Blue Ribbon. Blue Ribbon Producer Bonus Program Agent Bonus Program

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1 Blue Ribbon 2007 Producer Bonus Program Blue Ribbon 2007 Agent Bonus Program

2 Rewards and Incentives 2007 Blue Ribbon Program We greatly appreciate the continued efforts of our producers who are reaching beyond and selling more and more each year. It is, therefore, our pleasure to announce the launch of the 2007 Blue Ribbon Producer Bonus Program designed to reward the producer community who is a vital part of our success. The 2007 Blue Ribbon Producer Bonus Program offers generous rewards and incentives for new sales of Blue Cross and Blue Shield of Texas (BCBSTX) health and dental business and for retaining your existing BCBSTX health and dental books of business. Features of the 2007 Blue Ribbon Producer Bonus Program include: Independent sales programs which recognize the new sales of both individual and group health contracts An independent program which rewards retention of both fully insured and self-insured health business An independent program which recognizes dental sales and retention We greatly appreciate the continued efforts of our producers who are reaching beyond and selling more and more each year. Since the founding of Blue Cross and Blue Shield of Texas more than 70 years ago, the cross and shield have come to represent the largest, most experienced health care coverage organization in the state and in the nation. BCBSTX has operated as the only statewide non-investor owned health insurer in Texas, providing members with the best of both worlds access to affordable, quality health care and top-notch service from a company that focuses solely on customers, not shareholders. Because of relationships with physicians and hospitals that date back to 1929, investments in state-of-the-art claims processing systems, its commitment to member empowerment in personal health and wellness and significant local presence throughout the state, BCBSTX is known for providing significant value to nearly 3.5 million members today. We appreciate your contribution to the success of our company and are pleased that in your vital role as a producer, you have chosen to offer health care coverage from one of the most recognized and trusted brand names in health care. The following pages outline incentives offered to all eligible producers appointed and contracted with BCBSX. Any questions regarding the 2007 Blue Ribbon Producer Bonus Program may be directed to your local sales office. We recognize and value the important role that you play in our success and look forward to a collaborative and mutually beneficial relationship moving forward. Best wishes for a prosperous 2007!

3 Individual New Health Sales Bonus Program The individual health bonus for new business will be paid to eligible producers who sell at least 50 new individual health contracts through BCBSTX with an effective date during calendar year 2007 as shown in the chart below. Additionally, should you sell a minimum of 150 new individual health contracts, you will be paid an additional payment of $15.00 each for contracts For contracts with split commissions, bonus awards will be credited to the contract count with the same split ratio. In the event that a contract cancels retroactively to the effective date, that contract will not qualify toward the bonus award. New Individual Health Sales Bonus Qualifications Individual Contracts (excludes SelecTEMP) Bonus per New Health Contract $15.00 per contract $25.00 per contract $30.00 per contract $35.00 per contract $45.00 per contract $55.00 per contract If you sell at least 50 individual contracts, your sold contract counts as of December 31, 2007, will be used for bonus calculation. The new business bonus for individual health contracts will also be based on the number of active contracts with 2007 effective dates, as of December 31, In the event of split commissions, the same split ratio is applied to each producer s individual health contracts. Only individual health contracts with effective dates during calendar year 2007 will be included for calculating the new business bonus. If the new individual health contract cancels during calendar year 2007, it will not be included for new business bonus purposes. The following will not be considered new business for the purposes of the New Health Sales Bonus Program ~ Individual: An existing BCBSTX individual health contract for which you are the takeover producer. Life, dental or short term or long-term disability contracts; transfer contracts or continuations of coverage. Note: The maximum potential for any combination of new business and retention bonus is $100,000 per producer/agency. COMPENSATION POLICIES: Agent/Producer The Texas Insurance Code prohibits an Agent who receives compensation from a customer for the placement or renewal of an insurance product from receiving compensation from BCBSTX for the same placement or renewal, unless the Agent (i) provides advance written disclosure to the customer of the method and factors used by BCBSTX to compute the compensation, and (ii) receives documented acknowledgement from the customer that the compensation will be received by the Agent. Agent and Life and Health Insurance Counselor ( LHIC ) The Texas Insurance Code prohibits a person who is licensed as both an Agent and an LHIC from receiving compensation from BCBSTX for a service performed as an Agent if the person has received or will receive compensation from the customer for that same service. Reporting All payments made pursuant to bonus and recognition programs are subject to federal and state income tax reporting and withholding by BCBSTX (if applicable). BCBSTX will report the value of all remuneration paid by BCBSTX to ERISA plans with 100 or more participants for their preparation of ERISA Form 5500 schedules. Reporting will also be provided upon request of non-erisa plans or plans with fewer than 100 participants. The value of non-cash recognition, such as the Sales Trip, will be included in all reporting.

4 Group New Health Sales Bonus Program How It Works A new business bonus will be paid to eligible producers who sell a minimum of 50 new health contracts or 50 new dental contracts through BCBSTX with an effective date during calendar year 2007 as shown in the chart below. Additionally, should you sell a minimum of 150 new health or dental contracts, payment will be made for contracts 1-49 as follows $15.00 per contract will be made for Fully Insured contracts, $7.00 for ASO contracts, and $3.00 for dental contracts. New Group Health/Dental Sales Bonus Qualifications Contracts Bonus per New Bonus per New Bonus per New Health Contract Health Contract Dental Contract Fully Insured ASO 50 to 149 $15.00 $ 7.00 $ to 349 $25.00 $12.00 $ to 499 $30.00 $15.00 $ to 749 $35.00 $17.00 $ to 999 $45.00* $20.00 $17.00** 1,000+ $55.00* $25.00* $20.00** * There is a maximum new business bonus of $35,000 per health group. **There is a maximum new business bonus of $10,000 per dental group. Sales Bonus Example If you have 421 insured group health contracts, you will be paid $15.00 each for the 50th through the 149th contract, $25.00 each for the 150th through the 349th contract, and $30.00 each for the 350th through the 421st contract. Because the 150 contract threshold was met, you will be paid an additional $15.00 each for contracts Your total bonus would be $9, The same method will be used for calculating new group dental business. If you sell at least 50 health or group dental contracts, your sold contract counts as of December 31, 2007, will be used for bonus calculation. If you sell at least 150 health or group dental contracts, you will be paid for contracts New business bonus results will be calculated cumulatively by effective date. That is, all contracts sold and still on the books as of December 31, 2007, will be used to calculate bonus, without regard to the number of groups sold. In the event of split commissions on any groups, the same split ratio is applied to each producer s health or group dental contracts. Only new group health and dental contracts with effective dates during calendar year 2007 will be included for calculating the new business bonus. If a new group cancels within calendar year 2007, it will not be included for new business bonus purposes. The following will not be considered new business for the purposes of the New Health Sales Bonus Program ~ Group: Acquisition or addition of new enrollees to a group that was effective prior to January 1, (However, Retained Health / Dental Group Sales Bonus Program may apply.) An existing BCBSTX group for which you are the takeover producer. Life contracts, long-term disability contracts, short-term disability contracts or short term individual policies. Note: The maximum potential for any combination of new business and retention bonus is $100,000 per producer/agency.

5 Group Retained Health / Dental Group Sales Bonus Program How It Works Retention is defined as keeping a group for 12 months during the period of December 31, 2006, through December 31, A group must be in your book of business on December 31, 2006, and on December 31, 2007, to qualify. A group is considered retained when the next anniversary date premium has been paid and allocated. A retention bonus will be paid to eligible producers who retain at least 80% of total health or dental contracts from December 31, 2006, through December 31, 2007, and have a minimum of 300 health or 300 dental contracts as of December 31, Cancelled groups will be removed from a producer s book of business to determine retention. The contract count removed will be the number of contracts on the group as of December 31, Groups that transfer between different BCBSTX lines of business are not considered cancellations. In the event that an existing group changes to another producer during 2007, the group will not be considered a cancellation in the calculation of the 80% minimum qualification for retention percentage bonus purposes. It will not qualify for a retention bonus, however, because it will not be a calculation of producers book of business on December 31, If you are the takeover producer of an existing BCBSTX group during 2007, that group will not be included for retention bonus purposes, as it would not have been in your book of business as of December 31, Retention percentage will be determined by removing any cancelled groups from your December 31, 2006, base total contracts. This new contract total will then be divided by the original December 31, 2006, contract total to obtain your retention percentage. If commissions are split on any groups, the same split ratio is applied to each producer s health and dental contracts. Retention % Bonus Per Renewed Bonus Per Renewed Health Contract Dental Contract 90% or greater $12.00* $2.00** 80% to $ 9.00* $1.50** Less than 80% $0.00 $0.00 A retention bonus will be paid to eligible producers who retain at least 80% of total health or dental contracts from December 31, 2006, through December 31, 2007, and. have a minimum of 300 health or 300 dental contract as of December 31, * There is a maximum retention bonus of $10,000 per group. ** There is a maximum retention bonus of $2,000 per group. The following will not be considered retained groups for the purposes of the Retained Health/Dental Group Sales Bonus Program: Groups with anniversary date premium not paid and allocated when the retention bonus is calculated. New group contracts with effective dates of January 1, 2007, or later. Life contracts, long-term disability contracts, short-term disability contracts or individual health or dental contracts. Note: The maximum potential for any combination of new business and retention bonus is $100,000 per producer/agency. Sales Trip 2008 Those who qualify will join us at the distinguished Ritz-Carlton, Half Moon Bay, California, May 15-18, 2008.

6 Sales Trip Qualifications To join us in 2008, just meet any one of the four categories below: Category 1 Sell at least 10 new health groups and produce a minimum of 300 health contracts through BCBSTX. Category 2 Sell at least 5 new health groups and produce a minimum of 500 health contracts through BCBSTX. Category 3 Sell at least 2 new health groups and produce a minimum of 2,000 health contracts through BCBSTX. Category 4 Sell a minimum of 250 individual health contracts. Any new individual health contracts will also count toward the contract requirements. (excluding individual life, dental and short term contracts.) One half credit will be given for each new dental group sold. One half credit will be given for each new dental contract sold. The contract count on the group as of December 31, 2007, will be used to establish final eligibility for the Sales Trip. The acquisition or addition of new enrollees to a group that was effective prior to January 1, 2007, will not be considered new business for this incentive trip. Multiple Qualification Upgrade ~ A producer/agency who meets the qualifications of a given category multiple times may qualify up to a maximum of three individual producers for the Sales Trip.

7 Sales Trip 2008 Destination: The distinguished Ritz-Carlton, Half Moon Bay, California, May 15-18, The alluring and luxurious Ritz-Carlton Half Moon Bay, located less than an hour south of San Francisco is dramatically perched on top of a scenic bluff which plunges to the Pacific and overlooks 50 miles of rugged California coastline. Here the wind and the sea have carved out magnificent craggy seascapes and fashioned rolling green hills and meadows reminiscent of the misty moors of Scotland. Resembling a grand 19th century seaside lodge, the resort offers a relaxed and casual atmosphere that warms and welcomes guests with the tasteful and stylish blending of such Eastern and Western hallmarks as carved Chinese panels and Queen Anne appointments. Guestrooms reflect a generous array of European elegance and influences and include plush terry bathrobes, feather beds dressed with 300-thread count Egyptian cotton bedding and breathtaking coastal views. Dining offers the ultimate in atmosphere, food and service: Coastal cuisine in its truest and finest form may be experienced at the resort s signature restaurant, Navio. Its unique design and refined wood finishes evoke the craftsmanship of the Portuguese boat builders (navio is Portuguese for ship) who settled in Half Moon Bay during the 19th century. Lighter fare is served in an atmosphere reminiscent of a seaside lodge (complete with telescopes to view the sea) at The Conservatory. Each venue is graced with large windows that welcome fresh ocean air and frame breathtaking vistas. The 16,000 square foot spa offers the best of the earth and sea with 16 treatment rooms and lounges accented by whirlpools, steam rooms and sauna facilities. Its candlelit Roman mineral bath and oceanfront Jacuzzi provide tranquil respite before or after treatments. Complimentary to resort guests is the ultimate workout offered at a state-of-the art fitness center. Day classes range from coastal power walks along the bluff to yoga sessions. Two championship links courses are located just outside the resort s doors: The Ocean Course, designed by renowned golf architect Arthur Hills in 1997, is ranked as one of the top courses in California and features ocean views from every hole. The natural terrain of the rugged Northern California coast is the perfect setting for its traditional Scottish design. The Old Course, a Parkland-style course, offers cypress tree-lined fairways and generous yet challenging greens with a home hole that plays next to the ocean waves. The resort combines the majesty of a bygone era and old world tradition with an abundance of contemporary recreational opportunities including six lighted tennis courts, seaside jogging and bicycling, horseback riding on sandy beaches and sea kayaking. Contest Period ~ The contest period includes effective dates of January 1, 2007, through December 31, Participation Criteria Participation in the Sales Trip will be limited to Principals, Managers and Producers. Guests must be at least 21 years of age. The trip is non-transferable and must be taken on the scheduled date. Once travel tickets have been issued, the costs incurred for any changes are at the expense of the individual ticket holder. Participants will be responsible for the taxable value of the trip and will receive an IRS 1099 Form. The value of the Sales Trip, will be included in form 5500 reporting. See Sales Trip Qualifications Inside

8 A Division of Health Care Service Corporation, a Mutual Legal Reserve Company, an Independent Licensee of the Blue Cross and Blue Shield Association