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Underwriting Guidelines 2 to 50 eligible employees This material is for informational purposes only and is not intended to be all inclusive. Other policies and guidelines may apply.

Note: State and Federal Legislation/Regulations, including Small Group Reform, HIPAA, and ACA, take precedence over any and all Underwriting Rules. Exceptions to Underwriting Rules require approval of the Regional Underwriting Manager except where Head Underwriter approval is indicated. This information is the property of Aetna and its affiliates (“Aetna”), and may only be used or transmitted with respect to Aetna products and procedures, as specifically authorized by Aetna, in writing. All Underwriting Guidelines are subject to change without notice.

Affiliated, Associated or Multiple Companies, Common Ownership

Groups who have more than one business with different tax identification numbers (TIN) may be eligible to enroll as one group if the following are met:

One owner has controlling interest of all businesses to be included; or

Companies that are affiliated and that are eligible to file a combined income tax return for purposes of state taxation shall be considered one employer.

All groups filed under one combined tax return are considered one group.

There are 50 or fewer employees in the combined groups.

Businesses with equal controlling interest may be considered, if the owners of the company designate an individual to act on behalf of all the groups.

A completed Common Ownership form must be submitted.

Underwriting reserves the right to final underwriting review, and may consider common ownership on a case-by-case underwriting exception. Example: One owner has controlling interest of all businesses to be included: --Company 1 - Jim owns 75% and Jack owns 25% --Company 2 - Jim owns 55% and Jack owns 45% Both businesses can be written as one group since Jim has controlling interest in both businesses.

Benefit Waiting Period

The eligibility date for enrollment of a new employee will be the first day of the policy month following the waiting period of 0 days or 30 days following Date of Hire. Policy month refers to the contract effective date of the 1st or 15th.

Benefit waiting periods must be consistently applied to all employees, including newly hired key employees.

At initial submission of the group, the benefit waiting period may be waived upon the group’s request. This should be checked on the employer application.

Only one benefit waiting period is allowed.

Changes to the benefit waiting period may be requested 6 months after the original effective date.

Changes to the benefit waiting period can only occur one time in 12 months or on the group’s anniversary date.

• No retroactive benefit waiting period changes will be allowed. Examples 1st of the month following the BWP 15th of the month following the BWP 0 days Date of Hire: 4/18

Effective date: 5/1 Date of Hire: 4/18 Effective date: 5/15

30 days Date of Hire: 4/18 Effective date: 6/1

Date of Hire: 4/18 Effective date: 6/15

Businesses Located Outside the United States

When the parent company is located outside the United States and there is a division inside the country that is seeking coverage, the U.S. location must be a separate legal entity to be considered/counted separate from the rest of the corporation. If it is not a separate legal entity, then all eligible employees from all locations will be counted and the total must be under 50 eligible employees.

Although a group may be shown as a domestic business corporation, if it is not a separate legal entity, employees located outside the United States are included in the count for the number of employees for the corporation.

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Cal-COBRA Premium Check

Premium for Cal-COBRA employees should be made at the time of the case submission.

A separate premium check from the member should be included with the group’s new business submission.

If premium is not received, the group will be approved if all other requirements have been met.

Carve Outs Union carve outs are allowed with a minimum of 5 enrolled employees who reside within the Aetna California network service area.

Case Submission

All new business case submissions must be received by Underwriting no later than the end of the 5th business day after the requested effective date.

Any case received after the cut-off date will be considered on an exception basis only, as approved by Underwriting. If not approved, the effective date may be moved to the next available effective date, with potential rate impact.

Census Data Census data must be provided for all eligible employees, including enrolled, waivers (with spousal waivers notated) and COBRA/Cal-COBRA.

Include the date of birth for each employee, spouse and child, date of hire, gender, dependent status and residence Zip code and employee work location zip code.

COBRA/Cal-COBRA enrollees should be included on the census and noted as COBRA/Cal-COBRA.

Rates are based on final enrollment.

COBRA/Cal-COBRA

Federal COBRA is a U.S. law that applies to employers and group health plans that cover 20 or more employees. It lets employees keep their group health plan when their job ends or hours are cut.

Cal-COBRA is a California law that applies to employers and group health plans that cover from 2 to 19 employees. It lets employees keep their health coverage for up to 36 months.

Cal-COBRA is also for people who exhaust their Federal COBRA. When the 18 months of Federal COBRA ends, an individual can keep the health plan up to 18 more months under Cal-COBRA.

Small Employer (2 to 19 employees) Large Employer (20 or more employees) Cal-COBRA — up to 36 months

Federal COBRA — 18 or 36 months (depends on the qualifying event) Cal-COBRA — If Federal COBRA was 18 months, 18 more months of Cal-COBRA is available

For more information see the following link www.hmohelp.ca.gov/dmhc_consumer/hp/hp_cobra.aspx

Federal COBRA Applies to: Group health plans sponsored by employers with 20 or more employees on more than 50 percent of its typical business days in the previous calendar year. - Include: Full-time, Part-time, Seasonal, Temporary, Union, Owners, Partners, Officers - Exclude: Self-employed persons, Independent contractors (1099), Directors - Each part-time employee counts as a fraction of an employee, with the fraction equal to the number

of hours that the part-time employee worked divided by the hours an employee must work to be considered full time.

COBRA/Cal-COBRA enrollees are not eligible for Life, Disability and/or Voluntary Dental coverages.

COBRA/Cal-COBRA eligible enrollees should be included on the census to ensure accurate rates are quoted. The qualifying event, length, start date and end date must be provided in addition to the items noted under the Census Data section above.

Note: COBRA/Cal-COBRA enrollees are not to be included for the purpose of counting employees to determine the size of the group. Once the size of the group has been determined according to the law applicable to the group, COBRA/Cal-COBRA enrollees can be included for coverage subject to normal underwriting guidelines.

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Deductible Credit

Employees who are eligible and want to receive credit for deductibles paid to the prior carrier should submit a copy of the Explanation of Benefits (EOB).

EOBs may be submitted at the initial new business case submission or with the employee’s first claim, or can be faxed to claims at 1.866.474.4040 no later than 90 days after the effective date. For faxes, include “ECHS Category: SFRE” in the subject line with the Group/Control Number in order to direct the information to the correct area for processing.

Definition of Small Employer

“Small Employer” means any of the following:

Any person, firm, corporation, partnership, public agency or association with at least 1 eligible employee that is issued a W-2 who is not the proprietor or spouse of proprietor that is actively engaged in business or service, on a least 50% of its working days during the previous calendar quarter or previous calendar year, whichever is more favorable for eligibility; and

Employed at least 1 eligible employee who is not the proprietor or spouse of proprietor but not more than 50 eligible employees, and

The majority of whom were employed within California; and

The group was not formed primarily for the purposes of obtaining health insurance in which a bona fide employer-employee relationship exists. o In determining whether to apply the calendar-quarter or calendar-year test, Aetna will use the test that

ensures eligibility if only one test would establish eligibility. o In determining the number of eligible employees, companies that are affiliated companies and that are

eligible to file a combined income tax return for purposes of state taxation, shall be considered one group. o For the purpose of determining eligibility, the size of a small employer may be determined annually.

Any guaranteed association that purchases health coverage for members of the association. Newly Formed Groups A newly formed group must meet the following requirements:

Employs at least 1 eligible employee that is issued a W-2 who is not the proprietor or spouse of proprietor but not more than 50 eligible employees.

The group must submit a copy of the most recently filed DE 9C (Quarterly Wage and Tax Statement). If not available, up to a maximum of six weeks of consecutive weeks of payroll records, which include, for every eligible employee enrolling, taxes withheld, check number and wages earned.

If the group does not have payroll records they must submit the following:

Sole Proprietor A copy of the business license (not a professional license). A professional license, for example, is the certificate from the state indicating the sole proprietor is a licensed hair stylist, manicurist, real estate agent, etc.

Partnership or Limited Liability Partnership

A copy of the partnership agreement. For a limited partnership, Aetna underwriting can search the California Business Portal; however, this cannot be used for a Partnership of Limited Liability Partnership.

Limited Liability Company

A copy of the articles of organization and the operating agreement to include the signature page(s) of all officers. For Limited Liability Companies, Aetna underwriting can search the California Business Portal; however, all documents still need to be submitted.

Corporation A copy of the articles of incorporation that includes the signature page(s) of all officers (must be followed up with a copy of the statement of information within 30 days of filing with the state).

Groups that cannot provide sufficient payroll documentation and have not been in business for 50% of the previous calendar quarter, regardless of corporate structure, must provide the information below and may be declined coverage. 1. A list of all employees that should include owners, partners and officers (full time and part time) 2. Number of hours worked per week for each employee 3. Weekly salary for each employee 4. Date of hire for each employee 5. Explanation of payroll record status 6. Date when Quarterly Wage and Tax Statement (DE 9C) will be filed

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Dental Plan Availability

1 life

Not available 2 eligible employees

Standard Dental available with Medical.

Voluntary Dental not available.

Orthodontic coverage not available 3 to 50 eligible employees

Standard and Voluntary Dental plans are available with or without Medical.

Standalone available.

Standalone Dental has ineligible Industries Orthodontic coverage Available with 10 or more eligible employees with a minimum of 5 enrolled employees for adults and dependent children for both standard and voluntary plans. See footnotes in the Plan Guide - dental plan section for adult orthodontic availability.

Rates • Rates are based on the employee zip code.

Product Packaging

Refer to the Plan Guide - Dental section footnotes page for plan availability.

Participation Noncontributory plans (Employer Pay All)

100% participation is required, excluding those with other qualifying dental coverage. Contributory plans with medical or standalone (round to the nearest whole number) Standard

2 to 3 eligible employees - 100% excluding those with other qualifying existing dental coverage.

4 to 50 eligible employees - 75% excluding those with other qualifying existing dental coverage. A minimum of 2 and 50% of total eligible employees must enroll in the dental plan.

Voluntary

3 to 50 eligible employees - 30% excluding those with other qualifying existing dental coverage.

Minimum of 3 must enroll.

If a group does not qualify for a standard plan and has 30% or more participation then group qualifies for voluntary.

Standard and Voluntary plans

Employees may select coverage for eligible dependents under the dental plan even if they elected single coverage on the medical plan, or vice versa.

Coverage can be denied

Contribution Employer must contribute at least 25% of the total cost or 50% of the cost of employee only coverage for Dental plans.

If the employer contributes less than the above guideline, or if the coverage is 100% paid by the employee coverage is deemed Voluntary.

Coverage can be denied based on inadequate contributions.

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Dental Open Enrollment

Standard Plans with medical or standalone

2 to 9 : No open enrollment

10 to 50: Employees/dependents who do not enroll when initially eligible are now eligible to enroll during a subsequent open enrollment period without being subject to the late entrant provision.

Voluntary Plans with medical or standalone

2 to 50: No open enrollment

Option Sales Option sales alongside another dental carrier are not allowed.

All dental plans must be sold on a full replacement basis.

Reinstatement (Voluntary Plans Only)

Members once enrolled who have previously terminated their coverage by discontinuing their contributions may not re-enroll for a period of 24 months. All coverage rules will apply from the new effective date including, but not limited to, the Coverage Waiting Period.

Coverage Waiting Period

Standard 2 to 9 and Voluntary 3 to 50 eligible employees

PPO and Indemnity Plans - For Major and Orthodontic Services employees must be an enrolled member of the employer’s plan for 1 year before becoming eligible.

DMO - there is no waiting period.

Discount plans do not qualify as previous coverage.

Future hires - waiting period applies regardless if takeover for Voluntary 3 to 50 eligible employees.

Virgin group (no prior coverage) - the waiting periods apply to employees at case inception as well as any future hires.

Takeover/Replacement cases (prior coverage) - you must provide a copy of the last billing statement and schedule of benefits in order to provide credit for major and orthodontic. If a group’s prior coverage did not lapse more than 90 days prior, the waiting periods are waived. In order for the waiting period to be waived, the group must have had a dental plan in place that covered Major (and Orthodontic, if applicable) immediately preceding our takeover of the business. Example: Prior Major coverage but no Orthodontic coverage. Aetna plan has coverage for both Major and Orthodontic. The Waiting Period is waived for Major services but not for Orthodontic services

Standard 10–50 eligible employees

No waiting period

Ineligible Industries

All industries are eligible if sold with medical.

The following industries are not eligible when dental is sold standalone or packaged only with life.

7319-7319 Advertising, Miscellaneous 7692-7699 Miscellaneous Repair

7800-7999 Amusement, Recreation & Entertainment 8999-8999 Miscellaneous Services

8600-8699 Associations & Trusts 5271-5271 Mobile Home Dealers

5511-5599 Auto dealerships 4111-4121 Passenger Transportation

7231-7241 Beauty & Barber Shops 7221-7221 Photo Studios

7331-7338 Direct Mailing, Secretarial 7384-7384 Photofinishing Labs

7361-7363 Employment Agencies 6500-6799 Real Estate

8700-8799 Engineering & Management Services 7251-7299 Repairs, Cleaning, Personal Svc

7000-7099 Hotels 5800-5899 Restaurants

9721-9721 International Affairs 8211-8299 Schools, Libraries, Education

3911-3915 Jewelry Manufacturing 0761-0783 Seasonal employees

8100-8199 Legal 7381-7382 Security Sys, Armored Cars

8000-8059 Medical Groups 8800-8899 Service-Private Households 8071-8099 Medical Groups 8300-8499 Social Services - Museums, Art

Galleries Botanical Gardens

7389-7389 Miscellaneous Business Services 7631-7631 Watch, Clock & Jewelry repair

7379-7379 Miscellaneous Computer Services

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Dependent Eligibility

Eligible dependents include:

Spouse of employee. If both husband and wife/partner work for the same company, they may enroll together or separately.

Domestic Partners are eligible if they meet the contractual definition of a dependent and are considered eligible within the policy established.

Children - Medical and Dental

o Children are eligible as defined in plan documents in accordance with applicable state and federal law, for medical and dental coverage up to age 26, regardless of financial dependency, employment, eligibility of other coverage, student status, marital status, tax dependency or residency. This requirement applies to natural and adopted children, stepchildren, and children subject to legal guardianship.

o Children can only be covered under one parent’s plan when both parents work for the same company.

o Grandchildren are eligible if court ordered. A copy of the court papers must be submitted. - Dependent Life

o Dependent children are eligible from 14 days up to their 19th birthday or to their 23rd birthday, if in school on a regular basis and dependent solely on the employee for support.

Dependents are not eligible for AD&D or disability coverage.

For medical and dental, dependents must enroll in the same benefit plan as the employee (participation not required, however, waivers are required).

Employees may select coverage for eligible dependents under the dental plan even if they selected single coverage under the medical plan. See product-specific Life, AD&D, and Disability guidelines under Product Specifications.

Individuals cannot be covered as an employee and dependent under the same plan, nor may children be eligible for coverage through both parents and be covered by both under the same plan.

Effective Date The effective date must be the 1st or the 15th of the month.

The effective date requested by the group may be up to 90 days in advance.

Electronic Funds Transfer (EFT)/ACH

Payment for the first month’s premium at new business can be processed via an Electronic Funds Transfer/ACH.

Once the group is issued, the group can pay their monthly premiums online or by calling 1-866-350-7644, using their checking account and routing number, with no extra charge.

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Employee Eligibility

An eligible employee is:

Any permanent employee who is actively engaged on a full-time basis in the conduct of the business of the small employer with a normal work week of at least 30 hours, in the small employer’s regular place of business, who has met applicable waiting period requirements.

This includes sole proprietors or partners of a partnership, if they are actively engaged on a full-time basis in the small employer’s business, and they are included as employees under a health benefit plan of a small employer.

A permanent employee who works at least 20 hours but not more than 29 hours is an eligible employee if all four of the following apply: 1. The employee otherwise meets the definition of an eligible employee except for the number of hours

worked. 2. The employer offers the employee health coverage under a health benefit plan. 3. All similarly situated individuals are offered coverage under the health benefit plan. 4. The 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.

Aetna 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.

Employees not eligible for coverage include leased, part-time less than 20 hours, temporary, seasonal or substitute employees, 1099 contractors, uncompensated employees, employees making less than equivalent minimum wage, volunteers, retirees, inactive owners, directors, shareholders, officers, outside consultants, managing members who are not active, investors or silent partners.

Employees are eligible to enroll in the dental plan even if they do not select medical coverage and vice versa.

Employees Residing out of California

Medical

Groups must have at least 51% of their employees residing in California to be considered Guarantee Issue.

Out-of-state employees who live/work in an out-of-state network area will receive California rates and products (inclusive of any required extraterritorial benefits).

Out-of-state employees who do not reside in an out-of-state network area will receive the California standard indemnity products (inclusive of any required extraterritorial benefits).

Out-of-state employees who reside in an area with an MC network must enroll in the California MC plan.

Out-of-state employees who reside in an area with a PPO only network must enroll in the California PPO plan.

Out-of-state employees who reside in an Indemnity only network must enroll in the California Indemnity plan.

HMO plans are not allowed outside of California.

PPO plans are not available in the following states: AL, HI, ID, MN, MT, ND, NM, UT, VT, WI, and WY.

Indemnity plans are not available in HI and VT.

Out-of-state employees residing in Louisiana are required to have a separate plan quoted and sold based on Louisiana rates and benefits. These employees are still underwritten as part of the group; however, the plans and rates for the Louisiana members will not be based on where the group is located. Louisiana Employer and Employee applications need to be completed for any Louisiana employees.

Dental

Employees/dependents who reside out of state will receive the same plan as instate members (based on state rules and network availability). This applies to DMO, PPO and Freedom-of-Choice Dental plans.

If an out of state member resides in a state that does not allow the instate plan, those members will be placed into an available PPO or Indemnity plan.

Life

Employees are eligible for Basic Term Life.

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Employer Contribution

Single Choice Medical • Groups must contribute at least 50% of the employee rate. Pick-A-Plan (Medical) • Groups must contribute 50% of the employee only rate of whichever plan the employee selects; or • Groups may choose to offer a defined contribution of at least $80 or the actual cost of the plan, whichever

is less. Dental • See Dental section. Term Life • 2 to 9 eligible employees - the employer must contribute 100% of the cost of the plan. • 10 to 50 eligible employees - the employer must contribute at least 50% of the cost of the plan (excluding

optional dependent life).

Coverage may be denied based upon inadequate contributions.

Employer Eligibility

Medical plans can be offered to sole proprietorships, partnerships or corporations.

Groups with 2 to 50 eligible employees that do not meet the definition of a small employer are not eligible for coverage.

Groups must not be formed solely for the purpose of obtaining health coverage.

Associations, Taft Hartley groups, professional employers organizations (PEO)/employee leasing firms and closed groups (groups that restrict eligibility through criteria other than employment) and groups where no employer/employee relationship exists are not eligible.

Employer’s leaving a PEO (Professional Employer Organization)

Groups leaving a PEO with 2 to 50 eligible employees may be considered.

Groups are required to complete and submit the PEO Questionnaire with their new business case submission.

Groups are required to provide a copy of payroll records specific to the group.

Employer’s Replacing Other Group Coverage

Groups must provide a copy of the current billing statement that includes the account summary and employee roster.

For dental, also provide a copy of the benefit summary to verify major and orthodontic benefits.

Groups should not cancel any existing coverage until they have been notified of approval from the Aetna Underwriting unit.

Holding Companies

Holding company – A holding company is a company that owns part, all, or a majority of other companies’ outstanding stock. It usually refers to a company that does not produce goods or services itself; rather its only purpose is to own shares of other companies. Holding companies allow the reduction of risk for the owners and can allow the ownership and control of a number of different companies.

Parent Company – A parent company is a holding company that owns enough voting stock in another firm (subsidiary) to control management and operations by influencing or electing its board of directors. A parent company could simply be a company that wholly owns another company.

Example - Bank A is the holding company (allows the smaller banks to raise more capital than a traditional bank). - Bank A (the holding company) has no ownership; it is simply an umbrella company for the 3 Bank B

locations. - Bank B has 3 locations and all under one TIN. - Bank A (the holding company) is under a separate TIN. - The holding company and banks have no ownership because the owners are all stockholders and bank

employees or bank executives. - There are no articles of incorporation only stock certificates. - Bank B is the only group enrolling. Bank A is listed as an associated company with no employees and the

group is not to be enrolled. - Documentation needed: QWTS for Bank B, which should include all 3 locations.

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Indemnity Plan Offering

Medical

Employees residing outside of an Aetna network medical service area must enroll in the Indemnity plan.

Aetna Indemnity plan is only available if the employee resides outside of both the Aetna PPO/MC network service area and the Aetna HMO network service area.

Dental

Employees residing outside of an Aetna dental network service area must enroll in the Indemnity plan. Life

Not Applicable

Initial Premium The initial premium payment should be included with the New Business applications, in the amount of the first month’s premium; and may be in the form of a check or electronic funds transfer (EFT).

Premium checks for Cal-COBRA members should be on a separate check made payable to Aetna.

The initial premium payment is not a binder check and does not bind Aetna to provide coverage.

Electronic funds transfer (EFT) option is available for the initial premium payment. If the EFT method is selected, the initial premium will be withdrawn from the checking account when the group is approved. This is a one-time authorization for the first month’s premium only

If the initial premium payment is returned for non-sufficient funds, the standard termination process will be followed.

If the request for coverage is withdrawn or denied due to business ineligibility the premium will be returned to the employer.

Late Applicants An employee or dependent enrolling for coverage more than 31 days from the date first eligible or 31 days from the qualifying event is considered a late enrollee. Applicants without a qualifying event (for example, marriage, newborn child, adoption, loss of spousal coverage, etc.) are subject to the late entrant guidelines as noted below.

Voluntary cancellation of coverage is NOT a qualifying event. For example, if a spouse is covered through his/her employer and voluntarily cancels the coverage, it is not a qualifying event to be added to the other spouse’s plan. The spouse who cancelled the coverage must wait until the next plan anniversary date to be eligible to be added.

Medical

Late applicants will be deferred to the next plan anniversary date of the group and may reapply for coverage 30 days before the anniversary date.

Dental

An employee or dependent may enroll at any time; however, coverage is limited to preventive and diagnostic services for the first 12 months.

No coverage for most basic and major services for first 12 months (24 months for orthodontics).

Late entrant provision does not apply to enrollees less than age 5. Life

Late applicants will be deferred to the next plan anniversary date of the group and may reapply for coverage 30 days prior to the anniversary date.

The applicant will be required to complete an individual health statement/questionnaire and provide EOI. Late Life Example: Group has $50,000 life with $20,000 guarantee issue limit. Late enrollee enrolling for $50,000 would not automatically get the $20,000. Since the applicant is late they must medically qualify for the entire $50,000.

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Licensed, Appointed Producers

Only appropriately licensed Agents/Producers appointed by Aetna may market, present, sell and be paid commission on the sale of Aetna Products.

License and appointment requirements vary by state and are based on the contract state of the employer group being submitted.

Life - Basic Term

Product Availability

1 life is not available.

2 to 50 eligible employees if packaged with medical and/or dental.

26 to 50 eligible available on a standalone basis.

Carve outs are not allowed.

Pick-A-Plan is not allowed.

Participation 2 to 9 eligible employees - 100% participation is required.

10 to 50 eligible employees - Non-contributory - 100% participation - Contributory - 75% participation

COBRA/Cal-COBRA enrollees are not eligible.

Dependent participation is not required.

Retirees are not eligible.

Coverage can be denied based on inadequate participation.

Employees may elect life insurance even if they do not elect medical coverage and the group must meet the required participation percentage. If not, then life will be declined for the group. Example: 9 employees 3 waiving medical 9 must enroll for life

Open enrollment

Prohibited

Job Classification (Position) Schedules

Varying levels of coverage based on job classification are available for groups with 10 or more lives. Up to three separate classes are allowed (with a minimum requirement of three employees in each class). Items such as probationary periods must be applied consistently within a class of employee.

The benefit for the class with the richest benefit must not be greater than five times the benefit of the class with the lowest benefit. For example, a schedule may be structured as follows:

Position/Job Class Basic Term Life Amount Executives $50,000 Managers, Supervisors $20,000 All other employees $10,000

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Life - Basic Term

Guarantee issue coverage

Aetna provides certain amounts of life insurance to all timely entrants without requiring an employee to answer any medical questions. These insurance amounts are called “guaranteed issue.”

Employees wishing to obtain increased insurance amounts will be required to submit evidence of insurability, which means they must complete a medical questionnaire and may be required to provide medical records.

On-time enrollees who do not meet the requirements of evidence of insurability will receive the guaranteed issue life insurance amount.

Late enrollees must qualify for the entire amount and are not guaranteed any coverage.

Depending on the group’s size, life insurance amounts are guaranteed issue up to the maximums listed below:

Case Size Basic Term Life 2 to 9 eligible lives $20,000 10 to 25 eligible lives $75,000 26 to 50 eligible lives $100,000

Actively at work

Employees who are both disabled and away from work on the date their insurance would otherwise become effective will become insured on the date they return to active full-time work one full day.

Continuity of Coverage (no loss/no gain)

The employee will not lose coverage due to a change in carriers. This protects employees who are not actively at work during a change in insurance carriers.

If an employee is not actively at work, Aetna will waive the actively-at-work requirement and provide coverage for a maximum of 12 months from the policy effective date, except no benefits are payable if the prior plan is liable. If the employee has not returned to active work prior to the end of the 12 month period, conversion must be offered.

Evidence of insurability (EOI)

Evidence of Insurability (EOI) means the person must complete an individual health statement and may have to submit to medical evidence via medical records at their expense. EOI is required when one or more of the following conditions exist:

Life insurance coverage amounts requested are above the guaranteed standard issue limit.

Late Enrollee - coverage is not requested within 31 days of eligibility for contributory coverage.

New coverage is requested during the anniversary period.

Coverage is requested outside of the employer’s anniversary period due to qualifying life event (for example, marriage, divorce, newborn child, adoption, loss of spousal coverage, etc.)

Reinstatement or restoration of coverage is requested.

Dependent coverage option was initially refused by employee but requested later. The dependent would be considered a late entrant and subject to EOI, and may be declined for medical reasons.

Requesting Life or Disability at the individual level and they are a late enrollee even if enrolling on the case anniversary date. Late enrollees are not eligible for the Guaranteed Issue Limit Example: Group has $50,000 life with $20,000 Guaranteed Issue Limit. Late enrollee enrolling for $50,000 would not automatically get the $20,000 Since the applicant is late, they must medically qualify for the entire $50,000.

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Live/Work An employee must live or work within 30 miles of the network. If they are more than the 30 mile radius, they must select a plan with a different network.

Employees that live outside of California cannot use the live/work guideline above and must select a plan with an OAMC or PPO network. If no OAMC or PPO network is available, the employee may enroll in an Indemnity plan.

For Cal-COBRA enrollees, the live/work guidelines do not apply; please contact Aetna for product availability.

Medicare (MSP) for CMS Reporting

All carriers must report to Centers for Medicare and Medicaid Services (CMS) the number of Medicare Secondary Payer (MSP) groups and the number of employees, each year based on the number of employees provided by the employer.

Counting: Both full and part-time employees are counted based on the number the group employed for at least 20 or more calendar weeks during the current or prior calendar year. - Include: Full-time, Part-time, Seasonal, Temporary, Union, Owners, Partners, Officers - Exclude: Self-employed persons, Independent contractors (1099), Directors, Leased employees

Medicare Secondary - 20 or more employees: Medicare Secondary Payer (MSP) is the term used by Medicare when Medicare is not responsible for paying first. This is generally when the Aetna plan would pay primary to Medicare for active employees and would pay first when there are 20 or more total employees (full and part-time) for 20 or more weeks during this calendar year or prior calendar year.

Municipalities and Townships

A township is generally a small unit that has the status and powers of local government.

A municipality is an administrative entity composed of a clearly defined territory and its population, and commonly denotes a city, town or village. A municipality is typically governed by a mayor and city council or municipal council. In most counties a municipality is the smallest administrative subdivision to have its own democratically elected officials.

Underwriting Requirements 1. Quarterly Wage and Tax Statement (QWTS). 2. W2 - Elected or appointed officials and trustees “may” be eligible for group coverage based on the charter

or legislation. If so, they may not be on the QWTS rather they may be paid via W2 and must provide a copy of their W2.

3. If elected officials are to be covered provide a copy of the charter or contract indicating which classes or employees are to be covered, the minimum hours required to work per week to be eligible for coverage, and confirmation that coverage will be offered to all employees meeting the minimum number and participation will be maintained.

Open Enrollment for Groups not meeting standard participation or contribution requirements

Groups that do not meet Aetna’s standard participation or contribution requirements are eligible to enroll during an annual open enrollment period.

Groups must apply to Aetna between November 15 and December 15 of each year for a January 1st effective date.

Groups that don’t meet Aetna’s standard participation or contribution requirements may be denied coverage outside of this open enrollment period.

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Option Sales Alongside Other Carriers

Medical • Standard participation of 75% must be met for option sales. • Groups offering other carrier’s HMO must have at least 50% participation and a minimum of 5 employees

enrolling in an Aetna plan. • Employees covered by the same employer on another group policy are not considered a valid waiver. Dental • Options sales alongside another dental carrier are not allowed. • All dental plans must be sold on a full-replacement basis only. Life • Option sales alongside another life carrier are not allowed. • All life plans must be sold on a full-replacement basis only.

Participation - Medical

Non-contributory plans (group pays all) • 100% participation is required. All employees, excluding those with coverage through another employer’s

plan, must enroll. Contributory plans • 2 to 3 eligible employees – 100% of eligible employees, excluding those with coverage through another

employer’s plan, must participate. • 4 to 50 eligible employees – 75% of eligible employees (rounded down), excluding those with coverage

through another employer’s plan, must participate. • Groups offering other carrier’s HMO must have at least 50% participation and a minimum of 8 employees

enrolling in an Aetna plan. • Groups offering Vitalidad Mexico con Aetna are eligible for 65% participation if at least 1 employee enrolls

in a Vitalidad network area (see Zip code listing under Vitalidad Section). • Employees waiving due to spousal coverage, Medicare, Medi-Cal, Champus and TRICARE are valid waivers. • Individual coverage (on or off exchange) is not a valid waiver. • All employees waiving coverage must complete the waiver section of the application. • If the coverage is not from a qualifying group plan, the employee may not be considered a valid waiver

and will count toward the minimum participation requirement.

Pick-A-Plan • Pick-A-Plan is available to all groups. • If the group does not enroll in Pick-A-Plan, a maximum of 3 plans may be offered.

Plan Change Ancillary Additions (Life or Dental)

The future renewal date of the ancillary products will be the same as the medical plan renewal date.

Life and dental plan additions must be requested 30 days before the desired effective date if processed off anniversary.

Life and dental plan additions may be submitted on or before the effective date to add at renewal.

Non-packaged plan changes are available upon renewal.

Plan Changes - Employees

Medical

Employees are not eligible to change plans until the group’s open enrollment period, which is upon their annual renewal (except for qualified special enrollment events).

Dental

Freedom of Choice - individuals may change from DMO to PPO and vice versa at any time.

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Plan Changes - Employer

After the first 30 days of enrollment, groups may request a change in medical benefits 6 months after the original effective date.

Groups that have Pick-a-Plan are not eligible for mid-policy benefit changes.

Upgrades are only allowed once in a 12-month rolling period and are subject to medical underwriting.

Upgrades may be declined based upon underwriting review.

The requests for changes must be submitted to Aetna Small Group Underwriting 30 days prior to the requested effective date.

Late requests will be moved to the next applicable effective date pending underwriting approval.

During the first 30 days of coverage, the group shall have the option of changing coverage to a different benefit plan design offered by the same carrier. If the group notifies us within the first 15 days of the month, coverage under the new benefit plan design shall become effective no later than the first day of the following month. If a group notifies us of the change after the 15th day of the month, coverage under the new benefit plan design shall become effective no later than the first day of the second month following notification.

PrimeCare Physicians Plans/Aetna Whole Health (HMO and MC)

Employer group must be located within approved small group Rating Area 17; zip codes in Riverside/San Bernardino counties.

If employee does not live in a Rating Area 17, they must live within 30 miles of their work site to be eligible for the plan.

Standard small group underwriting guidelines apply.

PrimeCare Physicians plans are included in Pick-A-Plan.

Prior Aetna Coverage

Groups are not guarantee issue if they terminated health coverage with Aetna in the past 12 months.

Groups that have been terminated for non-payment must pay all premiums still owed on the prior Aetna plan before the new plan will be issued.

Product Availability Medical

Groups may be written standalone or with ancillary coverages.

Only non-occupational injuries and disease will be covered. Coverage under the Aetna plan is non-occupational, unless it is an owner or employer.

Pick-A-Plan allows each employee the option to choose their medical product from a wide selection of product offerings selected by the employer.

Groups may choose the Pick-A-Plan box, which provides all plans to all employees. If the group does not want to offer all plans they may choose just the plans they wish to allow their employees to enroll into.

Requests to add more products to the group’s contract are subject to medical underwriting if the group did not choose Pick-A-Plan at their original effective date.

• Carve outs are allowed.

Pick-A-Plan is allowed (See Pick-A-Plan section.)

Rates • Rates are based upon the age and location of the employee. • Rates will change upon the group’s anniversary date.

Renewal Benefit Changes

• Request for plan changes to be effective on the renewal date must be submitted 10 days prior to the renewal date.

• Requests for plan changes to be effective off of the renewal date must be submitted 75 days before the requested effective date.

• The effective date for the plan change will be based upon notification receipt (this will be the date the email or fax was sent to Aetna).

Signature Dates

• The Aetna employer application and all employee applications must be signed and dated before and within ninety (90) days of the requested effective date.

• All employee applications must be completed by the employee himself/herself.

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Spin-off Groups (current Aetna customers leaving an Aetna group only)

Aetna will consider the group with the following: • A letter from the group or broker indicating the group is enrolling as a spin off. Letter needs to include the

name of the group they are spinning off from. • Ownership documents showing that the spin-off company is a newly formed separate entity.

A minimum of two weeks payroll. If the group that is spinning off has been in business longer than two weeks, payroll will be required for the amount of time in business up to a maximum of six consecutive weeks.

Tax Documentation for 2 to 20 Eligible Employees AND 21 to 50 eligible employees WITHOUT Prior GROUP Coverage

Groups with 2 to 20 eligible employees and groups with 21 or more eligible employees without prior coverage must provide the following:

A copy of the most recent Quarterly Wage and Tax Statement (QWTS) must be provided for all groups.

The QWTS must contain the names and salaries of all employees of the group. - Employees who have terminated, work part-time or are newly hired should be noted accordingly on

the QWTS. - Any handwritten comments added to the QWTS must be signed and dated by the employer. This may

be requested at the discretion of the underwriter. - Newly hired employees should be written in on the Quarterly Wage & Tax Statement and signed by the

employer. The underwriter may request payroll in questionable situations.

Churches must provide Form 941, including a copy of the payroll records with employee names, wages and hours, which must match the totals on Form 941.

Non-profit groups may provide payroll documents as long as they also submit the appropriate form detailing their non-profit status.

Proprietors, Partners or Officers of the business who do not appear on the QWTS must submit one of the following identified documents. This list is not all inclusive. The group may provide any other documentation to establish eligibility.

Other documentation may be requested by Aetna Underwriting.

Sole Proprietor

Franchise

Limited Liability Company (operating as a Sole Proprietor)

IRS Form 1040 along with Schedule C (Form 1040)

IRS Form 1040 along with Schedule SE (Form1040)

IRS Form 1040 along with Schedule F (Form 1040)

IRS 1040 along with Schedule K1 (Form 1065)

Any other documentation the owner would like to provide to determine eligibility

Partner

Partnership

Limited Liability Partnership

IRS Form 1065 Schedule K-1

IRS Form 1120 S Schedule K-1 along with Schedule E (Form 1040)

Partnership agreement if established within 2 years - eligible partners must be listed on agreement

Any other documentation the owner would like to provide to determine eligibility

Corporate Officer

Limited Liability Company (operating as C Corp)

C-Corporation

Personal Service Corporation

S-Corporation

IRS Form 1120 S Schedule K1 along with Schedule E (Form 1040)

IRS Form 1120 W (C-Corp & Personal Service Corp)

1040 ES (Estimated Tax) (S-Corp)

IRS Form 8832 (Entity classification as a corporation)

W2

Articles of Incorporation if established within 2 years - corporate officers must be listed

Any other documentation the owner would like to provide to determine eligibility

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Tax Information/ Documents 21 to 50 eligible employees WITH Prior GROUP Coverage

A QWTS is not needed if a bill roster is provided and at least 75% of the eligible employees are on the prior carrier billing statement.

A copy of the current billing statement that includes the account summary and employee roster is needed.

Reconciling the bill roster - New hires can be written in by the employer, broker or underwriter. - Employees not on the prior bill who are enrolling now can be enrolled without documentation unless

there are questionable aspects. - The underwriter may request QWTS, payroll, etc., if warranted in questionable situations.

1099 Employees

1099 employees are not eligible.

Vitalidad Mexico con Aetna

Vitalidad is available to California groups who have employees who work or live within the Vitalidad Service Area. (Imperial County is not within a Vitalidad Service Area).

Participation of 65% for groups of 2 to 50 (excluding valid waivers) for those groups that have employees located in a Vitalidad Service Area with a minimum of 1 employee enrolling in Vitalidad.

The Vitalidad service area is defined as the Mexican cities of Tecate, Mexicali, and Tijuana and including the following U.S. Zip Codes that fall within a 50-mile radius: 91901-91903 92004 92056 92142-92143 91905-91906 92007-92011 92058 92145 91908-91917 92013-92014 92064-92067 92147 91921 92018-92027 92069-92072 92149-92150 91931-91935 92029-92030 92074-92075 92152-92155 91941-91948 92033 92078-92079 92158-92179 91950-91951 92036-92040 92081-92085 92182 91962-91963 92046 92090-92093 92184 91976-91980 92049 92096 92186-92187 91987 92051-92052 92101-92124 92190-92199 91990 92054 92126-92140

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