ADMINISTRATIVE INFORMATION/PLAN PROVISIONS – ARIZONA

Eligible Employers

For group medical coverage, employers may participate in First Health® small employer group program if any person, firm, corporation, limited liability company, partnership, association, or political subdivisionemployer is actively engaged in business and, who employs at least two but not more than on a least fifty eligible employees on a typical percent of its working days during the preceding calendar year, employed no more than fifty eligible employees or employed an average of not more than fifty employees on business day s during any the preceding calendar year and who employs at least one employee on the first day of a plan year.

Companies that are affiliated companies or which are eligible to file a combined tax return for state tax purposes will be considered one employer.

In the case of an employer which was not in existence throughout the preceding calendar year, the determination of whether an employer is a small or large employer will be based on the average number of employees that it is reasonably expected to employ on business days in the current calendar year.

For Optional Life & Dental coverage, employers may participate if they employed an average of 2 but no more that 50 employees on business days during the preceding calendar year and who employed at least 2 employees on the first day of the current plan year.

Health Participation Requirements

Employees covered under another health benefit plan may waive medical coverage and will not be considered as eligible employees in determining the participation requirements. Those waiving for other reasons will be considered eligible employees and will count toward participation.

Number of Eligible Employees / Required Number to Meet Participation
1 - 4 / All must participate
5 –7 / All, less 1 must participate
8 – 10 / All, less 2 must participate
11 -12 / All, less 3 must participate
13+ / 75% of eligible employees

For contributory coverage, FHLHIC requires coverage of at least 75% of all eligible employees. In addition, no more than 50% of eligible employee’s may waive coverage.

If the employer elects to pay 100% of the employee’s premium, all eligible employees must participate.

Health Insurance Plan

Health Insurance Plan or plan means any hospital or medical policy or certificate, major medical expense insurance, hospital or medical service plan contract, or health maintenance organization subscriber contract which provides benefits consisting of medical care, provided directly, through insurance or reimbursement, or otherwise and including items and services paid for medical care. It includes the entire contract between the insurer and the insured, including the policy, riders, endorsements, and the application, if attached. Health Insurance Plan does not include: accident-only; blanket accident and sickness; specified disease or hospital indemnity or other fixed indemnity insurance if offered as independent non coordinated benefits; credit; limited scope dental or vision if offered separately; Medicare supplement if offered as a separate policy; long-term care if offered separately; disability income insurance; coverage issued as a supplement to liability or other liability insurance, including general liability insurance and automobile liability insurance; coverage designed solely to provide payments on a per diem, fixed indemnity, or non expense incurred basis; coverage for Medicare or Medicaid services pursuant to a contract with state or federal government; workers’ compensation or similar insurance; automobile medical payment insurance; coverage for on-site medical clinics; or other similar coverage, specified in regulations, under which benefits for medical care are secondary or incidental to other insurance benefits.

Note: If Life Insurance is elected, both the Health and Life participation requirements must be met in order for both coverages to become effective. See the “Optional Benefit” sheet for Life Insurance participation requirements.

Employee and Dependent Eligibility are determined by the Employer

An employee who works on a regular full-time basis for the Employer and who has a normal work week of 30 hours or more. The term includes a sole proprietor, a partner, and an independent contractor, if the sole proprietor, partner, or independent contractor is included as an employee under the Employer’s health benefit plan. Eligible employee does not include an employee who works on a part-time, temporary, and seasonal or substitute basis.

Eligible dependents of insured employees are defined as the spouse and unmarried dependent children under the age of 19. Dependent children also include stepchildren, legally adopted children or children placed for adoption and any child for whom a court order requires the employee to provide health coverage, if they are under the age of 19. An unmarried child who is a full-time student between the ages of nineteen and twenty-fivetwo and who is financially dependent upon the parent and an unmarried child of any age who is medically certified as disabled and dependent upon the parent.

Note: The definition of Dependent Eligibility for the Traditional PPO Plans L, F, G, H and I is modified to provide coverage until the child’s 21st birthday unless the child is a full-time student in a secondary school, college or university and is dependent on the employee for primary financial support. For additional information on the Traditional PPO Plans, contact a Telesales representative at (800) 237-4878.

Late Entrants

If an eligible employee or eligible dependent fails to enroll within the first 31 days that he or she was first able to enroll, he or she will be considered a late entrant. Coverage will become effective on the first of the month that next followings the date Health Plan Services receives a completed enrollment form provided that any applicable waiting period has been satisfied. Coverage, however, will be subject to an 18-month pre-existing condition limit.

Under certain circumstance, late entrant rules will not apply if the person waived coverage. See the Certificate Booklet for additional details.

Coveraged Effective Date

Coverage is effective on the first of the month following any applicable waiting period, unless the firm has prior group coverage immediately preceding enrollment in this plan. Coverage in that case will begin on the next day following the termination date of the prior plan. Health Plan Services must receive all the necessary information before coverage can become effective, including fully completed enrollment forms and a copy of the prior insurance carrier’s bill.

With respect to Life, AD&D, and Dental coverage, employees who are not actively-at-work on the effective date will not become insured until the date they return to active work on a full time basis and are able to perform all the normal activities of his or her job. Employees do not have to be actively-at-work for Medical coverage to become effective.

Credit for Previous Deductible

If a firm is covered under another group health plan and it transfers coverage to First Health®, the cash deductible charges accumulated under the prior plan by the current insured employees, during the present calendar year, will be applied to the new plan’s cash deductible. To obtain credit, the insured must submit a letter or an Explanation of Benefit statement from the prior carrier employee with his or her first claim.

Deductible Carryover (Not applicable to HDHP)

Any expenses used to meet the individual cash deductible in the last 3 months of the prior calendar year will be applied to meet the individual cash deductible for the next calendar year. This also applies to the family deductible. (Available on selected plans - please contact a Telesales Representative at (800) 237-4878 for specific plan details.)

Medicare

Medicare eligibility does not terminate eligibility under the plan for active employees or dependents. Benefits, however, are reduced for Medicare entitled individuals.

For groups with less than 20 employees, the benefits payable by this plan will be reduced by the amount of benefits paid or payable by Medicare Part A and B. This applies whether or not Medicare Part B is applied for. Charges are calculated at the plan coinsurance, then reduced by the amount that Medicare pays or would have paid if the covered person was enrolled in Medicare Parts A & B.

For employers with more than 20 employees, the group health plan is the primary payer and it will pay its benefits without regard to Medicare.

Premium rates may be adjusted accordingly as allowed by applicable state law.

Maternity Coverage

The Federal Government’s Pregnancy Discrimination Act requires employers who have 15 or more employees for each working day in 20 or more calendar weeks in the current or preceding calendar year, to cover pregnancy on the same basis as any other sickness.

If an employer is not subject to this Act (groups with fewer than 15 employees) the group health plan provides coverage for complication of pregnancy only.

Remember: The responsibility for compliance with this Act rests with the employer. The employer may be held financially liable if it is subject to the Act and it fails to provide coverage either through the group health plan or through some other arrangement, such as self-insurance. For groups with fewer than 15 lives, full maternity coverage can only be added at time of initial underwriting or at plan renewal. For groups of more than 15 employees, full maternity coverage may be added effective the first of the month from the date the coverage is approved.

COBRA

For businesses employing more than 20 employees, Federal legislation (COBRA) applies to medical and dental benefits (if this optional coverage is elected). COBRA allows insured employees and covered dependents to continue group coverage after certain qualifying events occur (like loss of employment, death or divorce) that would otherwise terminate the group coverage. Coverage may be continued for up to 18 or 36 months depending on the specific event, at 102% of the applicable group rate. See the Certificate Booklet for specific details.

State Continuation

For businesses employing less than 20 employees, continuation under state law is available. See the Certificate Booklet for specific details.

Coordination of Benefits (COB)

Health care benefits are coordinated with other group or governmental plans so that the total benefit payable by all plans does not exceed 100% of expenses, provided that one or more of the plans would have provided benefits. Coordination does not include benefits paid by individual plans.

Usual & Customary Charges (U&C)

For PPO plans, the U&C In-Network Provider charge is the negotiated rate, capitated fee, per diem rate, case rate or discounted charge as contracted between First Health®or its subcontracted vendor and In-Network and theIn-Network P providers.

For Indemnity plans and Out-of-Network Providers, the U&C charges is the lesser of a health care provider’s actual billed charge or the billed charge adjusted by First Health’s® current and appropriate fee schedule.

Medical Underwriting

Evidence of Insurability is not required for group health coverage. First Health®, however may request this information in order to set the initial group rate.

For optional coverages, employees and dependents must submit evidence of insurability that is satisfactory to First Health® before any optional coverage becomes effective for that employee or dependent.

Establishing Initial Group Rates

The rating guidelineswere designed and developed to promote fairness in the small group marketplace. The rate charged to a particular employer group will depend upon issue date, plan of benefits chosen, location, case size and industry. It will also depend upon the age, sex, family composition and health status of the insured employees and dependents. In addition, rates are adjusted in accordance with Arizona Laws.

12-Month Rate Guarantee

Group rates are guaranteed for the first 12 months coverage is in force based on applicable rates tables. Subsequent rate periods are guaranteed for additional 12-month intervals. Premium rates will reflect the current rate structure and the demographics of the group. While the factor applicable to the health status may be reset at renewal, any increases will be subject to the limitations of Arizona State Law.

For optional coverages, premiums may be adjusted upon a change in dependent status, plan structure or change in business location. Premiums also will be adjusted on the first day of an employee’s birth month, should his or her age change enter the employee into a higher age bracket. These brackets are 20-29, 30-39, 40-44, and then every 5 years thereafter.

Guaranteed Renewability

Group insurance coverage is guaranteed renewable at the employer’s option except for:

  • Non-payment of premium;
  • Fraud or misrepresentation by the small employer or with respect to for individuals insured’s;
  • Non compliance with carrier’s plan provisions;
  • The small employer carrier elects to non-renew a particular plan after providing a 90 day notice and offering the currently marketed group health plan;
  • The small employer carrier elects to non-renew all of its health benefit plans delivered or issued for delivery to small employer after providing 180 day notice.

Pre-existing Conditions

A health benefit plan shall not deny, exclude or limit benefits for a covered individual for losses incurred more than 12 months after the effective date of coverage due to a pre-existing condition. The plan cannot define a pre-existing condition more restrictive than any sickness or

injury (physical or mental) for which medical advice, diagnosis, care or treatment was recommended or received by a Covered Person within the 6-month period ending on the effective date of coverage. Pregnancy and genetic information that is unrelated to a condition so diagnosed are not Pre-existing Conditions.

Pre-existing conditions do not apply to a newborn or newly adopted child under the age of 1825 if they enroll for coverage within 31 days from the date of birth or the date of placement for adoption.

First Health® will credit the time the a Covered Pperson was covered by the plan of creditable coverage certain prior health plansagainst the policy’s pre-existing condition limitation to the pre-existing condition limit if the period of time that lapsed between the plan of creditable coverage and the enrollment date two plans is less than 63 consecutive days.

Covered Services

The following is intended to be a general reference and is not all-inclusive. Actual covered services may vary by state. Please refer to the Certificate Booklet for detailed information regarding Covered Services.

Covered Services must be medically necessary, not experimental or investigational and are subject to a usual & customary charge limit. Benefits may be subject to cash deductibles, coinsurance, co-payments and calendar year and annual lifetime limits.

  • Ambulance Service
  • Back Disorders and Spinal Manipulation

Therapy

  • Chemotherapy & Radiation Therapy
  • Dental Services related to Accidental Injury
  • Diabetic Care
  • Diagnostic Lab & X-ray Services
  • Dialysis
  • Durable Medical Equipment & Prosthetics
  • Home Health Care
  • Home Hospice Care
  • Hospital Services
  • Human Organ & Tissue Transplants
  • Mastectomy Coverage
  • Mental Illness, Alcoholism & Substance Abuse
  • Inpatient Prescription Drugs.
  • Outpatient Prescription Drugs either under the group medical plan or as a Prescription Drug Card Service
  • Physician Services
  • Preventive Health Care
  • Rehabilitation Therapy
  • Skilled Nursing Facilities
  • Treatment of PKU
  • Treatment of CMJ & TMJ
  • Cancer Clinical Trials
  • Inherited Metabolic Disorders

Hospital Services include:

  • Room and board for a semi-private room
  • Ancillary Services
  • Physician services, including surgery, diagnostic and therapeutic care
  • Drugs, medicines and biologicals
  • Anesthesia and the cost of its administration
  • Blood transfusions and blood that is not donated or replaced
  • Oxygen and the cost of its administration, including rental equipment
  • General nursing care provided by a RN, LPN or CNA
  • Intensive care, cardiac care and neonatal care
  • Medical supplies and equipment
  • Operating rooms and related facilities and pre- and post- operative care
  • Ambulatory Surgical Centers
  • Pre-admission testing
  • Any other service, treatment or supply normally billed by a Hospital.

Physician Services include:

  • Inpatient and OutpatientHospital and Skilled Nursing Care services
  • Physician Office visits
  • Physician at-home visits
  • Second Surgical Opinions
  • Services related to Home Health Care, Hospice Care, and rehabilitative therapy.

Preventive Health Care includes:

  • Immunizations
  • Preventive & Primary Care for Children under the age of 19
  • Adult Health Exams
  • Routine Physicals
  • Pap Smears
  • PSA Screenings
  • Colorectal Screenings
  • Routine Mammograms
  • Benefits are limited on some plans. Please refer to the Certificate Booklet, Schedule of Insurance, for specific details.

Back Disorders and Spinal Manipulation

Therapyincludes:

  • Spinal manipulation
  • Vertebral alignment
  • Spinal adjustment
  • Muscle stimulation,
  • Ultrasound, diathermy
  • Benefits are subject to the plan cash deductible, co-payment, and co-insurance.

Human Organ & Tissue Transplants includes:

  • Medically necessary bone marrow
  • Solid human organ transplants
  • Donor services
  • Benefits are subject to the plan cash deductible, co-payment, co-insurance
  • Benefits are limited up to $100,000 for each Covered Person during his or her Lifetime.

Treatment of CMJ & TMJ:

  • Is subject to the plan cash deductible, co-payment, coinsurance
  • Benefits are limited up to $2,500 for each Covered Person during his or her Lifetime.

Maternity Coverage

Coverage automatically provides benefits related to complications of pregnancy.

Full Maternity Coverage (if elected), also provides coverage for prenatal testing, gynecological, obstetrical, prenatal and postpartum care, prenatal vitamins, delivery (including cesarean section), home uterine monitoring and delivery charges for the birth of a child who is legally adopted by the Insured Employee.