Blue Shield Of California Small Group Underwriting .

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Blue Shield of CaliforniaSmall Group UnderwritingGuidelines for ProducersEffective January 1, 2019Groups of 1 to 100 employeesThis booklet contains guidelines that represent Blue Shield’s general approach to underwritingnew and existing small group business for health plans and specialty benefits plans. Theseguidelines apply to coverage written by either Blue Shield of California or Blue Shield ofCalifornia Life & Health Insurance Company. We will make every effort to keep you informedand up-to-date on changes to these guidelines.Please note: Blue Shield of California is a licensed health care service plan under provisions ofthe California Health & Safety Code Sec.1340 et seq. (the "Knox-Keene Act").Blue Shield of California Life & Health Insurance Company is a licensed life and disability insurerunder the provisions of the California Insurance Code.A16060-REV (10/4/18)Blue Shield of California is an independent member of the Blue Shield Association A16060-REV(1/09)Only Blue Shield may make the final decision to accept or decline coverage for a case or assignan effective date for coverage. Producers are not authorized to bind or guarantee coverage orassign a specific rate or effective date for coverage. Please advise all prospective groups tomaintain their current coverage until Blue Shield notifies them in writing of any acceptance intoa Blue Shield plan.

Table of ContentsSection I: Health Plan General Requirements . 5Small employer defined. 5Small employer eligibility requirements. 5Groups not considered small employers.5Other employer requirements. 6Employer dues/premium contribution requirements. 6New group eligibility/effective date.6Orientation and waiting periods. 7Additional enrollment and plan criteria. 7Special enrollment period for small groups. 7Policy on HRAs for small employers purchasing a Blue Shield health plan. 7HMO service area. 7HMO provider networks and pairing options. 8Access HMO Network (Off-Exchange Package only). 8Local Access Network (Off-Exchange Package only). 8Trio ACO HMO Network (Off-Exchange and Mirror Packages). 9PPO provider networks and pairing options. 9Tandem PPO Network (Off-Exchange Package only). 9Additional benefits available . 9Blue Shield of California Off-Exchange Package for Small Business. 10Account-based health plans. 10Off-Exchange Package for Small Business participation requirements.10Off-Exchange Package for Small Business notes. 11Blue Shield of California Mirror Package for Small Business. 11Mirror Package for Small Business participation requirements. 11Mirror Package for Small Business notes. 12Section II: Health Plan Other Requirements. 12Employers of union and nonunion employees. 12Professional Employer Organization (“leased”) employees. 12Combining multiple employer groups. 12Spin-off groups. 12Section III: Who can Enroll?. 13Employee eligibility for coverage. 13Part-time employee eligibility for coverage. 13Dependent eligibility for coverage. 13Domestic partners. 14Domestic partner documentation requirements to enroll a domesticpartner. 14Spouses or domestic partners working for the same employer. 14Section IV: Health Plan Rating Criteria. 14Quoting a group. 14Field rating. 15Rating policies. 15Medicare primary and secondary rules. 15Blue Shield Medicare Supplement plans. 15Rate changes. 15Section V: New Business Submission Requirements. 15Guidelines for completing forms. 15Processing time specifications.16Start-up groups. 16Exception for small employer start-ups when five or more are enrolling. 16Evaluation criteria. 162Blue Shield of California Small Group Underwriting Guidelines for Producers

Blue Shield may decline groups if. 16Waivers/declinations. 17Group enrollment checklist. 17Documentation to submit based on nature of business. 18Section VI: Existing Business Guidelines. 20Enrolling new hires. 20Enrolling late enrollees .20Special enrollment period. 20Regular effective dates for special enrollment periods. 20Qualifying/Triggering events. 21Open enrollment. 24Guaranteed renewal. 24Small-to-large group renewal conversions. 24Contract benefit modifications. 24Group level. 24Subscriber level. 24Re-enrollees. 24Benefit Modification Options Chart. 25Section VII: Health Plan Benefit Continuity. 26Prior deductible credit .26Takeover provisions. 26Section VIII: Definitions. 26Guaranteed associations defined. 26Declinations. 26Late enrollee. 27Section IX: State and Federal Regulations. 28Federal regulations. 28Cal-COBRA/COBRA continuation coverage. 29Federal COBRA coverage. 30Disabled COBRA extension. 30Extension of COBRA under California Health and Safety Code 1373.621. 30HIPAA requirements after COBRA and Cal-COBRA termination. 30Employer option to include part-time employees. 31Takeover provisions (California Insurance Code) . 31Confidentiality of personal and health information. 31Meeting your obligations. 32Section X: Specialty Benefit Plan Guidelines. 33General requirements .33Eligible employees. 33Employer option to include part-time employees. 33Small business dental plans – general requirements.34Employer dues/premium contribution requirements. 34New group eligibility/effective date.34DHMO service area. 34Small business dental plan participation requirements. 34Small business dental plan notes. 35Rating policies. 35Rate changes. 35Coverage guarantee. 36Small business vision plans – general requirements. 36Employer dues/premium contribution requirements. 36New group eligibility/effective date.36Small business vision plan participation requirements. 36Small business vision plan notes. 373Blue Shield of California Small Group Underwriting Guidelines for Producers

Rating policies. 37Rate changes. 37Coverage guarantee. 37Small business life insurance – general requirements .37SIC limitations. 37Employer dues/premium contribution requirements. 37New group eligibility/effective date.38Additional enrollment and plan criteria. 38Special enrollment period for groups of 2-50 employees purchasing lifeinsurance. 38Small business life insurance participation requirements. 38Small business life insurance notes. 38Rating policies. 39Rate changes. 40Coverage guarantee. 40Appendix. 41Form names and form numbers. 414Blue Shield of California Small Group Underwriting Guidelines for Producers

1. Combine the number of hoursof service of all non-full-timeemployees for the month, butdo not include more than 120hours of service per employee.Section I: Health Plan GeneralRequirementsTo qualify for any Blue Shield health plancoverage, a group must meet the criteriaoutlined below in the qualified smallemployer, small employer eligibilityrequirements and other employerrequirements sections.2. Divide the total by 120.3. If the result is a fraction, rounddown to the next wholenumber.Small employer defined(applies to medical plans only)The group must qualify as a “small employer”as defined by the Small Group Act inCalifornia and the federal Patient Protectionand Affordable Care Act (ACA) as follows: The group must be a person, firm,proprietary or nonprofit corporation,partnership, public agency, association orguaranteed association. The group must employ at least one“common-law employee.”oo A common-law employee is definedby the Internal Revenue Service (IRS)as anyone who performs services foran employer if the employer cancontrol what will be done and how itwill be done.A common-law employee must alsomeet the definition of an “eligibleemployee” (see page 13).The group employed one to 100employees on at least 50% of its workingdays during the preceding calendarquarter or calendar year. In determiningwhether to apply the preceding calendarquarter or year test, Blue Shield will use thetest that ensures eligibility.o For plan years commencing on orafter January 1, 2016, for nongrandfathered plans, a smallemployer is determined using thedefinition of “employee.” An“employee” is defined as a full-timeemployee or full-time equivalentemployee as those terms are definedin Internal Revenue Code Section4980H(c)(2):oo5A “full-time employee” is anemployee who has on average atleast 30 hours of service per week,or at least 130 hours of servicetotal during a calendar month.The number of “full-timeequivalent employees” isdetermined as follows:In determining the number ofemployees for small employereligibility, groups that are affiliatedcompanies and that are eligible to filea combined state tax return shall beconsidered one employer, even ifthey are not presently filing together.The affiliated companies are treatedas a single employer and are writtenunder the same contract.The group is not formed primarily for thepurpose of obtaining health coverage.The group offers health plan coverage to100% of its eligible employees.At least 51% of the group’s employeesmust be employed in California.o Small employer eligibility requirementsA small employer meeting the followingeligibility requirements is eligible for Blue Shield’ssmall group health plans on a guaranteed issueand guaranteed renewable basis: Must qualify as a “small employer.” Must be actively engaged in business orservice. Must have and maintain applicablebusiness licensure, permits, etc. allowingthe company to conduct business inCalifornia. All employees must be covered byworkers’ compensation when required bylaw.The following groups are not consideredsmall employers: A group not meeting the definition of“small employer.”Groups with only a sole proprietor and/ora sole proprietor’s spouse-employee.Carve-out groups (see Section II, “HealthPlan Other Requirements” on page 12).Associations, multiplayer trusts, union trustplans, Taft-Hartley groups, retirees andhour bank groups.Blue Shield defines these groups as follows:Blue Shield of California Small Group Underwriting Guidelines for Producers

Association – A group of employer unitsthat are banded together for any reason,unless the group meets the definition of aguaranteed association.Multiple Employer Trust – Employers,usually in the same or related industries,that are brought together by an insurer,agent, broker or administrator for thepurpose of providing insurance for theiremployees under a master contractissued to a trustee under a trustagreement.Union trust plans – When a small groupemployer is contributing to a labor fund incompliance with a collective bargainingagreement for the purchase ofhealthcare benefits, that employer’sunion employees are considered ineligiblefor Blue Shield purposes.Retirees – Retirees are individuals who areformer employees, typically over age 65,who may be eligible for retiree benefits ifoffered by the employer.Taft-Hartley – A group in a trustestablished under the authority of theLabor Management Relations Act of 1948.It is comprised of one or more unions andone or more employers who providecoverage for union members. A groupcontract is issued to the trustees namedunder the trust agreement, which usuallyresults from collective bargaining.Hour bank group – A Taft-Hartley WelfareFund in which eligibility under the fund isdetermined by a specific number of hoursworked. If an employee works more hoursthan is needed to maintain eligibility, theemployee can put all or a portion of theseexcess hours in the bank. If an employeeworks insufficient hours to maintaineligibility, the employee can draw onbanked hours.Other classifications that do not qualify asa small employer include: privatehouseholds, employees providingcontracted services (i.e., receiving 1099forms for income tax purposes), leasedemployees or employees part of a coemployment or PEO relationship,domestic help and members oforgan

Small Group Underwriting Guidelines for Producers Effective January 1, 2019 Groups of 1 to 100 employees This booklet contains guidelines that represent Blue Shield’s general approach to underwriting new and existing small group business for health plans and specialty benefits plans. These

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