small group underwriting guidelines - healthplan services · small group underwriting guidelines...

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Small group underwriting guidelineSFor Brokers & Agents

TEnnEssEE

www.CIgnaforBrokers.com1.877.CIgna.15

822127 TN 09/08

CIGNA HealthCare Small Group New Business Underwriting Guidelines – Tennessee | Page 1

This material is intended for brokers and agents and is meant to be informative. It is not intended to be all-inclusive. Other policies and guidelines may apply.

Note: State and Federal regulations and legislation, including HIPAA and Small Group Reform, take precedence over any and all Underwriting rules. This information is the property of CIGNA and may only be used or transmitted with respect to CIGNA products and procedures as authorized by CIGNA.

Tennessee Small GroupNew Business Underwriting GuidelinesFor businesses with 2-50 Eligible Employees E� ective 12/01/2008

Small Employer DefinitionAn employer who employs an average of at least two, but not more than 50, employees on business days during the preceding plan year and had at least two employees on the � rst day of the plan year. Includes all employers subject to Tennessee small group reforms.

If a company has a� liated companies, they are treated as one company. Companies are considered a� liates if they are treated as a single employer under the Internal Revenue Code. All eligible employees of all a� liated companies, including employees of out-of-state a� liates, are considered in determining eligibility. When combined, if the number of eligible a� liated companies’ employees exceeds 50 eligible employees, the group is not eligible for small group coverage.

Eligible Employee■ Works for a small employer on a full-time basis, with a normal work week of 30 or more hours, includes sole

proprietors, partners of a partnership and o� cers

■ Independent contractors, if included under a health bene� t plan

■ Employees in a waiting period are considered when determining the group size and are considered eligible only if the group waives the waiting period for existing new hires (only at initial underwriting).

Eligible Dependent■ A lawful spouse

■ An unmarried child (natural, step-child) to age 24 if dependent on the certi� cate holder

■ A newborn child. If addition of the child requires additional premium, newborn must be enrolled within 31 days or coverage will not continue for the child beyond the initial 31-day period.

■ An adopted child upon placement in the home. Documentation must be submitted.

■ An unmarried child of any age, who is both incapable of self-sustaining employment because of mental or physical disability and chie� y dependent on the eligible employee for support. Written proof of such handicap and dependency is required within 31 days of child’s 19th birthday and annually thereafter.

■ A child for whom an eligible employee is subject to a court ordered medical support order.

■ Where both the husband and wife work for the same company, they must enroll separately on their own enrollment form. A child can be a dependent of only one of the two employees.

| CIGNA HealthCare Small Group New Business Underwriting Guidelines – Tennessee



Quote RequirementsThe following items must be provided when requesting a quote from CIGNA.

■ Census Data must include

● Name of the group

● Total Number of Employees working at the � rm and a� liates if applicable

● Total Number of Eligible Employees

● Total Number of Employees Expected to enroll

■ Census Information (Dates of Birth [employee and spouse only], Gender, Coverage Types and ZIP Codes) for all employees and number of children expected to enroll as well as any COBRA or State Continuation participants

■ SIC Code (Nature of Business) for the employer

■ New Business rating will be based on � nal enrollment.

E� ective Dates■ The e� ective date can be the � rst or the 15th of the month. Groups will renew on the � rst of the month.

New Business Submission Dates■ All completed case paperwork must be received by CIGNA Small Group Underwriting no later than the end of the

business day on the day prior to the requested e� ective date.

■ If the completed case is not received by this date, the requested e� ective date will be moved to the next available e� ective date.

Signature Dates■ All paperwork must be signed prior to the requested e� ective date and no more than 60 days in advance.

Medical Underwriting ■ Although employers who meet the de� nition of a Small Employer cannot be declined coverage unless other

contractual requirements are not satis� ed, groups may be rated up for enrolling employees and COBRA participant’s known medical conditions.

PEOs■ In circumstances where the PEO (Professional Employer Organization) is considered the Employer, the group will

not be eligible to enroll as a Small Group.




Employer Eligibility Requirements■ An employer/employee relationship must always exist.

■ The business must be organized as a sole proprietorship, partnership, or corporation. Corporations include the parent company and may include branch o� ces, if requested, that are in the service area. Companies that are a� liated companies or that are eligible to � le a combined tax return for purposes of state taxation will be considered one employer.

■ The group must be licensed to operate as a business in the service area.

■ The employer must be an active ongoing business entity with records maintained and whose operation is located and has been transacting business in the same place for at least one month.

■ The business must maintain, on a regular basis, a census of 2-50 employees.

■ Group must be sitused in Tennessee.

New Case Submission; Basic Required Documentation■ A completed Employer Application

■ Completed Employee Enrollment/Change of Coverage Forms for all eligible employees and COBRA enrollees

■ Waivers for all employees and/or dependents, including COBRA eligible, who are eligible to enroll but are waiving coverage at this time.

■ A copy of the most recent state-� led Quarterly Wage and Tax Statement (QWTS), containing names, wages and taxes withheld for all employees. This form may not be altered.

● Employees must be identi� ed as Full-Time, Part-Time, waiving, terminated or not eligible.

● Employees not listed on the QWTS, or newly hired employees, must provide � rst and last payroll stubs for each along with weekly hours worked. Or, if payroll is not yet available because of recent hire status, a copy of their W4 will be accepted. If payroll is available, payroll must be submitted.




Proprietors, Partners or O� cers of the business who do not appear on the QWTS must submit one of the following:

If you are a Sole ProprietorSubmit one of the following most current documents

Anyone eligible must appear listed on any one of the documents listed below:

■ Sole Proprietors ■ LLC operating as a sole

proprietor or single-member LLC

a) IRS Form 1040C or 1040Fb) IRS Form 1040SEc) IRS Form 1040ES (estimated tax)

If you are a Partner

Submit one of the following most current documents


■ Partnership■ Limited Liability Partnership

(member)

a) IRS Form 1065 Schedule K-1b) IRS Form 1040SEc) IRS Form 1040ES (estimated tax)

If you are a Corporate O� cer

Submit one of the following most current documents


■ Limited Liability Company operating as a corporation

■ C-Corporation■ S-Corporation■ Person Service Corporation

a) IRS Forms 1120, 1120A or 1120W (C-Corporation and Person Service Corporation)

b) IRS Form 1120S Schedule K-1 or 1040ES (estimated tax) (S-Corporation)c) IRS Form 8832 (Entity Classi� cation; for LLCs treated as a corporation)

■ If business is incorporated in another state, must also provide a Certi� cate of Quali� cation.

■ If a group is coming o� of a PEO (Professional Employer Organization), a copy of the letter terminating the PEO arrangement and signed by the PEO and the group, must be submitted.

■ Groups enrolling 26-50 eligible employees must complete the Group Medical Questionnaire. (COBRA participants do not count toward the 26-50. For example, if a group has 23 employees enrolling and four COBRA participants, the health questionnaire on the employee enrollment form will need to be completed by all enrollees.

■ Groups enrolling 2-25 eligible employees must have the individual Health Questionnaire on the Employee Enrollment form completed.

■ A copy of the current or prior carrier billing statement

■ A signed rating proposal

■ Check equal to the � rst month’s premium payment




Newly Formed Business The following documents must be provided for businesses that have not been in business long enough (three months) to have � led a Quarterly Wage and Tax Statement.

■ In lieu of the Quarterly Wage and Tax Statement, provide payroll records for the most recent two consecutive weeks. The payroll records must include hours worked, wages earned and taxes withheld.

■ If payroll is not yet available, provide a letter from a CPA or an o� cer of the company documenting the total number of employees, hours worked, weekly salary and dates of hire for each employee

■ Employer identi� cation number / Federal Tax I.D.

■ Business license (not a professional license)

In addition, the following documentation will be required for:

Sole Proprietors Business License or Fictitious Business Name Filing

Partnerships or Limited Liability Partnerships Partnership Agreement

Limited Liability Corporation Articles or Organization and Operating Agreement

Corporation Articles of Incorporation, to include signature pages

Replacing Other Group Coverage

■ The employer must provide a copy of the most recent bill from the prior carrier.

■ Advise the employer not to cancel any current medical coverage until he or she has been noti� ed of approval from the CIGNA Underwriting department.

Waiting Periods■ A new group may waive the waiting period for all employees, including employees who are currently in their new-

hire waiting period

■ An employer may choose a waiting period of: First of the month following date of hire, or � rst of the month following: 30 days, 60 days, 90 days, 180 days or other.

■ Waiting periods must be consistently applied to all employees. If a dual waiting period is required for di� erent classes of employees, this must be set up at time of new business submission.

■ Changes to the waiting period may be made twice during one policy year (one o� of renewal and one on renewal).

■ Retroactive changes to the waiting period are not allowed. No exceptions.




Participation RequirementsThe following guidelines apply:

1) 100% participation for employers with � ve or fewer Eligible Employees. (excluding valid waivers)

2) 75% participation is required for employers with six through 50 eligible employees. When applying the participation percentage, eligible employees who have waived coverage because of qualifying existing coverage* are not to be included in the participation numerator.

3) 100% participation required if employer contributes 100% of the employee-only premium.

4) Dependent participation is not required

5) Coverage can be denied based on inadequate participation

* Waivers: The following types of coverage will be considered valid waivers. If an employee waives o� the coverage for any of the reasons listed below, that employee will not count toward CIGNA’s Small Group participation requirements.

■ Spousal Waiver (other group health coverage)

■ Medicare, Medicaid, CHAMPUS and other Federal programs

■ An employer-based health insurance or health plan, including a self-insured plan that provides bene� ts similar to, or in excess of, bene� ts provided under the basic health plan

Individual coverage is not a valid waiver.

All employees waiving coverage must complete the waiver section of the Employee Enrollment Change Form.

Contribution Requirements■ The employer must contribute at least 50% of the employee-only coverage. Contribution toward dependent

coverage is not required.

Initial Premium Check■ The initial premium check is not a binder check.

■ An initial premium check must accompany the Employer Application for coverage equal to one month’s premium.

■ If coverage is declined because of business ineligibility, participation or other permissible reasons by CIGNA or withdrawn by the group, the initial check will be returned to the employer.

■ The check must be a company-issued check. Personal checks will not be accepted at initial underwriting.




Midyear Policy Changes■ Only a downgrade in bene� ts will be allowed o� of renewal and only once in a 12-month period outside of the

renewal. The downgrade must be within same product line, for example OAP to OAP.

Common Ownership, A� liated and Associated Companies ■ See Small Employer De� nition section (page 1)

■ If an Employer has multiple businesses with di� erent Tax I.D. numbers, they may enroll together as one group if:

● One owner has controlling interest of all companies.

● All businesses together have at least two, but no more then 50, eligible employees or if the owner is eligible to � le a combined State Tax return for all companies to be covered.

If applicable, proof of common ownership must be provided by completing the Common Ownership form along with supporting documentation such as copies of K-1, shareholder certi� cates, articles of incorporation or other acceptable documentation as determined by CIGNA.

Plan OptionsEmployers may o� er more than one CIGNA medical plan to employees according to group size

■ Single Option: 2-4 enrolling

■ Dual Option: 5-50 enrolling, may o� er any combination of two plans

Rating*■ 2-9 Tabular

■ 10-50 Composite

*Based on number of enrolled

Retiree Eligibility ■ Retiree coverage is not available.

Producers■ Only CIGNA-appointed and licensed brokers/agents may market, present and sell CIGNA products.

■ All quotes are subject to change based on additional information that may become available after the quoting process and during the installation process, including any census change.




Out-of-State Employees■ Any active employee living in a state other than where the company is domiciled, is considered an out-of-state

employee

■ Out-of-state Employees may have any plan o� ered by the group, except for HMO coverage

■ For groups with more than 50% of the group’s employees that work or reside outside of Tennessee, CIGNA may decline to o� er coverage to those out-of-state employees

COBRA/STATE CONTINUATION ■ COBRA or State Continuation-eligible employees should be included on the census.

■ Employers with 20 or more full- and part-time employees* are required to o� er COBRA coverage

■ The COBRA qualifying event date is required at time of enrollment.

*During at least 50% of the working days in the previous calendar year

s m a l l g r o u p p l a n s

“CIGNA,” “CIGNA HealthCare” and the “Tree of Life” logo are registered service marks of CIGNA Intellectual Property, Inc., licensed for use by CIGNA Corporation and its operating subsidiaries. All products and services are provided exclusively by such operating subsidiaries and not by CIGNA Corporation. Such operating subsidiaries include Connecticut General Life Insurance Company, Tel-Drug, Inc. and its affiliates, CIGNA Behavioral Health, Inc., Intracorp, and HMO or service company subsidiaries of CIGNA Health Corporation and CIGNA Dental Health, Inc. In Arizona, HMO plans are offered by CIGNA HealthCare of Arizona, Inc. In California, HMO plans are offered by CIGNA HealthCare of California, Inc. and Great-West Healthcare of California, Inc. In Connecticut, HMO plans are offered by CIGNA HealthCare of Connecticut, Inc. In Virginia, HMO plans are offered by CIGNA HealthCare Mid-Atlantic, Inc. In North Carolina, HMO plans are offered by CIGNA HealthCare of North Carolina, Inc. All other medical plans in these states are insured or administered by Connecticut General Life Insurance Company.

822127 TN 09/08 © 2008 CIGNA

Small group underwriting guidelineSFor Brokers & Agents

TEnnEssEE

www.CIgnaforBrokers.com1.877.CIgna.15

822127 TN 09/08

small group underwriting guidelines - healthplan services · small group underwriting guidelines...

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