Summary Program Description - AZBlue/media/azblue/files/firstday/benefits... · 401(k) Savings Plan. Sponsored by . Blue Cross Blue Shield of Arizona . An independent licensee of

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Summary Program Description 401(k) Savings Plan Sponsored by Blue Cross Blue Shield of Arizona An independent licensee of the Blue Cross and Blue Shield Association

OVERVIEW

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An Investment in Your Future

The Blue Cross Blue Shield of Arizona 401(k) Savings Plan (the “program”) offers you a unique combination of features that are designed to help you meet your long-range savings and investment goals: ♦ you can contribute up to 60% of your eligible earnings to the

program ♦ your contributions are on a pre-tax basis ♦ Blue Cross Blue Shield of Arizona (the “employer”) matches a

portion of your contributions to the program ♦ the company makes additional Retirement Plus contributions to

your account if you meet certain eligibility requirements

♦ you have a choice of investment options for the investment of your contributions

♦ contributions to your account and your program investment

earnings accumulate tax-free until you receive them from the program

♦ the program has withdrawal and loan provisions

About Your Summary Program Description

This Summary Program Description (SPD) summarizes your program benefits, but it does not cover all of the details. Please keep in mind that: ♦ the full facts and details about your program are contained in the

official program documents, which are on file with your employer and the Program Administrator

♦ in the event of any conflict between the information shown in an

online SPD or the written SPD and the official program documents, the official program documents will always govern.

This SPD is effective July 1, 2012 and applies to Blue Cross Blue Shield of Arizona employees who are hired or re-hired after June 30, 2012. A separate SPD applies to Blue Cross Blue Shield of Arizona employees who are employed on June 30, 2012 and who remain continuously employed.

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Table of Contents

Program Eligibility and Enrollment

♦ Eligible Employees ♦ Ineligible Employees ♦ Joining the Program

1 1 1

Tax Advantages ♦ Tax Benefits ♦ Pre-Tax Contributions ♦ Tax Deferred Investment Earnings ♦ Payment of Taxes

2 2 2 2

Your Personal Account Information

♦ Your Personal Identification Number (PIN) ♦ Personal Information ♦ Naming Your Beneficiary ♦ Quarterly Participant Statement

3 3 3 3

401(k) Contributions

♦ Your Contributions ♦ Automatic Increase of Your Contributions ♦ Employer Match ♦ True-Up Employer Match ♦ Catch-Up Contributions ♦ Rollover Contributions ♦ Contribution Limits ♦ Your “Eligible Earnings” ♦ Changing, Stopping, or Resuming Your

Contributions ♦ Information for Veterans

5 5 5 6 6 6 6 7 7 7

Retirement Plus Contributions

♦ Eligibility for Retirement Plus Contributions ♦ Amount of Retirement Plus Contributions ♦ Vesting ♦ Years of Service for Vesting ♦ Contribution Limits

8 8 8 9 9

Investing Your Account

♦ Making Your Investment Decision ♦ Investment Options ♦ LifeCycle Investment Funds ♦ Core Investment Funds ♦ Investment Election ♦ Investment Changes, Fund Transfers and Other

Transactions ♦ Frequent Trading Limits and Other Investment

Policies ♦ Investment Management Fees ♦ Information Resources

10 10 11 12 14 14 14 15 15

How Vesting Works

♦ What is “Vesting”? ♦ Vesting of Your Account

16 16

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Table of Contents

Withdrawals While Actively Employed

♦ Withdrawals of Vested Account Balances ♦ Financial Hardship ♦ Definition of Financial Hardship ♦ Amount of Financial Hardship Withdrawal ♦ Permanent Disability ♦ Age 59 ½ Distribution ♦ Tax Consequences of Withdrawals

17 17 17 18 18 18 18

Borrowing From Your Account

♦ Taking Out a Loan ♦ Types of Loans ♦ Number of Loans Allowed ♦ Fifteen Day Waiting Period ♦ Loan Amount ♦ Loan Repayment ♦ Loan Fees ♦ Interest Rate ♦ Termination of Employment ♦ Default ♦ Tax Consequences of Loans ♦ For More Information

19 19 19 19 19 19 20 20 20 21 21 21

Receiving Your Program Benefits

♦ Applying for Benefits ♦ Forms of Payment ♦ Lump Sum Payment ♦ Installment Payments ♦ Retirement ♦ Death ♦ Taxation of Program Distributions ♦ Application of Taxes

22 22 22 22 22 22 23 23

Break-in-Service Rules ♦ Forfeited Contributions ♦ Returning Veterans

24 24

What To Do If a Claim is Denied

♦ Denied Claims ♦ Appealing a Denied Claim ♦ Review of Appeal

25 26 27

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Table of Contents

Other Important Information

♦ Program Administrator ♦ Administrative Expenses ♦ Agent for Service of Legal Process ♦ Assignment of Benefits ♦ Employer ♦ Continuance of the Program ♦ Employment not Guaranteed ♦ Employer Identification Number ♦ Program Number ♦ Maximum Benefits ♦ Participating Companies ♦ Program Administrator ♦ Program Sponsor ♦ Program Documents ♦ Program Financing ♦ Program Name ♦ Program Trustee ♦ Program Year ♦ Special Rules for “Top Heavy” Programs ♦ Type of Administration ♦ Type of Program ♦ Participant Control of Investments (ERISA

404(c)) Program

29 29 29 29 29 29 30 30 30 30 30 30 30 30 30 31 31 31 31 31 31 31

Your Rights as a Program Participant

♦ Overview ♦ Summary Annual Report ♦ Benefit Statement ♦ Program Fiduciaries ♦ Benefit Claims and Legal Actions ♦ Questions

34 34 34 34 34 35

PROGRAM ELIGIBILITY AND ENROLLMENT

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Eligible Employees

You become eligible to participate in the program on your date of hire.

Ineligible Employees

You are not eligible to participate in the program during periods in which your employer does not consider you to be an employee. Once your employer begins to treat you as having the status of an employee in all respects, you will be eligible to participate in the program and make contributions to it. You can contact your Human Resources department if you have any questions about your employment classification or your eligibility to participate in the program.

Joining the Program

You will automatically be enrolled in the program. Once an account has been set up for you at Fidelity, you will receive an Enrollment Kit. Unless you make a change by contacting Fidelity, 3% of your eligible earnings each pay period will be deducted and invested in one of the Fidelity Freedom K® Funds, based on your age. If you wish to contribute more or less than 3% to the program, it is your responsibility to change the level of your contributions by contacting Fidelity no later than the date specified in the enrollment materials (generally about 45 days after your hire date). You can also direct how your account is invested or make a change at any time. You are encouraged to take an active role in the program and to choose a contribution rate and investment options that are appropriate for you. Once contributions have been deducted from your pay and deposited into your account, your contributions may not be withdrawn until you qualify for an in-service withdrawal or distribution from your account. You can contact Fidelity Investments at 1-877-980-BLUE (2583) or log on to the Fidelity Web site at www.fidelity.com/atwork to make changes to any one or more of the following: ♦ the percentage of your pay you want to contribute; ♦ the name of the investment funds you’ve selected; and ♦ the percentage of your contributions you want to invest in these

funds.

http://www.fidelity.com/atwork�

TAX ADVANTAGES

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Tax Benefits This program offers you a unique combination of tax advantages.

These advantages apply: ♦ while you’re contributing to the program; and ♦ while your savings are growing.

Pre-Tax Contributions

You can elect to contribute to the program on a pre-tax basis. This means that you will not have to pay any federal taxes on your contributions until you receive them from the program. (Please note that your pre-tax contributions will not reduce your Social Security taxes.) Whether you pay state or local taxes on your contributions depends on your location. You can defer taxes on up to 60% of your eligible earnings from taxes if you are contributing to the program, subject to certain limitations. And, although your participation will lower your taxable income, it generally does not affect your other salary-related benefits, such as retirement, group life insurance, long term disability, or Social Security.

Tax Deferred Investment Earnings

Tax-deferred investment earnings are another major tax advantage. The investment earnings on all of your program savings will accumulate tax-free until you receive them from the program.

Payment of Taxes

The program allows you to defer payment of taxes – not avoid them. Your savings will accumulate tax-free as long as they stay in the program. However, you will have to pay taxes on any money that you receive from the program.

YOUR PERSONAL ACCOUNT INFORMATION

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Your Personal Identification Number (PIN)

When you join the program, you’ll need to establish a Personal Identification Number (PIN) to access your account information. Your enrollment kit will contain more information about setting up your PIN.

Personal Information

It is important for you to keep your personal information up to date. This includes: ♦ your mailing address; ♦ your beneficiary designation; and ♦ name changes or other changes in your personal information. If your mailing address or name changes, you should immediately contact Human Resources. To change your beneficiary, Human Resources will provide you with the necessary form.

Naming Your Beneficiary

When you join the program, you are asked to name your beneficiary. Your beneficiary is the person or persons who will receive the full vested value of your program accounts if you die. In general, your spouse will be your beneficiary if you are married. If you are not married but get married later, your spouse becomes your beneficiary on your marriage date. Should you wish to name someone other than your spouse, your spouse must give his or her written consent to this election. Your spouse’s written consent to your beneficiary designation must be notarized. If you don’t name a beneficiary, or if your beneficiary is not living on the date of your death, and you are not married, the full value of your account balance will be paid to your estate. You can change your beneficiary at any time by contacting Human Resources and requesting a form. This change will be effective when your completed form is received and approved by Human Resources.

Quarterly Participant Statement

After the end of each calendar quarter, you will receive a comprehensive participant statement, or you can request or review this information online. This statement reports your account activity for the quarter, including: ♦ your pre-tax contributions (and any catch-up or rollover

contributions) during the quarter • employer matching contributions ♦ Retirement Plus contributions made on your behalf

YOUR PERSONAL ACCOUNT INFORMATION

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♦ your investment gains or losses ♦ withdrawals, transfers, loans, or other adjustments to your account Your quarterly participant statement provides a valuable record of your account activities. Keeping these statements in a safe place will help you to track your progress in the program. You are responsible for reviewing your account statement and contacting Fidelity within 90 days of the account statement date if you have questions or if there are errors.

401(k) CONTRIBUTIONS

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Your Contributions

You can contribute 1% to 60% of your eligible earnings each pay period to the program on a pre-tax basis, subject to certain limits. Your pre-tax contributions will lower your taxable income, because they come out of your pay before federal and (in some cases) state taxes are applied.

Automatic Increase of Your Contributions

Your contributions will automatically increase in March of each year, beginning in 2013. Your contribution rate will be increased by 1% if you are contributing between 1% and 4% to the program at the time the automatic increase applies, for a total rate of contribution not to exceed 5%. (You may elect to contribute more than 5%, but your contributions will not increase automatically to more than 5%.) You will be notified prior to the automatic increase date and will have an opportunity to make a different election, including an election to contribute 0%. The automatic increase for a particular year will not apply to you if: • the March 1 automatic increase date is less than 6 months after

your automatic enrollment date (generally between 45-60 days after you are hired); or

♦ your contributions are suspended at the time the automatic increase otherwise applies because you took a hardship withdrawal

Even if you are excluded from the automatic increase for a particular year, you will be included in the automatic increase for the subsequent year as long as you otherwise meet the requirements. In addition, you will be permanently excluded from the automatic increase program if: ♦ you contact Fidelity via the web at www.fidelity.com/atwork or by

calling Fidelity Investments at 1-877-980-BLUE (2583) and opt out of the automatic increase program; or

♦ you make a 0% deferral election at any time; or ♦ you make an election to participate in a voluntary increase

program offered by Fidelity (where you specify an annual contribution increase percentage with an effective date other than March 1)

Employer Match

Your employer will match $1.00 for each dollar you contribute each pay period. Maximum: The employer match applies to the first 5% of your pre-tax contributions only. Your contributions in excess of 5% of your eligible earnings are not eligible for the employer match.


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True-Up Employer Match

At the end of the year, your employer will review the percentage of pay you deferred for the year to determine if your total employer matching contribution is less than $1.00 for each dollar you contributed during the year which is eligible for a match (up to the first 5% of your eligible earnings contributed), in which case a true up matching contribution may be made.

Catch-Up Contributions

You may be eligible to make pre-tax “catch-up contributions” if you are eligible to participate in the program and are age 50 or older during 2012. You may make up to $5,500 of catch-up contributions in 2012 if, at the end of the year, one or more of the following occurs: ♦ you make the maximum employee contribution of $17,000 ♦ your contributions to the program are limited by a program limit

Rollover Contributions

You generally may make a direct rollover of a lump sum payment from the following types of programs: ♦ 401(a) or 403(a) program; ♦ 403(b) annuity program; ♦ 457(b) governmental program; You would need to provide information about your retirement program distribution so that it can be determined whether it is eligible for "rollover." In a direct rollover, at your request, your previous employer provides for a transfer of your distribution directly into this program. In this way, your payment will not be taxed in the current year and no income tax will be withheld. Also, if you were employed at any time prior to July 1, 2012 and participated in the Non-Contributory Retirement Program for Employees of Blue Cross Blue Shield of Arizona, you may have the opportunity to roll over all or a portion of your lump sum distribution from the Retirement Program into this 401(k) program when you terminate employment. This option is available to you when you elect to receive your Retirement Program benefit and your 401(k) account balance is more than $1,000. Once you terminate employment, this is the only rollover contribution accepted by the program.

Contribution Limits

The maximum amount of participant contributions to the program may be limited under current federal law. This includes: ♦ a limit on the maximum amount of annual earnings that can be

taken into account for program purposes. (In 2012, the limit is $250,000.)

♦ a limit on the maximum before-tax amount that a participant can contribute during the calendar year, including before-tax contributions to any other savings program. (This limit is


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determined each year. In 2012, the limit is $17,000.) The above maximums do not apply to rollover contributions. (See the previous section entitled “catch-up contributions” for amounts that may be contributed over the 2012 limit if you are age 50 or older.) The employer will notify you if you are affected by the contribution limitations and your excess contributions will be returned to you.

Your “Eligible Earnings”

Your pre-tax contributions are based on a percentage of your eligible earnings. Your eligible earnings are your total earnings for each payroll period ending during the program year. Amounts contributed on a pre-tax basis to the program or to a cafeteria plan are also included in your eligible earnings. Eligible earnings do not include: ♦ Reimbursements or other expense allowances, cash and noncash

fringe benefits, moving expenses, welfare benefits, and deferred compensation.

♦ Severance pay or employee contributions to nonqualified deferred

compensation plans. ♦ Compensation in excess of $250,000 in 2012 (adjusted annually

by the IRS). ♦ Amounts paid when you are not considered an employee.

Changing, Stopping, or Resuming Your Contributions

You can elect to change, stop, or resume your contributions as of the first day of the payroll period following your election or as soon as administratively possible thereafter via the web at www.fidelity.com/atwork or by calling Fidelity Investments at 1-877-980-BLUE (2583). Fidelity will send you either an electronic or paper confirmation form, depending on your election. An electronic confirmation is sent at the time the transaction is executed or a paper confirmation is mailed to your home address within 3 to 5 business days.

Information for Veterans

Special rules apply if you are a veteran who returns to employment while you have reemployment rights under the law following a period of qualified military service. You may be eligible to “make up” contributions to the program that you would have been entitled to make during your period of military leave (and to receive matching contributions on those contributions). Also, you may be entitled to any additional contributions the employer made for a plan year during which you were in military service. You should contact Human Resources if you are an employee returning from military service with reemployment rights.

RETIREMENT PLUS CONTRIBUTIONS

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Eligibility for Retirement Plus Contributions

The company helps you save for retirement by making additional employer contributions to eligible employees. Retirement Plus contributions are a separate benefit and are provided by the company in addition to the basic benefits available through the program. You are eligible for Retirement Plus contributions if you are eligible to participate in the program, and ♦ you were hired or rehired after June 30, 2012;

♦ you are not accruing a benefit in the company defined benefit

Retirement Program for all or a portion of the program year; and ♦ you are employed on the last business day of the year.

If you are not accruing a benefit in the defined benefit Retirement Program (referred to as the Non-Contributory Retirement Program for Certain Employees of Blue Cross and Blue Shield of Arizona, Inc.), you are eligible for Retirement Plus contributions, provided you meet the other eligibility requirements specified above.

Amount of Retirement Plus Contributions

You will receive a 3% Retirement Plus contribution based on your eligible earnings for the year. You will receive this contribution even if you are not contributing to the program, although you are strongly encouraged to participate. If you were accruing a benefit in the defined benefit Retirement Program for a portion of the program year, terminate employment, and were rehired in that same year, you would be eligible for the Retirement Plus contribution for that year.

Vesting Retirement Plus contributions made on your behalf (including any

associated earnings or losses on these contributions) become vested as follows: Years of Service Vested Percent Less than 1 year 0% 1 year 20% 2 years 40% 3 years 60% 4 years 80% 5 or more years 100% You become fully vested in your Retirement Plus contributions if you terminate employment because of death, disability, or termination of employment on or after age 65.

RETIREMENT PLUS CONTRIBUTIONS

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Years of Service for Vesting

Current and prior employment with Blue Cross and Blue Shield of Arizona counts toward vesting.

If you were employed by Blue Cross and Blue Shield of Arizona at any time prior to January 1, 2003 and had prior service with another Blue Cross Blue Shield organization, your prior Blue organization service also counts toward vesting.

Contribution Limits

The maximum amount of contributions to the program may be limited under current federal law. This includes: ♦ a limit on the maximum amount of annual earnings ($250,000 in

2012) that can be taken into account; and ♦ special nondiscrimination tests which monitor the benefits that may

be contributed by or on behalf of highly paid employees.

INVESTING YOUR ACCOUNT

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Making Your Investment Decision

As a participant, you control the investment of your program account, and are responsible for the investment results and investment performance of your program account. This section provides information about your investment options and how to direct the investment of your program account. If you fail to provide investment instructions, your account will automatically be invested in one of the Fidelity Freedom K® Funds, based on your birth date and assuming retirement at age 65. The decision on how and where to invest your program account is entirely up to you. Your employer cannot provide you with personal financial advice.

Investment Options

The program’s investment options offer an array of investment choices and were selected for the program with the advice of a professional investment consultant. The options include: ♦ LifeCycle Funds (consisting of the 13 Fidelity Freedom K® Funds) ♦ Core Investment Funds (consisting of 24 individual funds) This structure is designed to help you determine your investment approach, based on how involved you want to be in choosing your investments and monitoring their performance. A list of the program’s investment options is shown on the following pages. Also, a description of each fund is available online at Fidelity NetBenefits (www.fidelity.com/atwork) or in an Enrollment Guide. The investment options are offered through Fidelity Investments and include funds managed by Fidelity as well as non-Fidelity managed funds.

http://www.fidelity.com/atwork�


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LifeCycle Investment Funds

The LifeCycle Funds consist of the 13 Fidelity K® Freedom Funds. These “pre-mixed” funds offer a blend of stocks, bonds and short-term investments. Each Freedom K® Fund’s asset allocation is based on the fund’s target retirement date. The fund will gradually adopt a more conservative asset allocation over time but you will always be invested partially in stocks. The Freedom K® Funds are designed for investors who want a simple approach to investing for retirement. You may want to consider these funds if you wish to benefit from asset allocation and diversification, but you feel more comfortable having a professional portfolio manager manage your asset allocation. For example, the Freedom K® Income Fund is designed for those already in retirement and reflects that assumption by emphasizing bond and money market mutual funds and seeking to maintain a stable asset allocation from year to year.

Fidelity Freedom K® Funds Target Retirement Years ♦ Fidelity Freedom K® Income Fund Retired before 1998 ♦ Fidelity Freedom K® 2000 Fund 1998-2002 ♦ Fidelity Freedom K® 2005 Fund 2003-2007 ♦ Fidelity Freedom K® 2010 Fund 2008-2012 ♦ Fidelity Freedom K® 2015 Fund 2013-2017 ♦ Fidelity Freedom K® 2020 Fund 2018-2022 ♦ Fidelity Freedom K® 2025 Fund 2023-2027 ♦ Fidelity Freedom K® 2030 Fund 2028-2032 ♦ Fidelity Freedom K® 2035 Fund 2033-2037 ♦ Fidelity Freedom K® 2040 Fund 2038-2042 ♦ Fidelity Freedom K® 2045 Fund 2043-2047 ♦ Fidelity Freedom K® 2050 Fund

♦ Fidelity Freedom K® 2055 Fund 2048-2052 2053 and later


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Core Investment Funds

With the Core Investment Funds, you determine and maintain the mix of investments in your account. A selection of 24 core investment funds is available. The variety of funds available in the Core is designed to offer you an opportunity to create a diversified portfolio. The Core Investment Funds include both passive and actively managed funds, and represent the three major asset classes (short-term investments, bonds, and stocks). You may want to consider these fund options if you are comfortable managing your own asset allocation.

Short-Term Investments

Money Market and Fixed Income Fidelity Managed Income Portfolio II Fund (fund closed to new investments effective February 1, 2012; existing balances in the fund may remain in the fund until October 1, 2012 at which time balances will transfer to the Wells Fargo Stable Value Fund)

Wells Fargo Stable Value Fund E Fidelity Retirement Money Market Portfolio Vanguard Admiral Treasury Money Market Fund (closed to new contributions)

Vanguard Federal Money Market Fund (closed to new contributions) Passive Funds (Index Funds)

Index funds are designed to perform in-line with a major stock or bond index by investing in companies that make up the index. Passive funds provide broad market exposure that typically charge lower investment management fees than actively managed funds.

♦ Bond Index Fund Spartan® U.S. Bond Index Fund - Fidelity Advantage Institutional

Class

♦ US Stock Funds Spartan® 500 Index Fund - Institutional Class Spartan® Extended Market Index Fund – Fidelity Advantage

Class Fidelity U.S. Equity Index Commingled Pool - Class 2

♦ Non-US Stock Fund

Spartan® International Index Fund - Fidelity Advantage Institutional Class


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Core Investment Funds - cont.

Actively Managed Funds Active fund management is an investment style that seeks to outperform a particular market, represented by an index. The fund holdings are actively selected by the fund managers using a variety of factors and strategies. Active funds tend to have higher investment management fees than index funds because of the active investment decisions made by the fund managers.

♦ Broad Bond Funds (across different bond sectors) Dodge & Cox Income Fund

PIMCO Total Return Fund – Institutional Class

♦ Balanced – Bond and Stock Fund Oakmark Equity and Income Fund – Class I

♦ US All Cap – Stock Fund PRIMECAP Odyssey Stock Fund

♦ US Large Cap – Stock Funds American Beacon Large Cap Value Fund – Institutional Class Fidelity Growth Company Fund - Class K Pyramis Large Cap Value II Commingled Pool for BCBS Plans T Rowe Price Growth Stock Fund

♦ US Mid Cap – Stock Funds Artisan Mid Cap Value Fund – Investor Shares TimesSquare MidCap Growth Fund – Institutional Class

♦ US Small Cap – Stock Funds Fidelity Low-Priced Stock Fund - Class K Perimeter Small Cap Growth Fund – I Shares Wells Fargo Advantage Small Cap Value Fund – Institutional

Class

♦ Global – Stock Fund MSF Global Equity Fund – Class R4

♦ Non-US – Stock Funds Aberdeen Emerging Markets Fund Harding Loevner International Equity Portfolio – Institutional

Class Fidelity Diversified International Fund - Class K

The program’s available investment options may change from time to

time. You will be notified of a change in investment options.


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Investment Election

You can invest your contributions in one or more of the available investment funds in multiples of 1%.

Investment Changes, Fund Transfers and Other Transactions

Fidelity Retirement Services maintains an automated phone service and Web site that is available to you 24 hours a day, 7 days a week. In addition, Fidelity service representatives are available Monday through Friday, 8:30 a.m. - Midnight ET. By calling 1-877-980-BLUE (2583) or logging on to www.fidelity.com/atwork, you can: ♦ view your investment elections ♦ transfer money between the investment funds ♦ change your investment election for future contributions to the

program ♦ change your payroll deduction contributions ♦ order literature and prospectuses You can also use the automated phone service or Web site to obtain current investment fund prices, check your transaction history, and obtain other valuable information. Program loans may be initiated through the Web site or by speaking to a service representative. Keep in mind that you’ll need your PIN to access your personal account information. Generally, changes, transfers and transactions made by 4:00 p.m. ET will be effective that business day. If you call later in the day, your change or transfer will be effective the next business day. Fidelity will send you either an electronic or paper confirmation form, depending on your election. An electronic confirmation is sent at the time the transaction is executed or a paper confirmation is mailed to your home address within 3 to 5 business days.

Frequent Trading Limits and Other Investment Fund Policies

The investment options offered in this program are subject to the policies and procedures of the mutual fund companies or fund managers offering these options. Many mutual funds have now, or may in the future impose restrictions, limitations or penalties on investors, including retirement programs, that engage in activities they consider to be disruptive, such as frequent short term trading. These restrictions respond to concerns that frequent trading can be harmful to other investors. Some mutual funds could impose restrictions upon an entire retirement program where only some participants engage in such activities. In order to assure that the investment options offered under this program remain available on favorable terms to participants who do not engage in such practices, the program administrator will ordinarily implement any such restrictions or limitations imposed by mutual funds or fund managers. Although the precise rules applied by mutual fund companies and fund managers' policies may differ, the rules followed by a specific fund must be disclosed in its prospectus, which may be viewed on-line at www.fidelity.com/atwork or by calling 1-877-980-BLUE (2583).


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To the extent possible, you will receive advance notice of any new or different trading restrictions or limitations of mutual funds and fund managers. Advance notice may not be practicable in all situations, such as where the mutual fund imposes policies or procedures with limited or no notice to the program administrator. You will receive information about the restrictions or limitations as soon as practicable. Each fund company or fund manager may reserve the right to change its policies and procedures relative to frequent trading at any time.

Investment Management Fees

Generally, investment management fees and other fees related to the operation of the program’s investment funds are charged to participant accounts at the fund level as part of the investment process. To obtain further information on these fees and how they are charged, please refer to the prospectus or speak to a Fidelity service representative at 1-877-980-BLUE (2583) if a prospectus is not available.

Information Resources

As a participant in the program, you have access to a variety of resources for investment education, personal financial planning, and information on each of the available investment funds. Fund Information: Each of the available funds has important informational material that you should carefully read before deciding to invest in a given fund. www.fidelity.com/atwork: This is Fidelity’s Retirement Services web site, which includes: ♦ investment fund descriptions ♦ on-line fund prospectuses ♦ other information of general interest to investors Automated phone service: You can access the automated phone service at any time by calling 1-877-980-BLUE (2583). You can use this system to initiate fund transfers, investment changes, and other transactions related to your program account. Fidelity Retirement Services Specialists: A Fidelity representative is available to answer your questions or provide assistance Monday through Friday, 8:30 a.m. – Midnight ET. Fidelity Mailing Address: You can contact Fidelity at the following addresses:

For regular mail: For express mail: Fidelity Investments Attn: FITSCo P. O. Box 770002 Cincinnati, OH 45277-0090

Fidelity Investments Institutional Operations Company, Inc. Attn: FITSCo 100 Crosby Parkway, KC1E Covington, KY 41015

HOW VESTING WORKS

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What is “Vesting”?

Vesting is your ownership of or nonforfeitable right to receive a program benefit.

Vesting of Your Account

You are 100% vested in the value of your own contributions, including any catch-up or rollover contributions, and employer matching contributions. Vesting also applies to the Retirement Plus contributions made to your account. Please refer to pages 8 and 9 for additional information.

WITHDRAWALS WHILE ACTIVELY EMPLOYED

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Withdrawals of Vested Account Balances

This program is intended to provide retirement benefits and build retirement savings. Therefore, you generally cannot withdraw funds from your vested account balance while you are employed. The following are exceptions to this rule: ♦ withdrawals for financial hardship ♦ total and permanent disability ♦ withdrawals after age 59-1/2

Financial Hardship

All requests for a financial hardship withdrawal are subject to approval. There are several important points to remember in connection with financial hardship withdrawals: ♦ You must first take the maximum loan amount available to you

under the program. ♦ Your withdrawal request must meet specific rules established by

the IRS for “financial hardship.” ♦ The amount of your withdrawal cannot exceed the amount

necessary to meet your financial need and may include funds necessary to pay any income taxes and penalties that you reasonably expect to incur.

♦ Your participation in the program will be suspended for 6 months

after you take a hardship withdrawal. Your contributions will automatically recommence following the 6-month suspension period.

♦ Employer matching contributions made on or after January 1, 1999

and earnings may not be withdrawn due to a financial hardship. ♦ Retirement Plus contributions may not be withdrawn due to a

financial hardship (or upon reaching age 59-1/2). ♦ A hardship withdrawal is not eligible for rollover.

Definition of Financial Hardship

Under the program, you may qualify for a financial hardship withdrawal only for the following reasons: ♦ uninsured medical expenses for yourself, spouse or dependents

(as defined by the IRS); ♦ the purchase of a principal residence; ♦ rent or mortgage payments needed to prevent the eviction from or

the foreclosure on the mortgage of a principal residence;

WITHDRAWALS WHILE ACTIVELY EMPLOYED

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♦ tuition, education-related fees and room and board expenses for

the next twelve months of post-secondary education for yourself, spouse or dependents (as defined by the IRS);

♦ burial or funeral expenses for your parents, spouse, children, or

dependents (as defined by the IRS); ♦ repairs of damage to a primary residence that would qualify as a

casualty deduction under IRS rules (determined without regard to whether the loss exceeds 10% of adjusted gross income); or

♦ any other expenses specified in the future by the IRS.

Amount of Financial Hardship Withdrawal

A financial hardship withdrawal must be for a minimum of $1000. If you qualify for a financial hardship withdrawal, you may withdraw an amount up to the lesser of: ♦ the amount necessary to meet your financial need, plus an amount

needed to cover taxes or penalties that you reasonably expect to incur on the withdrawal; or

♦ the amount available in your account for withdrawal. Distribution of your financial hardship withdrawal will be made as soon as reasonably possible after your withdrawal request is received and approved, and will be based on your account balance as of the date that your hardship withdrawal request is approved. For information about withdrawals, including the amount you have available for a financial hardship withdrawal, you should call Fidelity at 1-877-980-BLUE (2583).

Permanent Disability

You may qualify for a withdrawal of your vested account balance if you become disabled while employed and meet the definition of “permanent disability,” as determined by the Program Administrator. “Permanent disability” means an illness or injury of a potentially permanent nature that prevents you from working, as determined under section 72(m) of the Internal Revenue Code.

Age 59-1/2 Distribution

If you are an active employee age 59-1/2 or over, you may request a withdrawal from the vested value of your plan account, except for Retirement Plus contributions, without having to prove financial hardship. Your application for an age 59-1/2 distribution will not affect your continued participation in the plan.

Tax Consequences of Withdrawals

If you are under age 59-1/2, with limited exceptions, you will be required to pay a 10% tax in addition to ordinary income taxes on a withdrawal. You should check with your tax advisor concerning the current rules at the time of the withdrawal.

BORROWING FROM YOUR ACCOUNT

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Taking Out a Loan

The program’s loan feature allows you to borrow from your account (excluding your Retirement Plus Contributions account) while still actively employed. You must sign a promissory note at the time you take a loan. In the case of a “paperless” loan, your endorsing, depositing or cashing the loan check acts as a signature to a promissory note. By signing this note, you commit to the loan payment terms and the loan interest rate to which you agreed. Taking out a loan will not affect your ability to make continued contributions to the program.

Types of Loans There are two types of loans:

♦ general-purpose loan ♦ principal residence loan General Purpose Loan: A general-purpose loan may be taken for any reason. The maximum term for a general purpose loan is five years. Principal Residence Loan: A principal residence loan is available only for the purchase of a home as a principal residence. It cannot be used to refinance or remodel an existing home. The maximum term for a principal residence loan is 30 years.

Number of Loans Allowed

Only three loans may be outstanding at any given time. You may not take out more than one loan in any 12-month period.

Fifteen Day Waiting Period

After paying off an existing loan, you will need to wait 15 days before requesting or initiating a new loan. This waiting period is to facilitate administration and help ensure 401(k) loans are administered in compliance with IRS requirements.

Loan Amount A loan may be made from your vested account balance (excluding

your Retirement Plus Contributions account). The minimum loan amount is $1,000. The maximum loan amount is set by law and is equal to the lesser of: ♦ $50,000 reduced by your highest outstanding loan balance in the

last twelve months; or ♦ 50% of your total vested account balance in the program

(excluding your Retirement Plus Contributions account), less your current outstanding loan balance.

Loan Repayment

Your loan is repaid with interest via after-tax payroll deductions and your repayments will go back into your program account. These repayments will be made in approximately equal installments.


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You may repay either the entire balance of your outstanding loan or a portion of the balance at any time without penalty for prepayment. If you take an unpaid leave of absence of one year or less, you may stop making loan repayments temporarily. The missed loan payments, including interest, are added to the end of the loan period, except that the term of a general purpose loan may not extend beyond 5 years. For a military leave of absence, special rules apply and loan repayments are not required during the military leave of absence. Loan repayments must resume upon the employee’s return from military leave, however, and the entire loan must be repaid within five years from the original date of the loan, not taking into account the period of military leave during which payments were suspended. The missed payments, including interest, are added to the end of the loan period. The interest rate applied to the period of missed payments is the lesser of the rate established when the loan was first taken or 6%.

Loan Fees There is a loan origination fee of $35 that will be deducted from your

account balance when you take a new loan. In addition, a quarterly administrative fee of $3.75 is deducted from your account balance for each outstanding loan.

Interest Rate The interest rate charged for a program loan will be equal to the prime

rate quoted in the Wall Street Journal on the first business day of the month plus 1%. Under current tax laws, loan interest payments are not tax deductible.

Termination of Employment

You have several options if you terminate employment while you have an outstanding loan. The first option is that you may repay the outstanding balance on your loan before the grace period ends and before you have taken a distribution. The grace period ends on the last day of the calendar quarter following the calendar quarter in which a scheduled loan repayment is not made. You also have the option to continue to repay your loan through an electronic loan payment service. The electronic loan payment service uses the Automated Clearing House Association (ACH). If you decide to use this service, loan payments would be debited directly from your bank account on a monthly basis. Electronic payment of loans using ACH is the only loan repayment method that may be used if you choose to continue to repay your loan. Contact Fidelity at 1-877-980-BLUE (2583) for more information on the electronic payment service and how to enroll. If you choose to use this service, you must set it up promptly so that your loan does not go into default. A loan is considered in default if the scheduled loan payment is not received by the end of the grace period described above. For example, if your last loan repayment was made April 15, all remaining loan repayments due through June 30 must be made no later than


21

September 30. If you terminate employment and either fail to pay off the outstanding loan before the end of the loan grace period, or you use ACH and the loan goes into default, the following will occur: ♦ the outstanding loan balance will be deducted from your account

balance and will reduce any Program benefit that you or your beneficiary may be eligible to receive, and

♦ the outstanding loan balance will be considered a distribution,

subject to applicable taxes and penalties. You may be entitled to roll over the entire amount of your distribution, including the amount of the loan balance, to an IRA or another employer-sponsored program. To roll over the amount of your loan balance to an IRA, you would need to repay the loan using funds from another source (such as your savings or a commercial loan) within the 60-day rollover period.

Default Active employees are generally required to make loan repayments

through payroll deductions. If payment is not received by the end of the calendar quarter following the first calendar quarter in which a scheduled loan repayment is not made, your loan will be considered in default. The program will use up to 50% of your vested account balance as security for your loan. In the event that an outstanding loan is declared in default, the following will take place: ♦ the outstanding loan balance will be considered a distribution

under tax laws, subject to applicable taxes and penalties. ♦ the loan remains part of your account until you are eligible for a

complete distribution from the program. ♦ you must agree to and make loan repayments through payroll

deductions for any subsequent loan, otherwise the subsequent loan will also be declared in default.

Tax Consequences of Loans

Loans taken from your account are not subject to income taxes unless you fail to make your loan repayments and your loan goes into default. If this occurs, your outstanding balance will become taxable and you may also be subject to an additional 10% tax penalty.

For More Information

For information about program loans, including the amount you have available for a loan, you should call Fidelity at 1-877-980-BLUE (2583) or log on to www.fidelity.com/atwork.

RECEIVING YOUR PROGRAM BENEFITS

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Applying for Benefits

You need to call Fidelity to initiate a distribution. A brochure with general information about your distribution options and a Special Tax Notice describing your tax considerations will be sent to you from Fidelity. If your account balance is more than $1,000, you may elect to receive your benefits under the program at any time following termination of employment, but not later than age 70 ½.

Forms of Payment

After you terminate employment, if the full vested value of your program account is $1,000 or less, you (or your beneficiary, if you are deceased) will receive a lump sum payment of the entire amount. This payment is considered an automatic distribution. Also, if the full vested value of your program account is more than $1,000, you may elect to have your account paid to you either in a lump sum payment or installment payments. If you don’t make an election, your account will be paid to you in a lump sum.

Lump Sum Payment

You may elect to receive the vested value of your program account in a single lump sum.

Installment Payments

You may choose to have the vested value of your program account paid to you in monthly, quarterly, semi-annual, or annual installments or in a specific dollar amount. The installment period, subject to certain limits, will depend on your age. After you begin receiving installment payments, you may choose to receive your remaining account balance in a lump sum. You should always consult with a tax advisor before making any changes to your payment schedule. Certain changes to your payment schedule may have severe tax consequences.

Retirement You will be eligible to receive the full value of your program account if

you terminate employment on or after the date that you reach normal retirement age (age 65).

Death In the event of your death during active employment, the full value of

your program account will be paid to your beneficiary. This applies regardless of your length of service at the time of death. Any person who would qualify as a surviving spouse or beneficiary shall be disqualified to receive a survivor benefit from this Program on your behalf if it is determined by a criminal court that such person was responsible for your death as a result of a criminal act which involved the intentional or reckless taking of your life. In such a case that person will be treated as if he or she predeceased you.

RECEIVING YOUR PROGRAM BENEFITS

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Taxation of Program Distributions

All of your contributions and employer contributions will accumulate tax-free as long as they stay in the program. However, you will have to pay taxes on any money that you eventually receive from the program.

Application of Taxes

Distributions from qualified programs (such as this program) are generally treated as ordinary income for tax purposes. Federal law requires a 20% withholding payment on the cash amount of distributions to you instead of being directly rolled over to an IRA or another plan that accepts direct rollovers. An additional 10% tax is also imposed on certain program distributions. More information will be provided to you at the time distribution begins. The tax laws that apply to benefit program distributions are complicated, and the employer cannot provide you with specific tax advice. You should always consult with a competent tax advisor before deciding when and how you want your account balance to be paid.

BREAK-IN-SERVICE RULES

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Forfeited Contributions

If you are not fully vested in your employer Retirement Plus contributions when you terminate employment: • you will forfeit the value of any non-vested Retirement Plus

contributions, if any; and ♦ if you are later rehired and you repay the full amount of your

Retirement Plus contributions received as part of a distribution from the program before the fifth anniversary of your rehire date, the forfeited Retirement Plus contribution amount will be restored to your account (subject to the exception described below).

If you return to work after an absence of five consecutive years, the Retirement Plus contribution amount you forfeited at termination will not be restored. Some periods of leave, layoff or disability are not counted in determining if you have been gone for five years. In the event you were 0% vested in your Retirement Plus contributions and forfeit those contributions when you terminate employment, the Retirement Plus contributions (without an adjustment for any subsequent gains or losses), will be restored to your account, provided you are rehired before the fifth anniversary of your termination date. If you terminate employment and are later rehired, you should contact Human Resources if you have any questions about your participation in the program, including the restoration of previously forfeited benefits, including Retirement Plus contributions.

Returning Veterans

Special rules apply if: • you leave the employer for qualified service in the Armed Forces of

the United States; and • you return to work with the employer while you have reemployment

rights under the law. In this case the period of qualified military service may not be treated as a break in service. You should contact Human Resources if you are an employee returning from military service with reemployment rights.

WHAT TO DO IF A CLAIM IN DENIED

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Denied Claims The Program Administrator is responsible for reviewing program

claims. You should receive word on your claim within 60 days after the Program Administrator has received your claim. Sometimes the review may take longer than 60 days, but if this happens you will receive a written explanation for the delay and a projected date for the decision. Regardless of the circumstances, you will receive a decision on your claim within 120 days of the initial receipt of your paperwork by the Administrator. In the case of a claim for disability benefits, you should receive word on your claim within 45 days after the Program Administrator has received your claim. If matters beyond the control of the Administrator prevent a decision from being made within 45 days, the period maybe extended for up to 30 days. You will be notified in writing of the 30-day extension prior to expiration of the initial 45-day period, the circumstances requiring the extension of time and the date when you can expect a decision. A second 30-day extension period may occur if, due to matters beyond the control of the Administrator, a decision cannot be made within the extension period. You will be notified in writing, prior to the extension of the first 30-day extension period, of the circumstances requiring the extension and the date as of which the Administrator expects to render a decision. In the case of an extension, the notice of extension will specifically explain the standards on which the entitlement is based, the unresolved issues that prevent a decision on the claim, and the additional information needed to resolve the issues, and you will be afforded at least 45 days within which to provide the specific information. If your claim for benefits under the program is wholly or partially denied, the Administrator will send you a written notice of the denial. This notice will include: ♦ the specific reason(s) for the denial; ♦ reference to the specific program provisions on which the denial is

based; ♦ a description of the program’s review procedures and the time

limits applicable to these procedures, including a statement that you have the right to bring a civil action under Section 502(a) of the Employee Retirement Income Security Act following an adverse benefit determination on review;

♦ a description of any additional material or information necessary for

you to complete your claim, as well as an explanation of why this additional material or information is necessary.

In the case of disability benefits:

♦ if an internal rule, guideline, protocol, or other similar criterion was


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relied on in making the adverse determination, either the specific rule, guideline, protocol, or other similar criterion; or a statement that such rule, guideline, protocol, or other similar criterion was relied upon in making the adverse determination and that a copy of the rule, guideline, protocol, or other similar criterion will be provided to you free of charge upon request.

Appealing a Denied Claim

You (or someone acting for you) can appeal a denied claim. Your appeal should be in writing, and should state the reasons why you think your claim is valid. You can also: ♦ submit written comments, documents, records, and other

information relating to your claim for benefits; ♦ review all pertinent documents relating to the denial of your claim

and submit any issues and comments, in writing, to the Administrator; and

♦ request, free of charge, reasonable access to, and copies of, program documents, records and other information relevant to your claim for benefits.

Your claim for review must be given a full and fair review. This review will take into account all comments, documents, records, and other information submitted by you relating to your claim, without regard to whether such information was submitted or considered in the initial benefit determination. Your claim will be reviewed without deference to the initial adverse benefit determination and the review will be conducted by an appropriate named fiduciary of the program who is neither the individual who made the adverse benefit determination that is the subject of the appeal, nor the subordinate of such individual. In addition to the above claims procedure, if your claim is for disability benefits, then the claims procedure provides that: ♦ In deciding an appeal of any adverse benefit determination that is

based in whole or in part on medical judgment, the appropriate named fiduciary will consult with a health care professional who has appropriate training and experience in the field of medicine involved in the medical judgment. The health care professional engage for purposes of a consultation will be an individual who is neither an individual who was consulted in connection with the adverse benefit determination that is the subject of the appeal, nor the subordinate of any such individual.

♦ Any medical or vocational experts whose advice was obtained on

behalf of the program in connection with your adverse benefit determination will be identified, without regard to whether the advice was relied upon in making the benefit determination.


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Although you are not required to appeal your claim, you are required to utilize the full appeal procedures provided under the program before you are permitted to file a lawsuit regarding your claim for benefits. Filing Your Appeal: If you wish to appeal, you must file your written appeal to the Secretary or Assistant Secretary of the Administrator within 60 days of the date that you received your initial claim denial notice. You will lose your right to appeal if your written appeal is filed after the 60-day period. However, if your claim is for disability benefits, then instead of the above time periods, you must file your written appeal for review no later than 180 days following the date you received your initial claim denial notice. You will lose your right to appeal if your written appeal is filed after the 180-day period.

Review of Appeal

The Secretary or one of the Assistant Secretaries will make his or her final decision within 60 days of receipt of your claim. (Under special circumstances, this period may be extended by an additional 60 days.) A decision will be sent to you in writing within 120 days of the Secretary’s or Assistant Secretary’s receipt of your appeal. If your claim is related to disability benefits, the Secretary or one of the Assistant Secretaries will respond to your written appeal within 45 days. If matters beyond the control of the Secretary or one of the Assistant Secretaries prevent a decision from being made within 45 days, the period maybe extended for up to 45 days. A decision will be sent to you in writing between 45 and 90 days after the Secretary’s or Assistant Secretary’s receipt of your appeal. If your appeal of an adverse benefit determination is denied, the Administrator will send you a written notice of the denial. This notice will include:

♦ the specific reason(s) for the denial; ♦ reference to the specific program provisions on which the

denial is based; ♦ a statement that you are entitled to receive, upon request and

free of charge, reasonable access to, and copies of, all documents, records, and other information relevant to your claim for benefits;

♦ a statement describing your right to request information about such procedures and a statement regarding your right to bring action under Section 502(a) of the Employee Retirement Income Security Act;

♦ a statement required by the Department of Labor concerning alternative dispute resolution options, such as mediation.

Also, in the case of disability benefits: ♦ if an internal rule, guideline, protocol, or other similar criterion was


28

relied on in making the adverse determination, either the specific rule, guideline, protocol, or other similar criterion; or a statement that such rule, guideline, protocol, or other similar criterion was relied upon in making the adverse determination and that a copy of the rule, guideline, protocol, or other similar criterion will be provided to you free of charge upon request.

You can contact the Program Administrator for more information on program claims, including your right to appeal a denied claim. The authority granted to the Program Administrator and its representatives to determine all questions, interpretations and benefit determinations under the program, including claims and appeals shall be exercised as they deem appropriate in their sole discretion. Benefits under this program will be paid or provided to you or your beneficiaries only if the Program Administrator or its representative decides in its discretion that you are entitled to them. All such benefit determinations shall be final and binding on all persons. The Program Administrator and its representatives will make decisions under these ERISA Claims Procedures solely upon the basis of the program’s administrative record regarding your claim or appeal. This record may include information obtained from an employer, from persons providing services to the program, the trustee, NEBA, or the Program Administrator’s own records. The record may include any other information the Program Administrator or its representatives deem reliable. It is essential that if you have information or opinions regarding the program or your benefits that you believe may be relevant to these decisions, you or your representative should supply that information to the Program Administrator or its representatives in a timely fashion so it may be considered during the deliberations concerning your claim or appeal. If you fail to do so, you will ordinarily be prevented from subsequently offering such information in asserting your ERISA rights in court. Moreover, you must first utilize all of the ERISA Claim Procedures, including your claim and your appeal rights before asserting claims in court. Specifically you may expect that courts may dismiss a claim you assert before you have first exhausted your ERISA Claims Procedure claim and appeal rights described above. Further, you may be barred from asserting your ERISA rights in court if you do not do so in a timely fashion under these procedures. If you fully utilized these procedures, but remain dissatisfied with the outcome of your appeal, you may challenge that decision in an ERISA Section 502(a) benefit claim. Under the program a one-year limitations period will apply. This means you must commence any ERISA Section 502(a) action no later than one year after the date you or your representative are first informed of the final decision on your final ERISA claims procedure appeal described above.

OTHER IMPORTANT INFORMATION

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Program Administrator

The Program Administrator has sole discretionary authority to: ♦ oversee the administration and management of the program; ♦ make rules governing the operation and administration of the

program, including but not limited to rules concerning participant investment elections and directions;

♦ interpret the program; ♦ determine eligibility for, and amount of, benefits. The Administrator’s decisions are final and binding.

Administrative Expenses

The cost of administering the program may be paid by the program trust, which holds the participant accounts, or by the employer.

Agent for Service of Legal Process

Legal process may be served on the Program Administrator and/or the Program Trustee at the addresses shown below.

Assignment of Benefits

For the protection of your interests and those of your dependents, your benefits under the program cannot be assigned and are not subject to garnishment or attachment, except under limited circumstances. For example, some or all of your benefits may be assigned to a former spouse under a Qualified Domestic Relations Order (QDRO). A QDRO is an order issued by a court, usually in connection with divorce or legal separation. You should contact Fidelity or the Program Administrator if you would like to receive a copy, at no charge, of the program’s QDRO procedures or you have a question concerning the procedures.

Employer As used in this Summary Program Description, the term “employer”

means Blue Cross Blue Shield of Arizona, and any of its subsidiaries or affiliates that have adopted this program for their employees.

Continuance of the Program

The employer reserves the right to change, amend or terminate the program at any time. The Administrator may also amend the program at any time to comply with changes in the law affecting the program. In the event that the employer fully or partially terminates the program, you will become 100% vested in the value of all of your program accounts if you are affected by the termination. This program is not the type of program that is insured by the Pension Benefit Guaranty Corporation (PBGC), and is therefore not covered by its program termination insurance provisions.


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Employment not Guaranteed

Your participation in this program or any other employer-sponsored benefit program does not mean that your employment with the employer is guaranteed for any length of time.

Employer Identification Number

86-0004538

Program Number

002

Maximum Benefits

Federal regulations require that employer-sponsored savings programs meet certain non-discrimination tests and other qualification rules to ensure that highly compensated employees do not receive a disproportionate share of benefits. You can also contact the Program Administrator for more information concerning the maximum benefit limitations for the program.

Participating Companies

A complete list of companies that have adopted the program is available and may be obtained by making a written request to the Program Administrator.

Program Administrator

National Employee Benefits Committee Blue Cross and Blue Shield Association 225 North Michigan Avenue Chicago, Illinois 60601 (312) 297-5722

Program Sponsor

Blue Cross Blue Shield of Arizona 2444 West Las Palmaritas Drive Phoenix, Arizona 85201 (602) 864-4100

Program Documents

This Summary Program Description (SPD) is only a summary of the official program documents. You should refer to the official program documents maintained by the Program Administrator for more information about the program. In the event of any conflict between the information summarized in an online SPD or written SPD and the official program documents, the program documents will always govern.

Program Financing

Your contributions and the employer’s contributions to the program are deposited and held in an independent trust fund. The program’s trust fund is administered by a Program Trustee in accordance with formal trust agreements among the Administrator, employer and the Trustee. The trust fund is maintained for the exclusive benefit of program participants and their beneficiaries. The employer is prevented by law from using this money for any other


31

reason, except to pay the reasonable costs of administering the program.

Program Name The official name of the program is: Blue Cross Blue Shield Arizona

401(k) Savings Plan (referred to in this Summary Program Description as the “program”).

Program Trustee

The Trustee for the program is: Fidelity Management Trust Company 82 Devonshire Street Boston, Massachusetts 02109

Program Year The Program Year begins on January 1 and ends on December 31. Special Rules for “Top Heavy” Programs

The Internal Revenue Service has issued special rules establishing minimum vesting and benefit formulas for programs that become “top heavy.” In general, the program would become top heavy if the value of the benefits earned by certain highly compensated employees under the program (or any other pension, profit sharing or stock bonus program in combination with this program) is more than 60% of the value of benefits earned by all covered employees. It is unlikely that the program will ever become top heavy. If this should occur, however, you will receive complete information on any required vesting and benefit formula adjustments.

Type of Administration

Contract administration

Type of Program

This program is considered by law to be a profit sharing program with cash or deferred features. Other terms to describe this program include defined contribution program and 401(k) program.

Participant Control of Investments (ERISA §404(c) Program)

As a participant or beneficiary in the program, you have the right to direct the investment of your account under the program. The program is a “participant-directed” program described in Section 404(c) of the Employee Retirement Income Security Act of 1974 ("ERISA"). Under an ERISA Section 404(c) program, the fiduciaries of the program may be relieved of liability for the losses that are the direct and necessary result of your investment instructions. As a participant, you control the investment of your program account, and are responsible for the investment results and investment performance of your program account. You may direct the investment of your account in any investment option available under the program. The section entitled “Investing Your Account” describes the investment alternatives available under the program. Specific fund information is available by contacting Fidelity Investments. You are encouraged to review all of the investment materials provided by the trustee so that you can make an


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informed decision about the investment of your account. Fidelity Management & Research Company is the program’s investment manager for the Fidelity funds and the non-Fidelity funds are managed by other fund companies. Upon enrollment in the program, you need to select the investment alternatives in which you want your account invested. Your account will remain invested in the alternatives you select upon enrollment in the program until you provide instructions to change those investments. If you fail to provide investment instructions, your account will be invested in one of the Fidelity Freedom K® Funds, based on your age. The section entitled “Investing Your Account” describes the procedures for changing this default investment or your investment instructions. Any transaction fees, investment management fees or other costs incurred in connection with the purchase or sale of an investment fund will be assessed as described in the prospectus for each investment alternative. If you invest in any securities that are subject to the Securities Act of 1933, any prospectus that is received on behalf of your account will be forwarded to you immediately prior to or following your initial investment. Subsequent to your initial investment in an investment alternative, you will be furnished with any program provisions or materials provided to the program relating to the exercise of voting, tender or similar rights to the extent such rights are passed through to participants. In addition, the following information will be provided to you upon request: ♦ copies of any prospectuses, financial statements and reports and

other materials relating to investment alternatives available under the program that are furnished to the program;

♦ a description of the annual operating expenses (for example, investment management fees) of each designated investment alternative, and the aggregate amount of such expenses expressed as a percentage of average net assets of that investment alternative;

♦ a list of assets held by an investment alternative and the value of each asset individually;

♦ with respect to each individual asset which is a fixed rate investment contract, the name of the issuer of the contract, the term of the contract, and the rate of return on the contract;

♦ information concerning the value of shares or units in investment alternatives, and the past and current investment performance of the alternatives determined net of expenses on a reasonable and consistent basis; and

♦ information concerning the value of shares or units in investment


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alternatives held in your account. The Program Administrator has designated Fidelity Investments to provide this information. They will respond to your requests based on the latest information available to the program. To obtain any of the information described above, please call Fidelity at 1-877-980- BLUE (2583) or by mail at:

For regular mail:

For express mail:

Fidelity Investments Attn: FITSCo P. O. Box 770002 Cincinnati, OH 45277-0090

Fidelity Investments Institutional Operations Company, Inc. Attn: FITSCo 100 Crosby Parkway, KC1E Covington, KY 41015

Please remember that directing the investment of your account is both your right and your responsibility. Neither the Program Administrator nor the Trustee can provide you with individual investment advice, nor is the performance of any of the investment funds guaranteed. The past performance of any investment fund does not guarantee future results. Before selecting your investments, please consult with your personal financial advisor to determine which investment funds best suit your particular financial needs.

YOUR RIGHTS AS A PROGRAM PARTICIPANT

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Overview As a participant in the program, you are entitled to certain rights and

protections under the Employee Retirement Income Security Act of 1974 (ERISA). This section of your Summary Program Description summarizes the rights you have as a program participant – rights that ERISA guarantees. We hope that this statement of your rights under ERISA is clear and that it is helpful to you. You may examine, without charge, at the Program Administrator’s office and at other specified locations, such as work sites and union halls, all documents governing the program, including insurance contracts and collective bargaining agreements, and a copy of the latest annual report (Form 5500 Series) filed by the Program Administrator with the U.S. Department of Labor and available at the Public Disclosure Room of the Employee Benefits Security Administration. You may obtain, upon written request to the Program Administrator, copies of documents governing the operation of the program, including insurance contracts and collective bargaining agreements, and copies of the latest annual report (Form 5500 Series) and updated summary program description. The Program Administrator may make a reasonable charge for the copies.

Summary Annual Report

You will receive a summary of the program’s annual financial report. The Program Administrator is required by law to furnish each participant with a copy of this summary annual report.

Benefit Statement

You have a right to obtain a statement telling you your account balance and whether you would be vested if you stop working now. This statement must be requested in writing and is not required to be given more than once every twelve (12) months. The program must provide the statement free of charge.

Program Fiduciaries

In addition to creating rights for program participants, ERISA imposes duties upon the people who are responsible for the operation of the employee benefit program. The people who operate your program, called ‘‘fiduciaries’’ of the program, have a duty to do so prudently and in the interest of you and other program participants and beneficiaries. No one, including your employer, your union, or any other person, may fire you or otherwise discriminate against you in any way to prevent you from obtaining a program benefit or exercising your rights under ERISA.

Benefit Claims and Legal Actions

If your claim for a program benefit is denied or ignored, in whole or in part, you have a right to know why this was done, to obtain copies of documents relating to the decision without charge, and to appeal any denial, all within certain time schedules. Under ERISA, there are steps you can take to enforce the above rights. For instance, if you request a copy of program documents or the

YOUR RIGHTS AS A PROGRAM PARTICIPANT

35

latest annual report from the program and do not receive them within 30 days, you may file suit in a Federal court. In such a case, the court may require the Program Administrator to provide the materials and pay you up to $110 a day until you receive the materials, unless the materials were not sent because of reasons beyond the control of the Program Administrator. If you have a claim for benefits which is denied or ignored, in whole or in part, you may file suit in a state or Federal court. In addition, if you disagree with the program’s decision or lack thereof concerning the qualified status of a domestic relations order, you may file suit in Federal court. If it should happen that program fiduciaries misuse the program’s money, or if you are discriminated against for asserting your rights, you may seek assistance from the U.S. Department of Labor, or you may file suit in a Federal court. The court will decide who should pay court costs and legal fees. If you are successful, the court may order the person you have sued to pay these costs and fees. If you lose, the court may order you to pay these costs and fees, for example, if it finds your claim is frivolous.

Questions If you have any questions about your program, you should contact the

Program Administrator. If you have any questions about this statement or about your rights under ERISA, or if you need assistance in obtaining documents from the Program Administrator, you should contact the nearest office of the Employee Benefits Security Administration, U.S. Department of Labor, listed in your telephone directory or the Division of Technical Assistance and Inquiries, Employee Benefits Security Administration, U.S. Department of Labor, 200 Constitution Avenue N.W., Washington, D.C. 20210. You may also obtain certain publications about your rights and responsibilities under ERISA by calling the publications hotline of the Employee Benefits Security Administration.

401k.030_7.2012