BlueShield and or Major Medical coverage

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                                                                                                                                         1901 MARKET STREET
                                                                                                                                 PHILADELPHIA, PA 19103-1480

      April 2011

      Dear Valued Customer:

      I am writing to provide you with additional information about “grandfathering,” one of the regulations
      that is part of the new health care reform law.

      Under the health care reform regulations, grandfathered status is available for plans that existed on March
      23, 2010, and that covered one or more individuals on that date. However, there are circumstances under
      which a plan can lose its grandfathered status. They are:

                elimination of all benefits to diagnose or treat a particular condition;
                any increase in member coinsurance levels;
                increase in deductibles or copayments subject to the applicable cost-adjustment test established
                 by the federal government;
                an increase in employee contribution of more than five percent. For example, the single rate for a
                 benefits plan is $100 and the employer subsidized $80 of the premium costs in 2010 but dropped
                 the subsidy to $74 in 2011. As a result, the employee’s premium contribution increased by from
                 20 percent to over 25 percent and grandfathered status is lost.

      If your plan meets grandfathering requirements, there are certain provisions of health care reform that you
      may choose not to implement. To help ensure health care reform compliance for our customers,
      Independence Blue Cross (IBC) has decided to implement some of the optional provisions for our fully
      insured customers. We enhanced the appeals process for all plans and updated benefits to provide 100
      percent coverage for designated preventive care for all of our HMO, POS, Direct POS, and Personal
      Choice® PPO programs. However, there are health care reform provisions that grandfathered plans may
      choose not to implement. They are:

                Coverage for dependents to age 26 – While coverage for dependents to age 26 is required for both
                 grandfathered and non-grandfathered plans, a grandfathered plan can elect to only cover adult
                 dependents who are not eligible for an insurance plan through their own employer
                Non-discrimination requirements – Grandfathered plans will not have to comply with IRS testing
                 requirements that ensure that benefit offerings do not discriminate in favor of highly compensated
                Preventive care – Grandfathered customers may choose not to provide 100 percent coverage for
                 designated preventive care. (as noted above, since IBC is adding 100% preventive care to HMO,
                 POS, Direct POS, and Personal Choice PPO plans for all fully insured customers, this provision
                 is only optional for customers with CMM and Traditional Independence Blue Cross/Highmark
                 BlueShield, and/or Major Medical coverage).

      We need your help to verify your grandfathered status. Depending on whether your plan is grandfathered
      or not, we need certain information from you to ensure that your plan is administered within the
      parameters of the health care reform regulations.

Independence Blue Cross offers products directly, through its subsidiaries Keystone Health Plan East and QCC Insurance Company, and with Highmark Blue Shield.
                                             Independent Licensees of the Blue Cross and Blue Shield Association.

If your plan is grandfathered: If your plan meets grandfathering requirements, please complete
and sign the enclosed Certification form and send it to the address below, fax it to 215-761-0260, or email
it to by <month> <day>, 2011.

                                         Independence Blue Cross
                                              P.O. Box 13516
                                          Philadelphia, PA 19103

We will keep your Certification form on file in the event that we receive any questions from the federal
government regarding the grandfathered status of your plan.

If your plan is not grandfathered: If you are no longer entitled to grandfathered status, you must
comply with additional requirements under the health care reform law/regulations, such as covering
dependents to age 26 regardless of whether the dependent is eligible for coverage under another
employer-sponsored plan and satisfying nondiscrimination requirements. In addition, if you offer a
Traditional or CMM product that does not meet grandfathering requirements you will need to
either purchase or enhance the preventive rider to comply with health care reform.

Grandfathering your benefits program is an important decision. As outlined in the health care
reform regulations, if you lose grandfathered status and do not comply with the additional
requirements, you may be subject to an excise tax of $100 per person per day imposed by the
federal government.

Please be advised that the health care reform law requires IBC to notify members if their plan is
grandfathered. Upon receipt of your completed and signed Plan Sponsor Certification of Grandfathered
Status form, IBC will send this notification to your employees insured with us. If IBC does not receive
the completed and signed Certification form from you by <month> <day>, 2011, we will assume that
your plan is not grandfathered and notices will not be sent to your employees.

We are committed to providing you with the products and services you need to enable you to continue to
offer health insurance coverage to your employees. As we are unable to provide you with legal or tax
advice, you may want to consult with your attorney or other financial adviser if you have any specific
questions on whether your plan can maintain grandfathered status. Should you have any other questions,
please contact your broker or IBC account executive.


John R. Janney
Sr. Vice President, Marketing Services

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