I. Purpose and Overview: II. Appointment Process: III. Quote Requests: IV. Small Group and Individual Enrollment Procedures: V. Group Eligibility:

Transcription

1 Agent Handbook 2015

2 Table of Contents I. Purpose and Overview: 4 II. Appointment Process: 4 III. Quote Requests: 4 IV. Small Group and Individual Enrollment Procedures: 5 V. Group Eligibility: 5 1. Eligible Groups 5 2. Ineligible Groups 6 3. Virgin Groups: First Time Coverage and Newly Formed Businesses 6 4. Affiliated Companies 6 5. Deductible Carry-Over 7 VI. Employee Eligibility: 7 1. Eligible Employees 7 2. Ineligible Employees 7 3. Eligible Dependents 8 4. Ineligible Dependents 9 5. COBRA 9 6. Retirees 9 7. Late Enrollees 9 8. Military Service & USERRA Residence Criteria Special Enrollment Voluntary Cancellation Pay Grace Period & Delinquency 11 VII. Employer Group Size, Contribution & Participation: Group Size Participation Requirements Employer Contribution Requirements 11 VIII. Guarantee Issue and Renewability: 12 IX. Effective Dates and Enrollment: Effective Date Change of Anniversary or Renewal Date Broker of Record Change Waiting Periods: Employee & Dependent Enrollment 13 X. Small Group Rating: Background Methodology Non-Discrimination Multi-Year Rate Guarantees 17 XI. Dual Option and Multiple Carriers: 18 XII. Multiple Choice Product Options: 18 XIII. Billing: 18 XIV. Continuation of Coverage: 18 XV. Renewals: 19

3 I. Purpose and Overview: The Land of Lincoln Health Agent Handbook is designed to provide the staff of Land of Lincoln Mutual Health Insurance Company (LLH) and its appointed brokers with a guide to the small group and individual quoting and enrollment guidelines and procedures. The Handbook is applicable to Small Groups, defined as groups with 2-50 average total number of employees, as defined by the federal Shared Responsibility guidance, IRS, and the Affordable Care Act (ACA) and individuals under age 65. This Handbook is not intended to be an exhaustive list of all possible situations, but to provide users with an overview of Land of Lincoln Health s approach in regard to enrollment. Final enrollment and underwriting decisions are made at the discretion of Land of Lincoln Health s Underwriters. Any updates to this Handbook require the approval of the Chief Financial Officer of Land of Lincoln Health. II. Appointment Process: LLH will appoint brokers upon the first sale; please do not send the appointment paper work until completion of sale. Producers must meet specific requirements: Active license within the state of Illinois. Successful Producer Background Check- no complaints, license suspensions, or revocations on file with the Insurance Commissioner. Signed Producer Agreement. Bondable. (LLH will not bond you.) Possess at least $1 million in Errors and Omissions Insurance and maintain such policy. Agree to adhere to Privacy and HIPPA requirements. For Marketplace products, you must have completed the CMS Certification process and acquired an ID. IRS Form W-9 Appointments must be completed by the 10th calendar day following the effective date of group or individual enrollment. III. Quote Requests: a. For individual quotes outside of Open Enrollment, retrieve a rate from our website at and request a paper application from your representative. a. For individual quotes starting Open Enrollment 2015, utilize our private exchange and enrollment platform at and request step by step instructions from your representative. b. Requests for a small group quote should be sent to the following with reference to Land of Lincoln Health in the subject line: 3

4 a. b. c. Or call A response will be made within 2-3 business days or sooner, upon receipt of the following: Business Phone Number Census Information: date of birth and tobacco status for all applicants, including dependents Current Benefit Summary Effective Date Employer s Zip Code and County Name of Business SIC Code / Nature of Business IV. Small Group and Individual Enrollment Procedures: a. Individuals may apply for coverage through the Marketplace or direct with LLH. Individuals can find out whether they qualify for lower costs on premiums or out-of-pocket cost on the Marketplace. These savings are based on household income and size. b. Small Group Applications for enrollment should be submitted online (or by paper, as needed). Fulfillment will be acknowledged when the employer and employees meet all enrollment requirements and the Employer has provided the following: Bank Draft Authorization Form Group Master Application Employee Enrollment Forms (and Waivers) Most Recent Prior Carrier Bill, if applicable Most Recent State Wage and Tax Form (with employment status indicated) Plan Selection Form Rate Proposal Land of Lincoln Health reserves the right to request any additional information as deemed appropriate. 4 V. Group Eligibility: 1. Eligible Groups The groups eligible for coverage include, but are not limited to: 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 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

5 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) 2. Ineligible Groups The following types of groups are not eligible for coverage: a. Groups who fail to meet the minimum contribution or participation requirements, except during the specified open enrollment period. b. Groups with more than 30% of enrolled employees living outside the Land of Lincoln Health s service area. c. Groups not physically located within the Land of Lincoln Health service area. 3. 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. Additional documentation will be required, such as proof of incorporation, including articles of incor poration, if the group has newly formed and not yet filed a quarterly Tax/Wage statement. 4. Affiliated Companies Employers with more than one business under common ownership with different tax identification numbers may be eligible to enroll with proper documentation. 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. 5. Deductible Carry-Over Land of Lincoln Health offers a deductible credit that is based off of the calendar year from January 1st and on. EOB s will need to be submitted in order to obtain the carry- over credit. 5

6 VI. Employee Eligibility: 1. Eligible Employees 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 work week of at least 30 hours, or 120 hours per month in the group s regular place of business, who has met any applicable waiting period requirements. The term includes sole proprietors or partners of a partnership, if they are actively engaged on a full-time basis in the employer s business, and they are included as employees under a health benefit plan of the employer. A partner in a partnership or a 2-percent S-corp shareholder is not considered an Employee, unless they are actively working full-time. 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. 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. d. Contracted, leased or 1099 individuals may be eligible for group coverage subject to underwriting approval. e. Domestic partner acceptance follows the rules for the State of Illinois. 2. Ineligible Employees a. Any employee, owner, board member, director, shareholder, relative, friend or associate, who is not actively working in the employer s business for the required minimum number of hours per week. 3. Eligible Dependents a. Legally married spouse, natural born children, stepchildren, and legally adopted children to age 26. b. Disabled and dependent adult children age 26 and beyond may be eligible for coverage with proper documentation. 6

7 c. Military veteran dependents up to age 30 may be eligible for coverage with proper documentation. 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 Land of Lincoln Health Plan within 31 days of the birth or placement for adoption. 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. 4. 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

8 5. COBRA A group may have up to 10% of its total enrollment covered by COBRA continuation. The total COBRA count includes those currently enrolled in COBRA, as well as any former Employees are who in their COBRA election period. 6. Retirees Coverage may be offered to early (< age 65) retirees and Medicare-eligible retirees of a Small Group as long as the active employees are also covered by the LLH medical plan. 7. Late Enrollees a. If an Employee fails to submit proper membership paperwork within the open enrollment timeframe and does not qualify as a special enrollee, then the Employee must wait to enroll during the next open enrollment period. b. Late enrollees are not allowed during the contract year. 8. Military Service & USERRA The Uniformed Services Employment and Reemployment Rights Act (USERRA) requires Employers to provide certain re-employment and benefits rights to employees who take a leave of absence for military service. All Employers are subject to USERRA rules, not just those who are subject to COBRA. Both COBRA and USERRA continuation of coverage run concurrently, and there is an additional 24 months of USERRA coverage after COBRA coverage expires. 9. Residence Criteria Subscribers must live and/or work within the Land of Lincoln Health service area. There are certain exceptions that are allowed, such as Dependents who are attending school or a college that is out-of-area, and Employees who may live out-of-area. The Group s plan design should address coverage for these insured (PPO or POS, etc.) and no greater than 30% of the enrollees should be located outside of the service area 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

9 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. 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. 11. Voluntary Cancellation Voluntary cancellation can be done via the phone (by the broker of the employer). Land of Lincoln Health asks for a 30 day notice to ensure that the group is not charged. In the event that a late notice is submitted, the group would be refunded (less any claims expenses that may have occurred). 12. Pay Grace Period and Delinquency Pre-ACA, the State of Illinois accepted the National Association of Insurance Commissioners (NAIC) standard of a 31 day grace period. This allows the Member to have 31 days past the premium due date. During the 30 day Grace Period Carriers/Issuers were required to pay for the Member s covered healthcare expenses. If the Member did not pay the premium due by the 31st day after the due date, the Carrier/Issuer would retro-terminate the Member s benefit plan to the date they were last paid through. At that time, the Carrier/ Issuer would routinely come back to the providers of care (Hospitals and Physicians) and require a refund of any money paid during that 31 day Grace Period. The providers were then on the hook to go after the patient/member for payment of the services rendered, often times leading to significant Bad Debt. With the onset of the ACA, the Federal Government changed the Grace Period designation for many individuals. For those individuals that enrolled through the FFM Marketplace (Exchange), and were eligible for an Advance Payment Tax Credit (APTC) otherwise known as a Subsidy, they were granted a Grace Period of 90 days past the due date for the monthly premium. During that time Carrier/Issuers were required to pay for the Member s covered healthcare expenses for the first month of the 90 Grace Period. 9

10 If the Member s premium was not ultimately paid by the 91st day after the due date, the Carrier/Issuer would retro-terminate the Member s benefit plan to the 31st day past the premium due date, otherwise known as the end of the first month of the Grace Period. This is a significant change for all involved: Members, Hospitals, Physicians, and the Carrier/Issuer. With the Federal Government requiring Carriers/Issuers to cover the first month of Grace Period, and allowing Carriers/Issuers to terminate the Member back to the end of the first month of the Grace Period, all care rendered to the patient/member during that first month of the Grace Period need not be refunded to the Carrier/Issuer. The provider of care is no longer on the hook for the payment of those services, the Carrier/ Issuer is on the hook. This is supported by Federal Regulations. The 90 day Grace Period only applies to those individuals that are eligible for APTC through the FFM Marketplace. All others are subject to the pre-aca, State regulated 30 day Grace Period. Land of Lincoln Health will distribute delinquency notices to the employer. VII. Employer Group Size, Contribution & Participation: 1. Group Size a. Group is any Employer group that averaged more than 1 but no more than 50 total employees during the preceding calendar year. PPACA defines the number of employees as the average number of employees employed by the company during the preceding calendar year. An employee is typically any person for which the company issues a W-2, regardless of full-time, part-time or seasonal status or whether or not they have medical coverage. b. Groups are required to re-certify eligibility as a Small Group prior to renewal, or at any time as may be requested. Should a Group grow above 50 average total number of employees, the Group will be reclassified as a Large Group upon time of notification or renewal. c. Proof of group size and qualification for Small 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. 2. Participation Requirements The minimum Employee participation requirement, excluding those with valid Waivers due to other creditable group coverage (say through a Spouse s group plan), or Medicaid, Medicare, Tricare, or Indian Health Services is 50 percent. Waivers due to covered under an individual plan are also considered valid. 10

11 3. Employer Contribution Requirements a. The minimum Employer contribution is established by the Employer at the time of initial enrollment. Under the ACA, an Employer may be subject to a penalty if the Employer does not provide affordable coverage. Affordable employersponsored insurance is defined as requiring an employee contribution of less than 9.5 percent of household income for an employee-only plan that covers at least 60 percent of medical costs on average ( minimum value ). b. Defined dollar contributions are allowable provided they meet the guideline of contributing a minimum of the total Employee-only premium. Fixed dollar contributions, or defined contributions will be reviewed annually to confirm compliance. c. In a multiple plan scenario, the low option plan contribution must meet the minimum contribution of Single tier premium. The buy-up option or additional premium may be allocated to the Employee. d. There is no minimum Employer contribution for the incremental Dependent (Spouse, Child, Family) tiers. VII. Employer Group Size, Contribution & Participation: Health insurance issuers are to offer coverage to and accept every employer who applies for coverage in the group market, subject to certain exceptions. Exceptions allow issuers to restrict enrollment in coverage to: 1) open and special enrollment periods, 2) employers with eligible individuals who live, work, or reside in the service area of a network plan, and 3) for situations involving limited network capacity and limited financial capacity. The Employer group coverage must be renewed, provided the group is in compliance with all underwriting guidelines, such as minimum participation and contribution guidelines. A renewal on the group s current benefit plan must be provided, unless the benefit plan has been discontinued. IX. 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. Effective dates begin on the first of the month. The deadline for enrollment is the 15th of the previous month. b. Anniversary / renewal / open enrollment dates are the same as the effective date in succeeding years. 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: 11

12 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 backdating 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 may be subject to termination 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 Underwriting in advance, and rates will be subject to recalculation and adjustment based on the new renewal date. 3. Broker of Record Change All Broker of Record changes are based on the date of receipt. In order for the Broker of Record change to be processed for the following month, the letter must be received by the 15th of the month. Requests should be sent to Valence Health. The statement of requests must be submitted with the group s letterhead and must include the following: Group address and phone number Group policy number New agent name, agency and address Previous agent name, agency and address Signed and dated by the group (officer) 4. 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: 12

13 a. Benefit Waiting Periods: i. Waiting Periods may be 0, 30, or 60 days per Group request and Underwriting approval after the date of full-time employment (or part-time if the Employer is offering coverage to its PT EEs, and meet the guidelines.) ii. The effective date of coverage will be the 1st of the month following the Waiting Period. iii. Waiting Periods can only be changed at renewal (subject to Underwriting approval) and must be the same for all individuals within the Group. 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. d. Special Enrollment Period for Loss of Other Coverage If the employee or dependent does not request enrollment within 31 days of meeting eligibility requirements, the Employee or dependent will be considered a Special Enrollee if one of the following conditions is met: i. The Employee or dependent was covered under a group health plan or had health insurance coverage at the time coverage was previously offered to the employee or dependent, and the employee or dependent stated in writing that the offer of coverage was declined due to other coverage. ii. The employee s or dependent s coverage was: 1. Exhausted under COBRA or state law continuation; or 2. Not under continuation coverage and the coverage was terminated as a result of loss of eligibility (including as a result of legal separation, divorce, death, termination of employment, or reduction in the number of hours of employment); or 3. Lost due to the termination of employer contributions towards coverage; or 4. Lost due to the Subscriber s spouse taking a leave of absence; or 5. Lost due to the Subscriber s spouse incurring a significant change in health coverage attributable to the spouse s employment, in which Underwriting will review. ii. The employee or dependent must request special enrollment within 31 days of the event(s.) e. Special Enrollment Period Due to New Dependents The following individuals are eligible to enroll together or separately without being considered a Late Enrollee, as long as the request is made within 31days of the event: 13

14 i. An eligible employee when he or she marries or has a new child as a result of marriage, birth, adoption, or placement for adoption. ii. A spouse of a Subscriber at the time of marriage or when a child is born, adopted, or placed for adoption. iii. An eligible dependent of the Subscriber and/or the Subscriber s spouse when the Subscriber marries, or has a new child as a result of birth, adoption, or placement for adoption. f. Employee in the Military i. The government provides military personnel with all medical, dental, and vision care on the date of active status. For their dependents, coverage is available through Tricare. Payment of premiums is not required. ii. Since any members who go into active military duty are no longer eligible as active employees, regulations require that the employer make available COBRA continuation coverage for their dependents. iii. When an Employee returns from active service to work for the same Employer, coverage may be resumed upon their return to work without an additional Waiting Period. The pre-existing condition exclusion period will apply if it was not satisfied prior to the military service. g. Temporary Absence i. This is defined as a situation, other than FMLA in which an event, either voluntary or involuntary in nature, results in an active, full-time employee being away from normal work duties for an unspecified amount of time. Employees temporarily absent are not eligible for continuation of coverage. ii. If an employee is absent from work for up to six consecutive months, and the employer has a written policy to continue providing benefits to all such employees, then the employee may remain covered on the group insurance program. After six months, the employee will no longer be eligible for coverage. h. FMLA For groups subject to the Family and Medical Leave Act of 1993 (FMLA), a previously enrolled member is eligible upon the Subscriber s request to reinstate coverage after completion of an approved leave in accordance with the FMLA, provided a written request for reinstatement is made within 31 days of the end of the FMLA leave and the person continues to satisfy the eligibility requirements. X. Small Group Rating: 1. Background Beginning for plan years on or after January 1, 2014, the ACA requires adjusted community rating for non-grandfathered policies in the small group insurance market. 14

15 2. Methodology Under the ACA s adjusted community rating provisions, the use of actual or expected health status or claims experience to set group premiums is prohibited. Health insurance issuers may vary the premium rate charged to a specific non-grandfathered small group from the rate established for that particular plan only on the following factors: family size (individual or family), geography (rating area), age (within a ratio of 3:1 for adults) and tobacco use (within a ratio of 1.5:1). a. Family rating: The final rule clarifies that the cap on rating no more than the three oldest individuals under the age of 21 only applies to covered children. Employees and spouses who are under the age of 21 will be separately rated. b. Small group rating: Issuers will use the per-member rating methodology in the small group market. States may require issuers to give small groups an average premium amount for each employee in the group, provided that the total group premium equals the premium that would be obtained through the per-member rating approach. c. Geographic rating: The final rule clarifies that states may establish different rating areas for the individual or small group markets, but rating areas must apply uniformly within each market and may not vary by product. In addition, the final rule allows much more flexibility for states in terms of what rating area configurations will be presumed adequate. If a state does not establish rating areas, the default will be one rating area for each metropolitan statistical area (MSA) in the state and one rating area for all other non-msa portions of the state. d. Age rating: The maximum 3:1 ratio for age rating applies to adults age 21 and older. The final rule retains the single band for children age 0-20 and a single age band for individuals 64 and older. Age for rating purposes continues to be determined based on the date of policy issuance and renewal; however, individuals who obtain coverage other than at issuance or renewal may be rated as of the age that they are added. i. No state exceptions to the uniform age bands are allowed under the final rule. States can still set their own age curve within these bands. States may also establish separate age curves for individual vs. small group markets. e. Tobacco rating: The final rule defines tobacco use as use of tobacco an average of four or more times per week within no longer than the past six months, including all tobacco products but excluding religious and ceremonial uses of tobacco. Tobacco use will be based on when a tobacco product was last used. Issuers may vary rates for tobacco only based on individuals who may legally use tobacco under federal and state law (i.e., no tobacco rating for individuals under age 18). If an enrollee provides false or incorrect information about their tobacco use, an issuer may retroactively apply the appropriate tobacco use rating factor to the enrollee s premium, but may not rescind the coverage. The final rule retains the rating for tobacco use within a ratio of 1.5:1. Issuers may vary tobacco rating by age, as long as the tobacco use factor does not exceed 1.5:1 for any age band. The small group market may apply the tobacco rating factor only in connection with a wellness program, allowing a tobacco user to avoid paying the full amount of the tobacco factor by participating in a tobacco cessation program. 15

16 4. Multi-Year Rate Guarantees a. Small Group premiums and rates will be guaranteed for a period of 12 months from the original 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 Land of Lincoln Health 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 prenotification to the group. b. Multiple year renewal rate guarantees are generally unacceptable, as the Employer group may unilaterally cancel coverage or not renew should another Carrier offer a better renewal rate or richer plan design. Alternatively, if the Employer group is experiencing benefit costs greater than expected, the multiple year renewal guarantees will result in a loss to LLH. In virtually all cases, a multi-year rate guarantee is advantageous to the Employer Group only, and results in losses (through claims costs) or membership (through group unilaterally terminating coverage for a better deal from another carrier). XI. Dual Option and Multiple Carriers: The expectation is that Land of Lincoln Health will offer small groups full replacement coverage, and there is less likelihood that LLH will be offered as a slice or multiplecarrier offering unless otherwise agreed to by the Manager of Underwriting, or designated Underwriting provider, and the Chief Financial Officer of LLH. XII. Multiple Choice Product Options: Multiple-choice arrangements allow an employer to offer more than one LLH medical plan to employees. Employers have the option to offer multiple choice product options to Employees. XIII. Billing: Upon initial enrollment the Employer must select a payment method. The Employer can choose to mail a check (or money order) to Valence Health lockbox or the Employer can elect to enroll in electronic funds transfer by completing the Bank Draft Authorization Form. The fi rst premium statement is prepared by Valence Health and delivered to the group with the Group Policy. Each statement thereafter will be generated by the 10th of the month for the upcoming month. The bill will contain the names of all of the employees with the premium for each employee. The total premium amount is due on the 1st of the month and must be received within the Grace Period for insurance to remain in force. If LLH has not received all Premiums and fees due by the end of the Grace Period, this Policy will. 16

17 XIV. Continuation of Coverage: a. Consolidated Omnibus Budget Reconciliation Act (COBRA) applies to employers that have had 20 or more employees during the prior 12 months. The law requires employers, who maintain group coverage, to offer employees and/ or their dependents continuation of group coverage at group rates when there is a loss of group insurance coverage. b. State Continuation of Coverage applies to employers who have less than 20 employees during the prior 12 months. Employees eligible for State Continuation of Coverage must meet thefollowing criteria: You have experienced a reduction in hours below the minimum required by the group plan; and You have been covered for Health Expense Coverage for at least 3 months in a row. XV. Renewals: Renewal notifications are sent to the agent of record and the Employer at least 90 days prior to the group s renewal date. Renewal notifications will contain the following: a. Group Renewal Letter b. Renewal Rates and Rate Details Employers will have 30 days to review their offer of coverage. Employees will have at least 30 days to review the new offer of coverage and decide to either accept the offer of coverage or waive the offer of coverage. During this open enrollment period, employees may also add eligible dependents and make changes to their medical plan (if an employer has made employee choice available to qualified employees). The group s renewal (both the employer s plan offerings and employee coverage decisions) must be submitted by the 15th of the month prior to the end of the group s plan year to be effective timely for the beginning of the following plan year. Land of Lincoln Health does not offer off-renewal benefit changes. 17