible to join their parent s plan until the next plan year that beings on or after September 23, Page 2 of 5 Rev

3 How will Coventry obtain the prior carrier s Certificate of Creditable Coverage (COCC) to add a dependent (when applicable)? Coventry will automatically enroll the dependent under age 26. Subsequently, a letter will be sent to the subscriber requesting a COCC. If the subscriber does not respond within 30 days, the dependent will be terminated back to the original effective date. Can employers allow subscribers to enroll a dependent if the dependent has access to other insurance coverage, and the dependent wants to waive that other insurance to enroll as a dependent under the Coventry plan? Yes. Plans established on or before March 23, 2010 offer employers the flexibility to include or exclude dependents under age 26 who are eligible to enroll in his/her own employer-sponsored health plan, unless it is the group health plan of their parent. Starting January 1, 2014, all employers must extend coverage to dependents under age 26. This includes plans with grandfathered status. Will Coventry verify if a dependent is living with a parent? Will Coventry verify if a dependent is eligible to subscribe for insurance through his or her employer? Our traditional Coordination of Benefits (COB) operations will continue as usual. We will not verify that a dependent is living with their parent since it is not a condition for coverage. It is the employers responsibility to verify eligibility to (1) determine if they will impose an eligibility limitation; and (2) verify the dependent s eligibility. As a reminder, starting January 1, 2014, all groups (including groups with grandfathered status) must extend coverage to a dependent under age 26, even if he/she is employed and eligible for coverage through his/her employer. Are employers required to ensure that under age 26 dependents are eligible for coverage? Yes. Group administrators or those authorized to act on their behalf must take reasonable steps to determine eligibility for all dependents. What happens if a state has more generous requirements than coverage until age 26? Some states currently mandate dependent benefits that extend beyond age 25. We will continue to administer those mandates in accordance with state laws. States where more generous guidelines are currently being administered are noted below: State Florida Illinois Iowa Nebraska Ohio Pennsylvania South Dakota Guideline To age 30 - unmarried, state resident or full time student, no other insurance To age 30 - if military service Unlimited age, unmarried, full-time student To age 29 unmarried, no dependents To age 28 unmarried, no student dependency. Legislation is effective July 1, To age 30 unmarried, no dependents. Groups have an option to offer the coverage. It is not mandated. To age 29 - full-time student Page 3 of 5 Rev

4 Are there any tax implications for employees covered under a group health plan from providing dependent coverage to age 26? No. The Internal Revenue Service (IRS) recently provided guidance (in Notice ) on the tax treatment of health coverage for children up to 27 under the new health reform law. This guidance stated that, effective March 30, 2010, the general exclusion from an employee s gross income for reimbursements for medical care under an employer-provided health plan extends to any employee s child who has not attained age 27 as of the end of the taxable year. If a group or subscriber has more specific questions, they should contact their financial or legal advisors. Are dependents to age 26 permitted to be enrolled in Coventry s Passport Program? Yes. Dependents are permitted to enroll or continue existing participation in the Passport Program. For more information, subscribers should contact customer service at the number on their member ID card. How will you administer dependents that terminate from Coventry coverage to enroll in coverage through their own full-time job, but then lose the job and their coverage and ask Coventry to reinstate them as a covered dependent? In this scenario, a dependent may be eligible to be added back to the benefit plan if required by federal HIPAA qualifying event requirements or state mandates. This long-standing provision is separate from recent PPACA and the Dependent Age 26 information in this FAQ. When the provisions of the new reform law are refined, our operations will be refined accordingly. Example: The customer is based in Virginia where the current state mandated coverage is up to age 23. This will change to age 26 for plans starting on or after September 23, Henry is the subscriber. Beth is his 24 year old dependent. Beth terminated her coverage under Henry s policy on February 1, 2010 because she found employment that offered health care benefits. Henry s group s plan year begins October 1, 2010 and Beth declined to enroll under Henry s plan at open enrollment for the October 1 st effective date because she had coverage through her own employment. Beth loses her job (and her coverage) on November 1, Beth qualifies for a special enrollment period under HIPAA and is eligible to re-enroll in Henry s plan within thirty days of her loss of other coverage. Under HIPAA if a dependent declines to enroll under a plan s coverage at the most recent open enrollment because the dependent had other coverage at the time, and then loses the other coverage, the dependent s qualifying event provides for a special enrollment period under HIPAA. Beth is eligible to enroll in Henry s plan because: 1) Beth is under age 26, 2) the qualifying event occurred after September 23, 2010, and 3) Henry s plan renewed after September 23, 2010, but before Beth lost her coverage. If a dependent under age 26 has a child, are benefits extended to the child as well? No. The law does not provide extended benefits for dependent s dependents. Some state laws may require temporary coverage of the newborn child. Please check with your account manager to confirm state regulations. Page 4 of 5 Rev

5 If a dependent under age 26 is married, are benefits extended to the dependent s spouse? No. The law does not provide extended benefits for dependent s dependents, such as a spouse. Example: John is the subscriber. John s 25 year old daughter, Elisabeth is married to Paul. Elisabeth is eligible to receive extended benefits as John s dependent. Paul is not eligible, since Paul is not a child of John s, Paul would be considered a dependent s dependent. How are pre-existing limitations applied to dependents under age 26? There are no pre-existing limitation changes specific to dependents under age 26 at this time. Current pre-existing limits apply (if applicable). There are separate provisions of the new law related to preexisting conditions and limitations that will be addressed at a later time. Will Coventry amend the group contract or certificates of insurance to reflect the extended benefits? No. Since the business decision is more generous, contract amendments are not necessary at this time. How will the new age 26 rules impact in-force premium rates? There are no changes to our rating methodologies at this time. I have other question related to health care reform. Where can I learn more about what Coventry is doing to prepare for other health care reform initiatives? Visit HealthAmerica s website, Page 5 of 5 Rev