Unique Groups. Rules: Total group size (union and non-union) must be 100 or fewer F-T + FTE employees AND

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1 Carve-Outs F-T + FTE employees must be enrolled and maintained within 's California Network Service Area AND 60% of the carve-out population must enroll with. Documentation: Group must prove that Union employees are covered by the Union plan, i.e. copy of healthcare billing statement for previous month F-T + FTE employees must be enrolled and maintained within AND 1-4 F-T + FTE employees: 70% of the carve-out population must enroll with OR F-T + FTE employees: 30% of the carve-out population must enroll with. Documentation: Union roster is required for identifying Union members AND Declinations are not required for Union employees waiving coverage (considered a valid waiver). Rules: Total group size (union and non-union), must be 100 or fewer F-T + FTE employees AND F-T + FTE employees must be enrolled and maintained with AND 1-5 eligibles: 65% of the carve-out population must enroll with OR F-T + FTE employees: 25% of the carve-out population must enroll with. Since union members are considered valid waivers, will write owners only for a non-union carve-out. Documentation: A copy of the collective bargaining agreement showing that the employer pays contributions to the trust fund AND The statement of ERISA Rights form and the union trust fund Summary Plan Description.

2 Carve-Outs 70% of the carve-out population must enroll with. Documentation: Union employees must be marked U on the DE-9C. A Union billing statement must be reconciled against the DE-9C. A Union card must be provided for Union employees not listed on the Union billing statement. 70% of the carve-out population must enroll with. Documentation: Union employees must be marked U on the DE-9C F-T + FTE employees must be enrolled and maintained with AND 1-5 eligibles: 66% of the carve-out population must enroll with OR 6-100: F-T + FTE employees 50% of the carve-out population must enroll with. Documentation: Union roster identifying union employees AND Collective Bargaining Agreement must be provided.

3 Carve-Outs All included classes must meet participation guidelines for the class Documentation: Copy of the Union bill Letter from the group representative or broker, on employer letterhead, including: class description of the carve-out population; union employees must have medical coverage through their union Declinations are not required for union employees waiving coverage (considered a valid waiver)

4 Consolidation of Companies One owner must have controlling interest of all businesses needing to be consolidated OR Owner must file, or is eligible to file, an Affiliation Schedule (Form #851) allowing for a combines tax return for all companies needing to be consolidated AND Letter from the company s tax advisor (e.g. CPA, Attorney, Controller) certifying that all companies are affiliated and eligible to file consolidated tax returns for State taxation AND Copies of the Statement of Information or Articles of Incorporation reflecting all officers and owners OR Copies of all Partnership Agreements listing all partners names AND The employer s CPA must provide a letter stating all business entities are eligible to file a combined tax return AND Each company must share a minimum of 50% common ownership AND Each company must have a related industry AND Each company must have at least 1 medically enrolled common-law employee who is not an owner or spouse of the owner AND Each company's home office must be located in California with a minimum of 51% of eligible employees residing in California AND Total number of employees, for all combined groups, may not exceed 100 F-T + FTEs. Required Documentation: Employer must complete the Common Ownership Statement AND If less than 5 eligible employees enroll, proof of common ownership is required if the owner is not listed on the DE-9C. Each company must have at least 1 medically eligible common-law employee who is not an owner or spouse of the owner AND Each company's home office must be located in California AND Total number of employees, for all combined groups, may not exceed 100 F-T + FTEs. Required Documentation: A letter on company letterhead stating the companies are affiliated and eligible to file consolidated tax returns for state taxation. Letter from a CPA certifying that all companies are affiliated and eligible to file consolidated tax returns for State taxation AND Common Ownership form AND Copies of the Statement of Information reflecting all officers and owners AND Copies of all Partnership Agreements listing all partners names AND The employer s CPA must provide a letter stating all business entities are eligible to file a combined tax return AND

5 PEO Exiting a PEO: They must meet the definition of a Small Group employer AND Any group leaving a PEO must provide copy of the contract termination letter from the PEO to the client containing the termination date AND Employer must have payroll established under their company name, not the PEO. Remaining in a PEO: A letter from the PEO indicating health coverage is not available AND A copy of the contract will be required. Exiting a PEO: Group must provide a copy of the PEO chargeback invoice that has been billed to the group address. It must include names of each previously leased employee AND Completed and signed Conditions of Enrollment form AND Within 45 days of approval, the group is required to provide 30 days of complete companywide payroll. Remaining in a PEO: Anthem will not consider PEOs of this type. Exiting a PEO: A copy of the letter sent from the PEO to the client business verifying the cancellation of the leasing arrangement will be required AND If a copy of a payroll register from the PEO is submitted with the new group application, separating the formerly leased employees by business location, the group will be considered a qualified group. Remaining in a PEO: will not consider PEOs of this type. Exiting a PEO: An employer letter describing the PEO spin-off scenario including the group s official split off date AND A minimum of one week payroll from the new company is required for approval and the balance for the month due within 30 days of the effective date. Remaining in a PEO: Use verbiage from s PEO sub-group Letter to create an employer letter AND The Statement of Compliance portion of the Employer Application must be signed by an authorized representative of the sub-group, not a PEO representative AND In lieu of a DE-9C, the group must submit a payroll ledger for the most current 3 months including group company name, employee names, SS#s, wages, withholdings, and payroll salary information AND The most recent PEO invoice matching payroll salary information AND Home office must be located in California AND Address provided on the Employer Application must be the group s physical location AND COBRA provisions must be based on the group s group size, not the PEO s group size AND FMLA provisions apply to a sub-group when the PEO is providing staffing services and when compliance is determined by the PEO. Exiting a PEO: Two (2) weeks of payroll Remaining in a PEO: 30 days of chargeback invoices AND Exiting a PEO: The most recent PEO invoice matching payroll salary information AND Home office must be located in California Group must submit the quarterly wage report prepared by the PEO. If the PEO does not prepare a quarterly wage report for each employer, payroll (chargeback invoice) from the PEO may be submitted. 6+ enrolling: at least 6 weeks of payroll (chargeback invoices) required. Less than 6 enrolling: payroll for 50% of the previous calendar quarter required. Remaining in a PEO: See Exiting a PEO for information.

6 PEO Exiting a PEO: Approval is contingent upon receiving, within 45 days of the effective date, 30 days of payroll records for all employees; and reserves the right to rescind or non-renew coverage if payroll documentation is not provided in a timely manner, or does not meet s criteria for enrollment eligibility AND Will be considered for small group coverage with a coverage date on or after the termination date of the PEO arrangement AND The employer group must meet the definition of an AB 1672/1083 employer and must have maintained employees for 50% of the previous calendar quarter or 50% of the previous calendar year to be considered guaranteed issue AND The employer group must have offered the employees health insurance previously through the PEO AND A copy of the contract termination letter sent from the PEO to the client (employer) business. This letter is generated by the PEO and verifies the cancellation of the leasing arrangement as well as the cancellation date AND A letter from the company owner/officer stating the following that the company has cancelled its contract with the PEO and the effective date of cancellation AND Prior carrier bill from the PEO with the employee census confirming prior coverage AND 6 weeks of chargeback invoices from the PEO to establish AB 1672/1083 AND Remaining in a PEO: Contract must be entered into only with the client company (the employer group) of the PEO that meets the definition of a small employer AND Only an officer of the client company may enter into, and sign, the insurance contract; it cannot be signed by the PEO and/or PEO co-employer AND must be the sole provider of health insurance AND If the employer group currently has health coverage offered or sponsored through a PEO that is covered as an active mid-market group (ADP or Administaff, for example), they will not be considered eligible for coverage as a separate small employer unless they terminate their PEO relationship AND Payroll report must be provided from a legitimate payroll record service, issued in the name and tax ID number of the individual employer group, and may not contain employees of any other PEO client company. A small group employer that utilizes the services of the PEO for payroll purposes alone and the PEO otherwise does not act as a co-employer, will offer coverage to the small group client company without requiring the employer to terminate their PEO contract.

7 Spin-Off Group must be a current group customer AND 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 AND Ownership documents showing that the company is a newly formed separate entity AND A minimum of 2 weeks payroll. If the group that is spinning off has been in business longer than 2 weeks, payroll will be required for amount of time in business to a maximum of 6 consecutive weeks. A spin-off is treated as a start-up AND A minimum of 30 days payroll is required within 45 days of requested effective date. At least 50% of the employees in the spin-off group must have been enrolled in through the former business AND The new group does not have shared ownership with the business they have separated from AND All enrollment documents are required (master application, subscriber applications, refusals, business check, etc.) AND Ownership paperwork and eligibility verification for the owner is required AND A copy of the most recent payroll register is required. If no payroll register is available, a W-4 form for all employees will be initially required, with subsequent submission of the first complete payroll register required within 30 days of the group s effective date. The first available effective date is the first of the month, on or following the group s official split-off date. Employees from the original company can maintain their original date of hire for the purposes of satisfying any waiting periods applied by the Employer. Documentation Requirements: Letter from Employer, on company letterhead, describing the split-off scenario, including the official split-off date AND Payroll ledger (from business start date to current under the new company structure) should include: (a) company name; (b) employee names; (c) employee wages; (d) employee wage withholdings; (e) wage summary totals; (f) run date. If less than one month of payroll is available, the balance for the month is due within 30 days of the effective date. Groups with less than 5 enrolling must have at least 1 eligible employee with 6 weeks of payroll. Owner Eligibility requirements for each enrolling owner/partner (not listed on the payroll with at least a minimum wage salary): If less than 5 medically enrolled, legal documents could be required by underwriting. The first available effective date is the first of the month, on or following the group s official split-off date. Employees from the original company can maintain their original date of hire for the purposes of satisfying any waiting periods applied by the Employer. Two (2) weeks of company wide payroll Prior carrier bill or ID cards for all employees (from the previous employer) AND Minimum of 2 weeks of payroll is required; groups with more than 2 weeks of payroll are required to submit the available payroll with a maximum of 6 weeks AND Ownership documents showing that the company is a newly formed, separate entity AND Letter from the group or broker, on company letterhead, indicating the group is enrolling as a spin-off. If the group did not have coverage under the previous business entity, or if the majority of those enrolling were not employed by or did not have coverage through the previous business entity, the group will not be considered for coverage. The group must be spinning off from a company whose medical coverage resides with AND Despite being a newly formed business, they are not subject to 50% of the previous calendar quarter/year rule AND A letter from the employer, on company letterhead, stating their request to spinoff and their requested effective date AND Standard group submission and underwriting rules apply.