California AB 2244 Applicants Under Age 19 Final Starting March 2, 2011

2 Overview - California Assembly Bill 2244 Signed by Governor Schwarzenegger on September 30, 2010, and the law became effective on January 1, 2011 Requirements: Requires health plans to guarantee issue coverage to children under age 19, including child only applicants. Initial open enrollment for all children January 1 – March 1, 2011

3 Enrollment After March 1st Open enrollment periods Applicants under the age of 19 will have additional open enrollment periods during the month of their birthdates. Enrolling outside of an enrollment period may result in higher rates compared to the rates available during an open enrollment period. Other qualifying events/late enrollees A child under the age of 19 may be assessed a surcharge of 20% for the 12-month period following enrollment if they failed to maintain health coverage for the 90 day period prior to the date of the child's application. Outside of open enrollment (if not late enrollee), carrier may rate more than two times the base rate

4 Definition of Late Enrollees/Qualifying Criteria A Late Enrollee is considered to be an applicant who did not enroll during the initial open enrollment period or birth month. One of the following qualifying events must occur to be considered a late enrollee: Loss of coverage due to termination or change in employment status of the child or person through whom child was covered Employer contribution for child’s coverage is terminated Death, legal separation, or divorce of the subscriber under which the child is covered Loss of access to Healthy Families, Access for Infants and Mothers, or Medi-Cal coverage Child moves to CA during a month that is not the child's birth month The child is mandated to be covered by a court order The child is within 63 Days from their date of birth or adoption

5 Surcharge Starting March 2 20% surcharge may be applied to the final premium [surcharge is limited under guidance 2244:2] for children under age 19, regardless of open enrollment status, who apply on or after March 2nd and who: failed to maintain health coverage for the 90 day period prior to the date of the child's application Do not qualify as a late enrollee Applies whether applicant is applying for child only coverage, as a dependent on a family plan, or being added as a child dependent under age 19 on to an existing plan May apply the surcharge for 12 months following effective date. After 12 months, the surcharge must be removed with no action by insured

6 Surcharge Information Starting March 2 There will be a surcharge message on AgentServices, when applicable. There will not be a separate surcharge line on member bills or agent commission statements Underwriting decision letter will advise if surcharge has been applied As part of application process, proof of prior coverage and proof of age is required

7 Planfinder Quoting Surcharge Draft Language

8 Planfinder Application Submittal Page

9 Documents Updated with Surcharge Language On Ordering site, as of 2/18, for applications submitted on and after March 2, 2011 – start using: New cover sheet for application New Coverage Details for brochures Orders for applications and brochures will automatically include the updated documents starting 2/22

10 Will the Surcharge Impact Agent Commissions? Surcharge is NOT considered premium when calculating commissions. We developed a chart that helps determine commissions for policies subject to a surcharge. Surcharge chart results in a determination of commission equivalent to an underwriting Level 1 excluding the surcharge (in most cases) See the information we sent you in February through the regular mail, including a commission schedule effective 3/1/11.

11 Updated Commission Schedule Effective 3/1/11 Added language about surcharges Added to “Original Premium” definition: Any surcharges applied to a plan/policy are not considered premium for purposes of determining commissions under this schedule or included within Original Premium. Added “Surcharge” definition: “Surcharge” shall mean any additional sum charged on a policy/plan in addition to the rate or premium. This shall include any surcharge applied pursuant to AB 2244 (2010) wherein a charge of 20% assessed to children under the age of 19 for no greater than 12 months if the child has not had coverage within the 90 day period prior to the date of application and is not a late enrollee.

12 Updated Commission Schedule Effective 3/1/11 New schedule with separate and tiers. This change will result in an increase in the commission percentage for underwriting level Added language about additional underwriting levels Added to “Underwriting Levels” definition: …and any additional underwriting levels as set forth in Anthem Blue Cross/Anthem Blue Cross Life and Health Insurance Company underwriting guidelines. Added paragraph IID, Commissions for Underwriting Levels Greater Than Level

13 Important Dates Last date to submit an application during initial open enrollment period March 1, 2011 for a March 16 effective date PlanFinder and other quoting sites will have surcharge message. Start using new application cover sheet and coverage details Starting March 2

14 Questions?

15 Anthem Blue Cross is the trade name of Blue Cross of California. Anthem Blue Cross and Anthem Blue Cross Life and Health Insurance Company are independent licensees of the Blue Cross Association. ® ANTHEM is a registered trademark of Anthem Insurance Companies, Inc. The Blue Cross names and symbols are registered marks of the Blue Cross Association.