Colorado Underwriting GuidelinesSmall Group Services

1-50 EmployeesEffective June 1, 2006

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Small Group Underwriting for ColoradoAnthem Blue Cross and Blue Shield P.O. Box 172466Denver, CO 80217-2466

Overnight DeliveryAnthem Blue Cross and Blue Shield Small Group Underwriting 700 BroadwayMail Stop UW-0665Denver, CO 80273

Small Group Member Customer Service877-833-5734Hours of operation: Monday-Friday, 7:30 a.m.-5:30 p.m. Mountain time

ISG (Individual and Small Group) Agent Sales Support 700 BroadwayDenver, CO 80273Phone: 303-831-2377 or 866-628-3097Fax: 303-863-1721 or 866-628-3096E-mail: isgsalessupport@anthem.comHours of operation: Monday-Thursday, 8 a.m.-5:30 p.m. Mountain timeFriday, 8 a.m.-3:30 p.m. Mountain time

Group Administrator/Agent SupportAnthem Blue Cross and Blue Shield Membership DepartmentP.O. Box 172405Denver, CO 80217-2405303-831-2098 or 800-922-4770Hours of operation: Monday-Wednesday and Friday, 8 a.m.-5:30 p.m. Mountain timeThursday, 8 a.m.-3:15 p.m. and 4:30-5:30 p.m. Mountain time

Website: anthem.com

Important Contact Information

To view, download and print these underwriting guidelines and other forms and documents, go toanthem.com. Click the Brokers/Producers tab, select Colorado from the drop-down menu, click Enter and then click Download Commonly Requested Forms.

Table of Contents

Important Contact Information . . . . . . . . . . . . . . . . . . . . inside front coverIntroduction. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3

SECTION 1 Overview of the Underwriting Process1. Requirements for Completing Forms . . . . . . . . . . . . . . . . . . . . . . . 42. Guidelines for Completing Forms . . . . . . . . . . . . . . . . . . . . . . . . . . 43. Process . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 54. Processing Time Specifications . . . . . . . . . . . . . . . . . . . . . . . . . . . 55. Evaluation Criteria . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5

SECTION 2 General Underwriting Guidelines for New Business1. Small Group Eligibility Requirements. . . . . . . . . . . . . . . . . . . . . . . 62. Business Groups of One. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 63. Employer/Employee Relationship . . . . . . . . . . . . . . . . . . . . . . . . . . 74. Ineligible Categories . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 75. Contribution . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 86. Employee Eligibility . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 87. Employee Participation Requirements . . . . . . . . . . . . . . . . . . . . . 88. Health Underwriting . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 99. EmployeeElect Health Coverage . . . . . . . . . . . . . . . . . . . . . . . . . . 910. BeneFits Health Coverage . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 911. Dental Coverage . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 912. Vision Coverage. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1013. Life Coverage . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1014. Disability Coverage . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1115. Protection Pack . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1116. P.O.P. (Premium Only Plan). . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1117. Rating Policies . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1218. Rate and Benefit Guarantees . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1219. New Group Eligibility/Effective Date . . . . . . . . . . . . . . . . . . . . . . 1220. Waiting Period . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1221. Pre-existing Conditions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1222. Takeover Provisions (CRS 10-16-106). . . . . . . . . . . . . . . . . . . . . . 1323. Prior Deductible and Annual Out-of-pocket Maxium Credit . . 1324. Eligible Dependents . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1325. Federal Regulations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1326. State Regulations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1427. Colorado Business Structure Underwriting Requirements . . . 15

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Table of Contents

SECTION 3 General Underwriting Guidelines for Existing Business1. Open Enrollment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 162. Contract Benefit Modifications. . . . . . . . . . . . . . . . . . . . . . . . . . . 163. Plan Modification Job Aid . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 174. Group Add Effective Dates . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 185. Group Conversion . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 186. Life Insurance Conversion. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19

SECTION 4 Definitions1. Declination . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 202. Dependent . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 203. Late Entrant . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 204. Special Enrollment Period . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 215. New Hire . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 216. Replacement Group/Members . . . . . . . . . . . . . . . . . . . . . . . . . . . 217. Virgin Group/Members . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21

Introduction

The guidelines in this manual are a statement of Anthem Blue Cross and Blue Shields current general underwriting approachto small group business.

Anthem Blue Cross and Blue Shield will strive to keep all parties informed of any changes to these guidelines in a timelymanner; however, Anthem may change these guidelines at any time without prior notice. Future changes will becommunicated as updates to the most current published guidelines.

Only Anthem Blue Cross and Blue Shield small group underwriters may make the final decision to accept or decline a case ordetermine the rate level or an effective date. Agents are not authorized to bind or guarantee coverage or a specific rate levelor effective date. Please remind all prospective groups to maintain their current coverage until Anthem Blue Cross and BlueShield notifies them that we have accepted them for coverage.

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1. Requirements for Completing FormsThe following documentation is required whensubmitting new business:

a. A copy of the signed agents quote (based on finalenrollment)

b. The most current Small Group Employer Application(Master Application)

c. The most current applicable Employee Applicationsfor all employees/dependents enrolling

d. Applications from all employees/dependentsdeclining coverage. Sections 2 and 4 of theEmployeeElect Employee Application must becompleted if that coverage is being declined.Sections 3 and 5 of the BeneFits EmployeeApplication must be completed if that coverage isbeing declined.

e. A copy of the companys most recent UnemploymentInsurance Tax Report (UITR) with the currentemployment status of all employees listed (See page17 for a listing of alternative forms to validatebusiness and employee eligibility when the UITR isunavailable.)

f. If it is a group replacement case, a copy of the lastmonths group premium statement

g. The last billing statement listing COBRA/FMLA/Colorado State Continuation subscribers, ifapplicable.

h. A company check for the first months applicablecoverage(s) made payable to Anthem Blue Cross andBlue Shield

i. Submit 100 percent of the premium with theapplications for all applicable lines of coverage.

2. Guidelines for Completing FormsGuidelines for completing Employer and EmployeeApplications for groups of 1-50 are as follows:

All questions must be answered and all signatures anddates provided before Anthem Blue Cross and BlueShield can begin processing the groups applications. Anemployees spouse, if applying, must also sign and datethe Employee Application. If the group paperwork isincomplete, the underwriter may be unable to completethe underwriting process.

a. For new group submissions, the employees signaturedate cannot be more than 60 days before therequested coverage effective date.

b. Employees may make alterations or changes to theirEmployee Application. The applicant must initial anddate any changes made.

c. See Section 2 for guidelines for business groups ofone and groups of 2-50 with only one employeeenrolling.

SECTION 1 Overview of the Underwriting Process

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3. ProcessUnderwriters evaluate small groups to determine theappropriate risk adjustment factor and whether thegroup qualifies for coverage.

4. Processing Time SpecificationsBecause processing within specific timeframes isimportant, all forms and other documents submitted forevaluation must be accurately completed and includedwhen the case is first submitted to Anthem Blue Crossand Blue Shield.

a. Anthem Blue Cross and Blue Shield will accept newgroup submissions, excluding business groups of one,with a requested effective date of the first or the 15thof the month up to the last day of the month beforethe requested effective date.

b. Business groups of one must be submitted by the 10thof the month before the requested effective date.

c. If Anthem Blue Cross and Blue Shield receivesincomplete forms, it cannot make a determinationuntil it receives all the necessary information.

d. When the information submitted is incomplete andsubsequently not received in a timely manner, thegroups application may be withdrawn for the monthrequested.

5. Evaluation CriteriaUnderwriting is based on the following criteria:

a. Business qualification

b. Employer contribution

c. Health status

d. Employee and dependent eligibility

e. Tobacco use

f. Employee participation

g. Group demographics

Groups may be declined if:a. A bonafide employer/employee relationship does not

exist.

b. More than 50 percent of the groups eligibleemployees are employed outside the state ofColorado on 50 percent of the work days in the lastcalendar quarter or the last calendar year. SeeSection 2, Item 1, Small Group EligibilityRequirements.

c. The group is not subject to Colorado small groupstatutes.

d. The group fails to meet Anthem Blue Cross and BlueShields eligibility requirements.

e. Other such factors, as determined by Anthem BlueCross and Blue Shield and subject to applicable law,apply.

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1. Small Group Eligibility Requirementsa. Small employer means any person, firm,

corporation, partnership or association activelyengaged in business that on at least 50 percent ofits working days, during the preceding calendarquarter, employed no more than 50 eligibleemployees, the majority of whom were employed inColorado, and that was not formed primarily for thepurpose of purchasing insurance. Small employerincludes a business group of one. In determiningthe number of eligible employees, companies thatare affiliated companies, or that are eligible to file acombined tax return for the purposes of statetaxation, will be considered one employer.

b. Eligible employee is defined as an employee whohas a regular work week of 24 or more hours andincludes a sole proprietor and a partner of apartnership if the sole proprietor or partner isincluded as an employee under the employershealth plan, but does not include an employee whoworks on a temporary or substitute basis.

c. The majority (51 percent) of all eligible employeesmust be employed in the state of Colorado or, if nostate has a numerical majority and the group isheadquartered in Colorado, then Colorado Divisionof Insurance small group regulations apply.

d. To be classified as a small employer with more thanone employee when only one employee enrolls inthe employers health plan, the employer mustsubmit to Anthem Blue Cross and Blue Shield thetwo most recent quarterly employment and taxstatements substantiating that the employer hadtwo or more eligible employees. Such smallemployer groups must also meet Anthemsparticipation requirements.

e. For a small employer group to be considered abusiness group of two or more, an employee whocould also be considered a dependent of theemployer must receive taxable income from theemployer in an amount equivalent to minimum wagefor working 24 hours per week on a permanentbasis.

2. Business Groups of Onea. Business group of one means, for purposes of

qualification, an individual, a sole proprietor or asingle full-time employee of a subchapter S

corporation, C corporation, nonprofit corporation,limited liability company or partnership who works24 hours or more a week on a permanent basis andwho has carried on significant business activity fora period of at least one year prior to application forcoverage, and who has gross income as indicatedon federal Internal Revenue Service Forms 1040,schedule C, F or SE, or other forms recognized bythe federal Internal Revenue Service for incomereporting purposes, which generated gross incomefrom which that individual, sole proprietor or singlefull-time employee has derived at least a substantialpart of such individuals income for one year out ofthe most recent consecutive three-year period.Substantial part of such individuals incomemeans income derived from business activities ofthe business group of one that are sufficient to payfor annual health insurance premiums for thebusiness group of one.

b. Business group of one includes a full-timehousehold employee who works 24 hours or more aweek on a permanent basis as a householdemployee, if that employee has derived at least asubstantial part of such employees earned incomefor one year out of the preceding three-year periodfrom household employment, and if the employeesemployer, on at least 50 percent of the days in anormal work week during the preceding calendarquarter, employed at least one household employee.

c. To determine whether an applicant meets therequirements of the business group of onedefinition, Anthem Blue Cross and Blue Shield mayrequire an applicant to submit any of the followingforms of documentation applicable to theapplicants current business or employment:

Employment-related tax and withholdinginformation, including, but not limited to, a federalInternal Revenue Service Form 1099

Relevant portions of federal and state tax returnsor a certification by an attorney or certified publicaccountant that federal and state tax returnshave been filed as a business

d. To determine whether an applicant meets therequirements for working 24 hours or more per weekon a permanent basis, Anthem Blue Cross and BlueShield will adhere to the applicable ColoradoDivision of Insurance rules and/or regulations.

SECTION 2 General Underwriting Guidelines for New Business

2. Business Groups of One (continued)e. Groups of 2-50 with one enrolling are not

considered business groups of one.

3. Employer/Employee Relationshipa. An employer/employee relationship must exist. An

employee who works a minimum of 24 hours perweek is considered a full-time employee. Anemployee who works less than 24 hours per week isconsidered a part-time employee and is not eligible.

b. Persons compensated on a 1099 basis are eligible forcoverage. Eligibility requirements for groups with1099 employees are as follows:

No more than 50 percent of the groups employeesmay be 1099 employees.

The 1099 employees must be employed by thecompany full time and year round.

All present and future 1099 employees are subjectto the same eligibility requirements as taxedemployees.

The small group employer must contribute thesame amount for 1099 employees as for all otheremployees.

The employer must have at least two taxedemployees, with tax documents that verify thecompany is a valid business.

A complete list of all 1099 employees must beincluded with the new group submission.

Anthem Blue Cross and Blue Shield may requirethe employer to submit documentation todemonstrate eligibility.

c. Temporary, seasonal and substitute employees are not eligible.

d. If an owner believes the structure of his or herholdings produces a single employer-employeerelationship, Anthem Blue Cross and Blue Shield willrequire copies of all associated supportingdocumentation validating 51 percent commonownership of all companies involved. Thedocumentation may be submitted before casesubmission. Anthem Blue Cross and Blue Shield willmake the final determination about whether there isone responsible employer.

e. The qualifying events for business group of oneeligibility are as follows:

Birthday rule: The employee must enroll within 31days of his or her birthday. The effective date willbe the first of the month following the birthday orthe first of the subsequent month if the submissiondeadline referenced in Section 1 is missed; or

Anniversary rule: The employee must enroll within31 days of the groups one-year anniversary of thebusiness start date; or

Loss of coverage rule: The employee must applywithin 31 days of any involuntary loss of coveragethat is considered a qualifying event, includingexhausting State Continuation or COBRA coverage.

4. Ineligible CategoriesAssociations, multiple employer trusts, part-time andseasonal employees, retirees, and board of directormembers and stockholders are not eligible.

Definitions or explanations follow:

a. Association (unless qualifying as a guaranteedassociation): A group of employer units bandedtogether for any reason

b. Multiple employer trust (unless qualifying as aguaranteed association): Employers, usually in thesame or related industries, brought together by aninsurer, agent, broker or administrator for the purposeof providing insurance for their employees under amaster contract issued to a trustee under a trustagreement

c. Part-time employee: An employee who works lessthan 24 hours per week

d. Seasonal employee: An employee who regularlyworks less than 12 consecutive months but forperiods of time that are definite in length and with aformal policy of recall

e. Retirees: Retirees are eligible for Individualconversion or Medicare Supplement products.

f. Board of director members and stockholders are noteligible unless they are also officers/employees andworking at least 24 hours per week.

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5. ContributionEmployers may choose their preferred approach forcontributing toward employee health premiums. Payrolldeduction is required if contributory. Employers have thefollowing contribution options:

EmployeeElect and BeneFits Healtha. Traditional option: A minimum contribution of 50

percent of each covered employees monthly healthpremium for EmployeeElect or 25 percent of eachcovered employees monthly health premium forBeneFits

b. Fixed dollar option: Any fixed dollar amount $125 ormore (in $5 increments) for each covered employeesmonthly health premium for EmployeeElect or $50 ormore of each covered employees monthly healthpremium for BeneFits

Mandated Basic and Standard HealthA minimum contribution of 50 percent of each coveredemployees monthly health premium (These plans arenot available as part of the EmployeeElect or BeneFitsportfolios.)

Dentala. If dental coverage is purchased alone, a minimum

contribution of 50 percent of each coveredemployees monthly dental premium

b. If dental coverage is purchased with EmployeeElector BeneFits health coverage, a minimum contributionof 25 percent of each covered employees monthlydental premium

VisionA minimum contribution of 50 percent of each coveredemployees monthly vision premium if purchased withEmployeeElect health coverage and 25 percent of eachcovered employees monthly vision premium ifpurchased with BeneFits health coverage

Life and DisabilityFor basic life, a minimum contribution of 25 percent ofeach covered employees monthly life premium

6. Employee EligibilityTo be eligible as an employee, a person must be anactive employee on a full-time basis and with a regularlyscheduled work week of at least 24 hours per week andbe compensated for that work by the employer (subjectto withholding it as appears on a W-2 form). Soleproprietors, partners and corporate officers must workat least 24 hours a week to be eligible.

7. Employee Participation RequirementsHealthThe standard group participation requirement forAnthem Blue Cross and Blue Shields EmployeeElect,state-mandated, and actively marketed PPO and HMOhealth plans is a minimum of 75 percent of the eligibleemployees. The standard group participationrequirement for BeneFits health plans is a minimum of 60percent of the eligible employees. (See Section 2, Items11-14, for dental, vision, and life and disabilityparticipation requirements.)

The group must maintain the corresponding minimumparticipation levels to remain eligible (100 percent ifnon-contributory). Groups are subject to non-renewal ifparticipation falls below the required minimum.

If an employee waives coverage due to other groupcoverage through another employer (as a subscriber ora dependent), because the employee has an Individualpolicy, or because the employee has other qualifyingcreditable coverage, the employee may be consideredineligible for the purposes of calculating participation.The employer must submit a declination for theseemployees.

If a husband and wife both work for the same employer,they may apply separately as employees, or one may bea dependent on the others coverage. The children mayapply as dependents of only one employee, not both.The contract holder under a single contract will be theemployee whose date of birth falls first in the year.

Class carve-outs such as management only or salary vs.non-salary may be considered with underwritingapproval. A list of the job classifications the employerwants to insure will be required with the initial groupsubmission. All employees must be accounted for, andthose in the carved-out classification must be identified.These carve-out groups are subject to underwritingapproval and may be declined if they do not meet AnthemBlue Cross and Blue Shields underwriting criteria.

SECTION 2 General Underwriting Guidelines for New Business

8. Health UnderwritingAnthem Blue Cross and Blue Shield will underwritegroups of 1-50 in accordance with Colorado laws andregulations.

Employees in employer groups of 1-50 eligible enrollingemployees must complete the health history section onthe current EmployeeElect or BeneFits EmployeeEnrollment Application/Change Form for small groups of 1-50.

a. Eligible employees and/or dependents waivingcoverage at the time of enrollment must complete awaiver of coverage, which includes their name,Social Security or ID number, and the applicablewaiver section of the Employee Application, and theymust forward it to Anthem Blue Cross and BlueShield. Proof of coverage may be required.

b. Late entrants (see Section 4, Definitions) may applyfor coverage, subject to the following:

Applicants enrolling in non-HMO Coloradocoverage may apply at any time, subject to lateentrant pre-existing condition limitations andexclusions.

HMO Colorado applicants may apply only duringthe employers open enrollment period.

c. Applications more than 60 days old are not acceptedfor underwriting purposes.

d. The underwriting department can usually make animmediate decision if it receives all the properdocumentation with the initial group submission.Please refer to page 4 for all documentation required.Any missing documentation and/or premium willdelay the underwriting process.

e. Under normal circumstances, the underwritingdepartment does not request an attending physiciansrecords. However, additional medical information maybe required to determine the appropriate riskadjustment factor.

If underwriting requests medical records, theapplicant is responsible for providing them at his orher own expense. A HIPAA-compliant authorizationwill be required.

9. EmployeeElect Health CoverageEmployers may offer one plan, a mix of plans or all theEmployeeElect health plans to their employees.

HMOSelect TM plans are only available in specificemployer-based geographic areas. Eligible groups mayoffer HMOSelect in conjunction with the followingrequirements:

a. The employers place of business must be within thedesignated HMOSelect counties.

b. Employees who reside outside the designatedHMOSelect counties may choose any other HMO planor non-HMO plan offered by the employer.

10. BeneFits Health CoverageEmployers may offer one plan, a mix of plans or all theBeneFits health plans along with dental, vision and lifecoverage.

a. The BeneFits portfolio includes five health plans.

b. Participation requirements are reduced to 60 percentin the aggregate for all BeneFits health plans offeredby the employer.

c. Contribution requirements are reduced to 25 percentor a minimum of $50 per employee health premium.

d. Two dental plans are available. (The HospitalBeneFits Preferred plan includes dental coverage.)

e. Life insurance coverage up to $200,000 is available.Supplemental life, dependent life, disability andProtection Pack options are also available.

11. Dental CoverageDental coverage is available to groups of 2-50.Employers may select all plans for their employees ormake specific plan options available.

At least 75 percent of the eligible employees mustparticipate when the employer offers stand-alone dentalcoverage. At least 50 percent participation is required ifdental coverage is offered along with EmployeeElecthealth coverage. At least 60 percent participation isrequired if dental coverage is offered along withBeneFits health coverage.

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12. Vision CoverageVision coverage is available to groups of 2-50. At least 75percent of the eligible employees must participate whenthe employer offers vision coverage on a stand-alonebasis or along with EmployeeElect health coverage. Atleast 60 percent participation is required if visioncoverage is offered along with BeneFits health coverage.

13. Life Coveragea. Stand-alone employee and dependent life coverage is

available.

b. The participation requirement is 75 percent of theeligible employees when the employer offers lifecoverage on a stand-alone basis or along withEmployeeElect health coverage. The participationrequirement is 60 percent of the eligible employeeswhen the employer offers life coverage along withBeneFits health coverage.

c. The employer must contribute a minimum of 25percent of the employees basic life premium.

d. Stand-alone life is available to groups of 2-50. Aminimum of two must enroll.

e. Basic life is available to groups of 2-50. Life planswith $15,000-$200,000 in coverage are available.Benefit plans may be salary-based (one times theemployees annual salary or two times the employeesannual salary); a flat-dollar amount for all employees;or graded by job title (class I and class II). The benefitamount for class I cannot exceed 2.5 times thebenefit amount for class II. Accidental death anddismemberment coverage, waiver of premium, aliving benefit, and conversion coverage are included.Benefits reduce by the following: 35 percent at age65, 50 percent at age 70, 72 percent at age 75 and 80percent at age 80. Coverage terminates at retirement.

f. The guaranteed issue amount is $30,000 for basic lifeinsurance coverage for employer groups with 2-9eligible employees enrolling.

g. The guaranteed issue amount is $50,000 for basic lifeinsurance coverage for employer groups with 10-24eligible enrolling employees.

h. Employer groups with 25-50 eligible enrollingemployees are guaranteed for up to $100,000 in lifeinsurance coverage. For any life insurance coverageover the guaranteed issue amount, completed healthstatements are required, and coverage is subject tounderwriting approval.

i. For all groups of 2-50, the basic life coverage guaranteedissue amount is $25,000 for employees age 70 and over.

j. In addition to the basic life option, supplemental life isalso available to groups of 2-50, subject tounderwriting approval. For groups of two employees,100 percent participation is required. For groups of 3-50 employees, at least 25 percent of the eligibleemployees, with a minimum of three enrollingemployees, must participate. Coverage options of$15,000, $25,000, $50,000 and $100,000 are available togroups of 2-50 eligible employees. Accidental deathand dismemberment coverage, waiver of premium, aliving benefit, and conversion coverage are included.Benefits reduce by the following: 35 percent at age65, 50 percent at age 70, 72 percent at age 75 and 80percent at age 80. Coverage terminates atretirement.

Supplemental life is 100 percent employee-paid.Supplemental life is not available on a stand-alonebasis. There is no guaranteed issue amount forsupplemental life for groups of 2-9. The guaranteedissue amount is $15,000 for groups of 10-50.

k. Two dependent life coverage options are available:

Option 1: Includes $10,000 in coverage for theemployees spouse and $10,000 for each dependentchild ages 15 days to 19 years. Continuation ofcoverage rules for children up to age 25 areconsistent with the health plans continuation rules.Spouse coverage terminates when the spouse turns65. The rate is a flat rate per family unit.

SECTION 2 General Underwriting Guidelines for New Business

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13. Life Coverage (continued)Option 2: Includes $5,000 in coverage for theemployees spouse and $5,000 for each dependentchild ages 15 days to 19 years. Continuation ofcoverage rules for children up to age 25 areconsistent with the health plans continuation rules.Spouse coverage terminates when the spouse turns65. The rate is a flat rate per family unit.

l. Existing employees and new hires must complete thehealth history section of the applicable EmployeeApplication if the amount chosen is more than theguaranteed issue amount. Life insurance above theguaranteed issue amount is subject to underwritingapproval.

m. Existing health groups that add life insurance orincrease the life coverage amount are subject tounderwriting approval, regardless of group size.

14. Disability CoverageShort term disability coverage is available to groups of2-50 lives. a. Plans available: 1/8/13, 1/8/26, 15/15/26

b. Benefit amounts available: flat $200/week, 66.67percent, with a $750 maximum.

c. Covers only non-occupational disabilities. Pregnancyis covered the same as any illness. There are no pre-existing condition limitations.

d. Guaranteed issue:

2-5 lives: None

6-9 lives: $500/week

10-50 lives: All amounts are guaranteed issue.

e. Participation requirements:

Contributory: 75 percent for the EmployeeElectportfolio and 60 percent for the BeneFits portfolio

Non-contributory: 100 percent

f. Rates are per each $10 in benefits.

Long term disability is available to groups of 2-50 lives.a. Plans available:

Gold: Age 65/RBD, 60 percent to $6,000,90-day elimination period

Gold: Age 65/RBD, 60 percent to $6,000, 180-dayelimination period

Silver: 5-year/RBD, 60 percent to $6,000, 90-dayelimination period

Silver: 5-year/RBD, 60 percent to $6,000, 180-dayelimination period

Bronze: 2-year/RBD, 50 percent to $3,000, 180-dayelimination period

b. Guaranteed issue:

2-5 lives: None

6-50 lives: All amounts are guaranteed issue.

c. Participation requirements:

Contributory: 75 percent for the EmployeeElectportfolio and 60 percent for the BeneFits portfolio

Non-contributory: 100 percent

d. Rates are per each $100 of monthly covered payroll.

15. Protection PackProtection Pack is available for groups of 2-50 lives.

a. Five fixed-price options consisting of life, accidentaldeath and dismemberment, short term disability, andlong term disability coverage and an employeeassistance program are available.

b. Protection Pack is available to employer groups of 2-50 lives on a non-contributory basis only, at a per-employee flat rate in three age bands.

16. P.O.P. (Premium Only Plan)*P.O.P. is available to any size group and is allowed under aspecial provision of Section 125 of the IRS tax code thataddresses employer and employee tax relief. With a P.O.P.,employers must adjust their payroll process and pay theiremployees portion of their group insurance premiums ona pre-tax basis. Ceridian* provides all the necessaryinformation for a group to install and support a P.O.P.

*P.O.P. administration services are offered through anarrangement with Cerridan, an independent company notaffiliated with Anthem Blue Cross and Blue Shield, or itsparent company.

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16. P.O.P. (Premium Only Plan) (continued)Groups enrolling fewer than 10 eligible employees inEmployeeElect coverage or fewer than five eligibleemployees in BeneFits coverage pay a $125 annual feefor the service. A separate check for the P.O.P. fee madepayable to Anthem Blue Cross and Blue Shield must besubmitted along with the P.O.P. application. If a groupapplies for Anthem Blue Cross and Blue Shield healthcoverage concurrently with P.O.P., the group mustsubmit the P.O.P. application and a separate check withall other required paperwork.

Note: The P.O.P. enrollment cannot be processed untilthe underwriter has approved the group healthcoverage. Therefore, the P.O.P. effective date assignedby Ceridian may be later than the groups healthcoverage effective date.

17. Rating Policiesa. All rates are based on actual enrollment.

b. The small group underwriter will determine thegroups acceptance, final rates and effective date.

18. Rate and Benefit Guaranteesa. Health coverage rates are guaranteed for a maximum

of 12 months.

b. Anthem Blue Cross and Blue Shield may changehealth rates and benefits with 31-day advance writtennotice or, when the change is mandated by law,without advance notice.

c. Changes to the risk adjustment factor are limited asdefined by Colorado law.

d. Rates for stand-alone dental, vision and life coverageare guaranteed for 12 months.

e. Rates for dental, vision or life coverage written inconjunction with health coverage will receive thehealth rate guarantee.

f. Groups enrolling in a health plan with 2-9 eligibleemployees will be issued age rates. Groups of 10 ormore eligible employees may choose between age orcomposite rates.

19. New Group Eligibility/Effective Datea. The eligibility date for existing employees and

dependents is the employers effective date, unlessnew hires have not yet satisfied their employersimposed waiting period. The effective date for theseemployees will be the first of the month followingcompletion of the EmployeeElect or BeneFitsEmployee Enrollment Application/Change Form forsmall groups of 1-50.

b. The employer may waive the waiting period for allnew hires at the initial group enrollment only if thegroup did not have prior coverage within the last 90days.

c. Small employer groups of 1-50 are not guaranteed aneffective date.

20. Waiting PeriodFor future employees, employers may designate theirwaiting period as the first of the month following theemployees hire date or one, two, three, four, five or sixmonths following the employees hire date. A futureemployees coverage eligibility date is always the firstday of the month following completion of the waitingperiod. Anthem Blue Cross and Blue Shield will notwaive the waiting period for any future employees.

21. Pre-existing Conditionsa. Anthem Blue Cross and Blue Shield imposes pre-

existing condition limitations, when applicable, for upto six months following the coverage effective dateand applies the limitations to conditions for whichcare was sought or provided within six months of theenrollment date. Pre-existing condition limitations arenot applicable to newborn and adopted children.Pregnancy is not subject to any pre-existing conditionlimitations.

Note: The look-back period for pre-existingconditions begins with the enrollment date (usuallythe hire date, not the effective date).

b. Anthem Blue Cross and Blue Shield provides creditfor prior creditable health or dental coverage(including individual, group or state-sponsoredprograms) in accordance with the Health InsurancePortability and Accountability Act of 1996 (HIPAA).Verification may be required.

SECTION 2 General Underwriting Guidelines for New Business

*P.O.P. administrative services are provided by Ceridian, an independent company notaffiliated with Anthem Blue Cross and Blue Shield, its affiliates or its parent corporation.

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21. Pre-existing Conditions (continued)c. HMO Colorado plans have no pre-existing condition

limitations.

d. New hires and re-enrollees may be subject to thepre-existing condition limitations indicated in thissection. Late entrants may be subject to pre-existingcondition limitations for up to 18 months.

22. Takeover Provisions (CRS 10-16-106)Small group takeover provisions comply with thefollowing:

Any carrier providing replacement coverage withrespect to hospital, medical or surgical expense orservice benefits within a period of 31 days from the dateof discontinuance of a prior contract or policy providingsuch hospital, medical or surgical expense or servicebenefits shall immediately cover all employees anddependents who were validly covered under theprevious contract or policy providing such hospital,medical or surgical expense or service benefits at thedate of discontinuance and are within the definitions ofeligibility under the succeeding carriers contract andwho would otherwise be eligible for coverage under thesucceeding carriers contract, regardless of anyprovisions of the contract relating to active full-timeemployment or hospital confinement or pregnancy.However, with respect to employees or dependents whoare totally disabled on the date of discontinuance of theprior carriers contract or policy and entitled to anextension of benefits pursuant to subdivision 2 of Section10-16-705-(4), or pursuant to subdivision (b) of Section 10-16-106 of the Insurance Code, the succeeding carrieris not required to provide benefits for services orexpenses directly related to any conditions that causedthe total disability, except to the extent it may apply anyapplicable pre-existing condition limitations (giving creditfor prior coverage as required by law).

23. Prior Deductible and Annual Out-of-pocketMaximum Credita. For new group submissions, Anthem Blue Cross and

Blue Shield provides credit for deductibles met underprior group health or prior group dental coverage ifproof of the actual dollar amount is submitted withthe first claim.

b. Anthem Blue Cross and Blue Shield provides creditfor deductibles met under our health or dental plans.

c. Credit for pharmacy deductibles is not available.

d. Credit for annual out-of-pocket maximums is notavailable.

24. Eligible DependentsDependent coverage is available to the following:

a. Lawful spouse

b. Unmarried natural child

c. Newborn child

d. Legally adopted child

e. Stepchild

f. Ward of legal guardian

g. Other such classifications as required by law orregulation

See Section 4, Definitions, for specific age criteria.

25. Federal Regulationsa. Federal TEFRA, DEFRA and COBRA legislation

regulates employee health care coverage. Based onthis legislation and Anthem Blue Cross and BlueShields Agreement with the employer, if a businessemploys, on average, fewer than 20 employees in ayear, should any employee become 65 years of age,his or her primary health carrier will be Medicare. Foremployees who are at least 65 years old and whochoose to retain their Anthem Blue Cross and BlueShield small group coverage, Anthem will applycontract benefits as a secondary carrier for Medicarebenefits paid or payable.

b. If a member is covered by both Medicare andAnthem Blue Cross and Blue Shield and Anthem issecondary to Medicare, the Medicare payment iscalculated first, and Anthem coordinates up to 100percent of coverage for deductibles and co-insurance, not to exceed the Anthem benefit.

Special coordination of benefits (COB) rules mayapply, specifically for Medicare secondary payorsituations. The groups certificate containsadditional details about COB rules.

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25. Federal Regulations (continued)c. Anthem Blue Cross and Blue Shield is secondary to

Medicare when the following criteria are met:

The employer has fewer than 20 employees andthe member is at least age 65, or

The employer has fewer than 20 employees andthe member under age 65 is eligible for Medicaredue to a disability, or

The member enrolled following the first 30 monthsof kidney dialysis treatments for end-stage renaldisease.

d. COBRA: Participation in the employers benefit plan,as well as coverage under whatever medicalprograms are provided by the employer to employeesand their dependents, may be continued under afederal law known as COBRA for groups thatemployed 20 or more employees for at least 50percent of the previous calendar year.

The employer is responsible for administration, withinthe guidelines established by the federal governmentfor compliance by employer groups.

26. State RegulationsColorado State Continuation (CRS 10-16-108) waseffective January 1, 1998. This legislation provides forcontinuation of coverage for employees and eligibledependents of qualifying groups (i.e., groups that on atleast 50 percent of the working days during the previouscalendar quarter employed 1-19 eligible employees).Employees must have been continuously covered underthe employers plan for six consecutive months. Groupconversion is available if the employee was covered forless than six months but more than three months.

The employer must send written notice of StateContinuation election, which must include, among otherthings, the amount of monthly premium due, toemployees within 10 days of termination. Within 30 daysof the termination date, the employee must 1) notify theemployer in writing of the employees intent to electState Continuation coverage and 2) remit theappropriate premium amount to the employer.

An employee and/or the employees eligible dependentsare eligible for State Continuation coverage for up to 18months if coverage was terminated due to any of thequalifying events below:

a. The employee dies (continuation for dependents)

b. The employees employment is terminated or theemployees hours are reduced to the extent that lossof coverage results

c. The employees spouse divorces or legally separatesfrom the employee

d. An enrolled child loses eligible dependent status

e. The subscriber enrolls in Medicare and voluntarilyterminates his or her Anthem coverage.

Anthem Blue Cross and Blue Shield does not administerState Continuation coverage.

SECTION 2 General Underwriting Guidelines for New Business

15

Documentation Requirements for Each Business Type

BBuussiinneessss ttyyppee IInn bbuussiinneessss mmoorree tthhaann 33 mmoonntthhss IInn bbuussiinneessss lleessss tthhaann 33 mmoonntthhss

C Corporation UITR Payroll records andArticles of Incorporation

S Corporation UITR orK-1 for shareholders income

Payroll records andArticles of Incorporation

Partnership

K-1 for partners income orSchedule SE (self employment tax)or Form 1065 Partnership Return andUITR for employees

Partnership Agreement andSS-4 (application for tax ID) andpayroll records

Limited Liability Company (LLC) May file as either a C Corporation orPartnership (refer to above)May file as either a C Corporation orPartnership (refer to above)

Sole ProprietorshipSchedule SE and Schedule C filedwith 1040 (tax return)and UITR for salaried employees

Payroll records and SS-4 or appropriate tax ID verification. A sole proprietor may use a Social Security number in lieu ofobtaining a new tax ID.

Independent Contractor Form 1099 for each contractor andsigned 1099 disclosureForm 1099 for each contractor and signed1099 disclosure

FarmForm 1040 and Schedule F or K-1Farms may also file Form 1041, 1065 or 1065B.

Payroll records and SS-4or Articles of Incorporation, PartnershipAgreement, etc.

Non-profit Organization Form 940 or Form 990 Articles of Organization andIRS confirmation of non-profit status

27. Colorado Business Structure Underwriting Requirements

1. Open Enrollmenta. An employee and/or qualified dependent who

previously declined coverage and wants to enroll in aPPO plan may apply at any time, subject to lateentrant pre-existing condition limitations andexclusions.

b. An employee and/or qualified dependent whopreviously declined coverage and later wants toenroll in HMO Colorado coverage may do so at thegroups anniversary date. See Section 2, HealthUnderwriting, Item 8b. Special enrollment periodsmay apply. See Section 4, Definitions, SpecialEnrollment Period.

2. Contract Benefit ModificationsGroup LevelEmployer plan change requests may be submitted onlyat the groups anniversary date. Required documentationmust be complete and accurate to process the request.Anthem Blue Cross and Blue Shield must receive thecompleted documentation, including all necessaryAnthem forms, at least 30 days before the requestedeffective date. If Anthem accepts the application forbenefit modification, the underwriting department willassign the effective date for the benefit change. Pleasealso refer to the Plan Modification Job Aid on the nextpage to determine when the employer may request eachtype of benefit modification and to determine whatdocuments must accompany the request.

The following additional criteria apply to group-levelcontract benefit modifications:

a. Increases in life benefits are subject to underwritingapproval.

b. Dental, vision, or life and disability coverage added toan existing health policy will default to the health rateguarantee after the initial dental, vision or life rateguarantee expires.

c. The underwriter must receive the completedpaperwork from groups requesting a benefitmodification at least 30 days before the requestedeffective date. No retroactivity is allowed.

d. Anthem Blue Cross and Blue Shield will only considerfuture requests for changes in the risk adjustmentfactor on the groups anniversary date.

e. Subject to underwriting approval, existing groups may only change their contribution method sixmonths after the original effective date and once in a 12-month period.

f. Anthem Blue Cross and Blue Shield does not allowchanges to the groups anniversary date.

g. Anthem Blue Cross and Blue Shield must be notifiedof changes in ownership or tax ID. These changesare subject to underwriting review.

h. Anthem Blue Cross and Blue Shield product orportfolio changes do not constitute a new rate andguarantee period.

Subscriber LevelCovered subscribers may move to a different planoffered by their employer on the anniversary month ofthe groups original effective date or at the time AnthemBlue Cross and Blue Shield approves a group-levelbenefit change. Please note: Changes in enrollment mayaffect composite rates.

A subscriber requesting a change in health care benefitsmust submit the appropriate application/change form forsmall groups of 1-50 if the employer is offering the planrequested.

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SECTION 3 General Underwriting Guidelines for Existing Business

17

3. Plan Modification Job Aid For current Anthem Blue Cross and Blue Shield applications and forms, go to anthem.com.

Benefit Modification When Eligible Documents Necessary

Add Health Benefits

Includes increasing number of plans offered under existing Anthem BlueCross and Blue Shield health coverage

On anniversary date 1. Employer Application2. Letter from group3. Completed EmployeeElect or BeneFits Employee

Enrollment Application/Change Form for small groups of 1-50 for those employees requesting to change

4. UITR reconciled (subject to underwriting approval)

Request a Change in Health BenefitsThat Requires Underwriting

First of the month following atleast six months after theoriginal effective date, once ina 12-month period

1. Letter from group (In some circumstances, anEmployeeElect or BeneFits Employee EnrollmentApplication/Change Form for small groups of 1-50 may be required.)

Change in Contribution Option Six months after originaleffective date, once in a 12-month period

1. Letter from group(subject to underwriting approval)

Add Life Insurance or Increase Existing Coverage

Existing groups choosing to add lifeinsurance or increase existing lifeinsurance coverage are subject to fullmedical underwriting, regardless of group size.

First of the month followingreceipt of all documentation

1. Employer Application2. Letter from group3. New applications for all applicants4. UITR reconciled

(subject to underwriting approval)

Add Dental/Change Dental Coverage

First of the month followingreceipt of all documentation,once in a 12-month period

1. Employer Application2. Letter from group3. Dental applications for all applicants

Add BlueView VisionSM Coverage First of the month followingreceipt of all documentation. (Ifthe groups prior Anthem BlueCross and Blue Shield visioncoverage was dropped, thegroup may only add again atrenewal.)

1. Employer Application2. Letter from group3. Vision applications for all applicants

Risk Adjustment Factor Change On anniversary date 1. Letter from group2. EmployeeElect or BeneFits Employee Enrollment

Application/Change Form for small groups of 1-50 for allenrollees

3. UITR reconciled

Change in Portfolioi.e., EmployeeElect to BeneFits (No rateor benefit guarantee will apply.)

On anniversary date 1. Employer Application2. Letter from group3. Completed EmployeeElect or BeneFits Employee

Enrollment Application/Change Form for small groups of 1-50 for all employees

4. UITR reconciled (subject to underwriting approval)

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SECTION 3 General Underwriting Guidelines for Existing Business

4. Group Add Effective Datesa. Eligible employees may apply for coverage for

themselves and their eligible dependents bysubmitting a completed EmployeeElect or BeneFitsEmployee Enrollment Application/Change Form forsmall groups of 1-50. Effective dates are determinedas follows:

Anthem Blue Cross and Blue Shield must receivethe application within 31 days after the date of hireor within 31 days of the expiration of the waitingperiod selected by the employer.

If Anthem receives the application before theemployees waiting period is completed, theeffective date coincides with the eligibility date.

If Anthem receives the application more than 30days after the employees eligibility date, theapplicant is considered a late entrant and thefollowing may apply:

If the employee is applying for a PPO plan, theeffective date will be the first of the monthfollowing the date Anthem received theapplication, and an 18-month pre-existingcondition limitation may apply unless aqualifying event is evident.

If the employee is applying for an HMO Coloradoplan, he or she must wait until open enrollment.

b. Any time an employee and/or dependent becomeseligible but does not enroll, or if an employee and/ordependent remains eligible but is not retainingcoverage, the coverage declination in Section 2(name and Social Security or ID number) and Section4 of the EmployeeElect Employee Application orSection 3 and Section 5 of the BeneFits EmployeeApplication must be completed.

c. Special enrollment periods are available for newbornchildren, adopted children, new spouses and wardsof legal guardians. They may be added without awaiting period if they are enrolled within 31 days ofbecoming eligible. In addition, spouses who areeligible but not enrolled may also be added in theevent of the birth or adoption of a child. An employeewho is eligible but not enrolled may enroll at the timeof marriage, birth, adoption or placement foradoption, which are qualifying events.

5. Group Conversiona. Members of terminated health plans who qualify for

group conversion plans and individuals whoseCOBRA or Colorado State Continuation coverage hasexpired may apply to Anthem Blue Cross and BlueShield within 31 days after the termination date for aConversion Benefit Agreement. The terms, benefitsand charges of the conversion plan are different fromthose of the employer plan. If a members previouscoverage was with an HMO plan, the member mustconvert to a Basic or Standard HMO plan. If the priorcoverage was a PPO plan, the member must convertto a Basic or Standard PPO plan. Conversioncoverage is not available to former employees of agroup and their dependents if:

The employees coverage ends because theemployer group plan terminated and is replacedwithin 60 days by another group plan.

The employees coverage under the employer planends because the employee fails to pay anyrequired contributions to premiums.

The employee is covered by Medicare Part Aand/or Part B at the time of eligibility forconversion coverage.

The employee is covered under an Individualhealth plan when coverage ends.

b. Application for Anthem Blue Cross and Blue Shieldconversion coverage is available without a healthstatement, if there has been no lapse in coverage.Anthem Blue Cross and Blue Shield must receive thefirst quarterly premium, accompanied by a completedapplication, within 30 days of termination.

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6. Life Insurance ConversionWhen an active employee loses group life coverage dueto employment termination or retirement, the employeemay have the right to convert from group term lifeinsurance to an individual whole life insurance policywithout evidence of insurability.

The employee must apply in writing to Anthem Life forconversion, or complete a Notice of Conversion Formand pay the initial premium on the policy within 31 daysafter the group term life insurance ends.

The employee may choose to be insured for the same ora lesser amount of the insured amount under the groupplan. The conversion plan will be effective on the dategroup term life insurance ends, if the employee appliesand pays the conversion premium within the required 31days. Conversion is also available when an employeeloses coverage because the group plan terminates orchanges. In these cases, the following additionallimitations apply:

The amount available for conversion is limited to thelesser of $2,000 or the difference between the grouplife amount Anthem Life provided and any new groupcoverage that becomes available during theconversion period.

The employee must have been covered under thegroup life policy for at least five years.

20

1. Declination A declination is a formal notification toAnthem Blue Cross and Blue Shield that an employeeand/or any of the employees eligible family membersare declining or refusing any coverage. The employeemust complete Sections 2 and 4 of the EmployeeElectEmployee Application or Sections 3 and 5 of theBeneFits Employee Application. A declination isrequired for any eligible employee or dependentopting not to enroll at the time of becoming eligible.

This information is required to ensure compliancewith federal and state laws.

2. Dependent Dependent means a spouse; anunmarried child who is under age 25 and financiallydependent on the subscriber or subscribers spouse,or who is a full-time student or who lives at the samelegal residence as the subscriber or the subscribersspouse; or an unmarried child of any age who ismedically certified as disabled and dependent on theparent.

a. A new spouse or stepchild must complete anapplication, and pre-existing condition limitationsmay apply.

b. A common law spouse must complete anapplication and provide the appropriatedocumentation (a notarized affidavit) for a commonlaw spouse. Pre-existing condition limitations may apply.

c. An adopted child must be added within 31 daysfollowing the date and acceptance of legalresponsibility and placement for adoption by theadopting parents. Copies of legal documentationmust be submitted along with the enrollment.

d. A newborn child must be added to an existingpolicy within 31 days following the date of birth. Nohealth questionnaire is required if the newbornchild is enrolled within 31 days following the dateof birth. Otherwise, the child will be considered alate entrant. Late entrants may be subject to an 18-month pre-existing condition waiting period and aneffective date on the first of the month followingreceipt of the application.

e. A ward of a legal guardian must be added to anexisting policy within 31 days following acquisition.An application must be submitted within 31 days ofissuance of the final court decree or order ofpermanent legal guardianship. A Letters ofGuardianship Form from the court, showing thefiling date and court seal, must also be submittedwith the application.

An eligible employee may be required to provideproof of parenthood and dependency of the child.Proof of parenthood must be provided by submittingthe childs birth certificate.

3. Late Entrant A late entrant is an eligible employee ordependent who has declined enrollment in a healthplan offered by a small group employer at the time ofthe initial enrollment period provided under the termsof the health plan and who subsequently requestsenrollment in a health plan of that small groupemployer, provided the initial enrollment period is aperiod of at least 31 days.

SECTION 4 Definitions

21

4. Special Enrollment Period An eligible employee ordependent will not be considered a late entrant if theindividual meets the criteria under a, b or c below:

a. He or she was covered under another health planat the time the individual was eligible to enroll; and

He or she certified at the time of the initialenrollment that coverage under another healthplan was the reason for declining enrollment,provided that, if the individual was covered underanother health plan, the individual was given theopportunity to make the certification and wasnotified that failure to do so could result in latertreatment as a late entrant; and

He or she has lost or will lose coverage underanother health plan as a result of termination ofemployment of the individual or of a personthrough whom the individual was covered as adependent, change in employment status of theindividual or of a person through whom theindividual was covered as a dependent,termination of the other plans coverage, cessationof an employers contribution toward anemployees or dependents coverage, death of theperson through whom the individual was coveredas a dependent, or divorce; and

He or she requests enrollment within 31 days aftertermination of coverage or employer contributiontoward coverage provided under another healthbenefit plan.

b. A court has ordered that coverage be provided forthe spouse or minor child under a coveredemployees health plan and request for enrollment ismade within 31 days after the court order is issued.

c. The plan cannot produce a written statement fromthe employer stating that the individual or the personthrough whom the individual was eligible to becovered as a dependent, before declining coverage,was provided with, and signed acknowledgment of,an explicit written notice in bold type face specifyingthat failure to elect coverage during the initialenrollment period permits the plan to impose, at thetime of the individuals later decision to electcoverage, an exclusion from coverage for a period of12 months, as well as a six-month pre-existingcondition exclusion (pre-existing condition exclusionsdo not apply to HMO Colorado plans).

55.. NNeeww HHiirree An employee in an employer group who is hired after the groups coverage effective date

66.. RReeppllaacceemmeenntt GGrroouupp//MMeemmbbeerrss All eligibleemployees/dependents of an employer group whowere covered as a group by a prior carrier

77.. VViirrggiinn GGrroouupp//MMeemmbbeerrss All eligible employees/dependents of an employer group who have not, as agroup, had prior group coverage within the 90 daysbefore the effective date. The probationary periodmay be waived.

05-00124 (Rev. 6/06)

Anthem Blue Cross and Blue Shield is the parent company of HMO Colorado, Inc. Life and disability products are underwritten by Anthem Life Insurance Company.

Independent licensees of the Blue Cross and Blue Shield Association. Anthem Blue Cross and Blue Shield is the trade name of Rocky Mountain Hospital and Medical Service, Inc.

Registered marks Blue Cross and Blue Shield Association.