**EXHIBIT10.3**

 

**CONFIDENTIALTREATMENT REQUESTED BY GEVITY HR, INC.**

 

**HEALTHCARE BENEFITS CONTRACT**

 

**BLUECROSS AND BLUE SHIELD OF FLORIDA, INC.**

**HEALTHOPTIONS, INC.**

 

**and**

 

**Gevity HR, Inc.**

 

**EffectiveDate: October 1, 2008**

 

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**CONFIDENTIALTREATMENT REQUESTED BY GEVITY HR, INC.**

 

**BLUECROSS AND BLUE SHIELD OF FLORIDA, INC.**

**HEALTHOPTIONS, INC.**

**HEALTHCARE BENEFITS CONTRACT**

 

**TABLE OFCONTENTS**

 
| **SECTION** | **I**    | **TERMS OF THE AGREEMENT**                                     |
|-------------|----------|----------------------------------------------------------------|
|        |     |                                                           |
| **SECTION** | **II**   | **RATE SHEET**                                                 |
|        |     |                                                           |
| **SECTION** | **III**  | **ADMINISTRATIVE EXPENSE AND  ANNUAL EXCESS LIABILITY CHARGE** |
|        |     |                                                           |
| **SECTION** | **IV**   | **CLAIM LIABILITY CHARGE**                                     |
|        |     |                                                           |
| **SECTION** | **V**    | **ANNUAL EXCESS LIABILITY  COVERAGE**                          |
|        |     |                                                           |
| **SECTION** | **VI**   | **TERMINATION PROVISIONS**                                     |
|        |     |                                                           |
| **SECTION** | **VII**  | **MODIFICATION OF RATES**                                      |
|        |     |                                                           |
| **SECTION** | **VIII** | **PRODUCTS**                                                   |
|        |     |                                                           |
| **SECTION** | **IX**   | **THE OFFERING OF BCBSF/HOI  PRODUCTS**                        |
|        |     |                                                           |
| **SECTION** | **X**    | **ENROLLMENT**                                                 |
|        |     |                                                           |
| **SECTION** | **XI**   | **ADMINISTRATIVE POLICIES**                                    |
|        |     |                                                           |
| **SECTION** | **XII**  | **GROUP REPORTING REQUIREMENTS**                               |
|        |     |                                                           |
| **SECTION** | **XIII** | **BCBSF/HOI REPORTING  REQUIREMENTS**                          |
|        |     |                                                           |
| **SECTION** | **XIV**  | **RENEWAL**                                                    |
|        |     |                                                           |
| **SECTION** | **XV**   | **COLLATERAL**                                                 |
|        |     |                                                           |
| **SECTION** | **XVI**  | **PERFORMANCE STANDARDS AND  PERFORMANCE INCENTIVE PLAN**      |
|        |     |                                                           |
| **SECTION** | **XVII** | **GENERAL**                                                    |

 

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**CONFIDENTIALTREATMENT REQUESTED BY GEVITY HR, INC.**

 

**AGREEMENTTO PROVIDE**

### **COMPREHENSIVE HEALTH CARE BENEFITS**

 

Thisis an Agreement (hereinafter “Agreement”) between the Blue Cross and BlueShield of Florida Inc.   (hereinafterreferred to as “BCBSF”) and its subsidiary HEALTH OPTIONS, INC., (hereinafterreferred to as “HOI”) located at 4800 Deerwood Campus Parkway, JacksonvilleFlorida 32246, hereinafter jointly referred to as “BCBSF/HOI”, and Gevity HR, Inc.(together with its subsidiaries hereinafter referred to as “Employer/PlanSponsor”) and the Gevity Health &Welfare Plan (the “Plan” and, together with the Employer/Plan Sponsor,hereinafter jointly referred to as “the Group”) located at9000 Town CenterParkway, Lakewood Ranch, Florida 34202.

 

WHEREAS,the Group is a professional employer organization and requests BCBSF/HOI toprovide health insurance and health maintenance organization products(hereinafter referred to as “the Product Offering”), to employees of itsclients  who have contracted with theEmployer/Plan Sponsor for provision of such products to its employees whoare  co-employed by the Employer/PlanSponsor; and

 

WHEREAS,BCBSF agrees to offer health insurance products to employees of  Employer/Plan Sponsor’s clients who havecontracted with the Employer/Plan Sponsor for provision of such products to itsemployees who are  co-employed by theEmployer/Plan Sponsor; and

 

WHEREAS, HOI agrees tooffer health maintenance organization products, and

 

WHEREAS, each of theparties to this Agreement seeks to set forth, in writing, the terms andconditions of this Agreement;

 

THEREFORE, the partiesagree as follows:

 

**I.****              Terms of theAgreement**

 

ThisAgreement between the parties is for the period beginning October 1, 2008(the effective date) and shall end on September 30, 2009 (the terminationdate).

 

**II.****            Rate Sheet**

 

The rates, charges, andmaximum amounts applicable to this Agreement are set forth in Exhibit A titled“Minimum Premium Accounting Agreement Rate Sheet,” which may be modified fromtime to time with the mutual consent of the parties and which is herebyincorporated by reference into and made a part of this Agreement.

 

**III.****           Administrative Expenseand Annual Excess Liability Charge**

** **

Approximately 15 daysbefore the first date of each month, BCBSF/HOI will submit to the Group aninvoice for the amount of estimated administrative expenses (Minimum PremiumCharge and Annual Excess Liability Charge) to be paid during the forthcomingmonth.  Such charges shall be equal tothe product of the Minimum Premium Rate and the Annual Excess liability rate,as set forth in Exhibit A hereto, then in effect multiplied by (times) thenumber of Insured’s as determined by BCBSF/HOI (on the renewal exhibit).   The Group agrees to pay the full amount ofthe invoice each month by the later of (i) the end of business on thefirst calendar day of the month the payment is due to cover (if the first ofthe month falls on a non-working day, payment will be made by end of businesson the first working day 

 

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**CONFIDENTIAL TREATMENT REQUESTEDBY GEVITY HR, INC.**

 

thereafter) or  (ii) 4 business days after the date theinvoice for the amount of estimated administrative expenses is made availableto the Group.  If the payment is notreceived by BCBSF/HOI by the later of the end of business on the first calendar day of the month (if the firstof the month falls on a non-working day and payment is not made by end ofbusiness on the first working day thereafter) or (ii) 4 business daysafter the date the invoice  for theamount of estimated administrative expenses is made available to the Group, thepayment will be considered past due and subject to a Late Payment Charge inaccordance with this Agreement and Exhibit A.  If after 1 day the invoice amount is notpaid, Corporate Receivables will notify the marketing representative.  The marketing representative will place acall to the group.  If the invoice amountis not paid by the 10th day the marketing representative will contact thegroup and place the group in suspense. If on the 15th day, the invoice is not paid the marketingrepresentative will generate and send to the Group by certified mail, acancellation notification.  BCBSF/HOI hasthe right, but not the duty; to notify Insured’s of the Group’s failure to makesuch payment and BCBSF/HOI’s intention to terminate this Agreement.

 

Within 120 days followingthe close of the contract period BCBSF will prepare an annual administrativeexpense and annual excess liability coverage expense settlement.  This settlement will compare actual andcontract period estimated and paid administrative expenses and excess liabilitycoverage expenses for the same time period. The product of monthly enrollment as adjusted for retroactiveenrollments and terminations during the contract period and the minimum premiumrate plus the annual excess liability coverage expense rate will determine actualexpenses in effect during the contract period. If actual expenses are greater than the previously estimated amount, theGroup agrees to pay the full amount of the difference within ten (10) calendardays after receipt of the invoice.  Ifthe invoice is not paid within 10 days the payment will be considered past dueand subject to a Late Payment Charge in accordance with this Agreement and Exhibit A.  If estimated expenses are greater thanactual, BCBSF will pay the Group the difference at the same time the annualadministrative expense settlement is presented.

 

**IV.****          Claim Liability Charge**

 

A.          1.              Prospective Claim Payment

 

Approximately 15days before the first date of each month, BCBSF/HOI will submit to the Group aninvoice for the amount of the expected claims (“Claim Liability Charge(s)”) to be paid during the forthcoming monthsee (Exhibit A).  This claimliability charge will be adjusted on a quarterly basis through the term of theAgreement and will be based on an average of monthly paid claims as determinedby BCBSF/HOI for the identified three month periods as follows:

 
| **Months  Used in Calculating Prospective Claim Payment** | ** ** | **Prospective Claim Payment Effective** |
|-----------------------------------------------------------|------------|-----------------------------------------|
| May, June, July                                           |       | October,  November, December            |
| August,  September, October                               |       | January, February,  March               |
| November,  December, January                              |       | April, May, June                        |
| February, March,  April                                   |       | July, August,  September                |

 

The claimliability charge will be invoiced each month. The Group agrees to pay the full amount of the invoice each month by thethe later of (i) the end of business on the first calendar day of themonth the payment is due to cover (if the first of the month falls on anon-working day, payment will be made by end of business on the first workingday thereafter) or (ii) 4 business days after the date the invoice for theamount of Claim Liability Charge(s) is made available to the Group.  If the payment is not received by BCBSF/HOIby the end of business on the first calendar day of the month (if the first ofthe month falls on a non-working day and payment is not made by end of businesson the first working day thereafter) or 4 business days after the date theinvoice for the 

 

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**CONFIDENTIAL TREATMENT REQUESTEDBY GEVITY HR, INC.**

 

amount of ClaimLiability Charge(s) is made available to the Group, the payment will beconsidered past due and subject to a Late Payment Charge in accordance withthis Agreement and Exhibit A.  Ifafter 1 day the invoice amount is not paid, Corporate Receivables will notifythe marketing representative.  Themarketing representative will place a call to the group.  If the invoice amount is not paid by the 10thday the marketing representative will contact the group and place the group insuspense.  If on the 15th day,the invoice is not paid the marketing representative will generate and send tothe Group by certified mail, a cancellation notification.  BCBSF/HOI has the right, but not the duty; tonotify Insured’s of the Group’s failure to make such payment and BCBSF/HOI’s intentionto terminate this Agreement.

 

2.     Actual Claim Settlement:

 

At the end of eachmonth, BCBSF/HOI will provide to the Group access to a detailed report in Exceläformat of the previous month’s claims and capitation payments (“Claim LiabilityCharge(s)”). In the event the actual claims are in excess of the estimatedamount received, BCBSF shall invoice the difference on the next prospectiveclaim payment invoice.  In the event theactual claims are less than the estimated claims, BCBSF/HOI shall offset thenext prospective claim payment invoice.

 

B.            1.              The Group will wire transfer the MinimumPremium charge, Annual Excess Liability charge, Prospective Claim Payment, andActual Claim settlement to BCBSF/HOI’s designated bank account as set forthbelow Paragraph C of this Section.

 

2.     If funds are not transferredin accordance with this section, the payment will be considered past due andwill be immediately subject to a Late Payment Charge in accordance with thisAgreement and Exhibit A. Additionally, if the Claim Liability Charge is not paid as set forth in Section IV.A. 2., BCBSF/HOI also has the right to terminate this Agreement as set forth inSection VI.   Accordingly, BCBSF/HOIhas the right, but not the duty, to notify Insureds of the Group’s failure tomake such payment and BCBSF/HOI’s intention to terminate this Agreement.

 

C.    The Group’s payment of theMinimum Premium charge, Administrative expense, Annual Excess Liability charge,Prospective Claim Payment and Actual Claim Settlement to BCBSF/HOI shall be viaa Federal Reserve Bank Transfer directed to [*]

 

**V.****           Annual Excess LiabilityCoverage**

 

A.    BCBSF/HOI agrees to provideAnnual Excess Liability Coverage, whereby the maximum annual liability for theGroup is defined as the average number of Insureds for the policy yearmultiplied by the Annual Individual Excess Liability Limit as set forth in Exhibit Awhich are based on the Group’s maximum annual liability being 115% of expectedclaims.  The average number of insuredsfor the policy year shall be the sum total of Insureds, as determined byBCBSF/HOI in accordance with the annual administrative expense and annualexcess liability coverage expense settlement in Section III, divided bytwelve.

 

B.    BCBSF/HOI will be responsiblefor any and all Claim Liability Charges incurred by Insureds in excess of theGroup’s maximum annual liability, provided that the claim is covered under theterms of the Benefit Contracts and is actually incurred during the term of thisAgreement.  Claims incurred by any memberduring a period of time when they were covered and whose coverage was later 

 

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*** THIS CONFIDENTIALINFORMATION HAS BEEN OMITTED AND FILED SEPARATELY WITH THE SECURITIES ANDEXCHANGE COMMISSION.**

 

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**CONFIDENTIAL TREATMENT REQUESTEDBY GEVITY HR, INC.**

 

retroactivelytermed will not be covered under the annual excess liability coverage.

 

C.    The Annual Excess Liabilitycoverage may be changed for each policy year based on BCBSF/HOI renewalunderwriting analysis and mutual consent of BCBSF/HOI and the Group.

 

 

# **D.**    SettlementProcess

 

1.     Settlement will be performedwithin 120 days after the end of each policy year.  This settlement will include all claims andcapitation payments liability incurred from October 1, of each yearthrough September 30, of each year (“Actual Incurred Claims”) and paidprior to January 1 following that period.

 

2.     If Actual Incurred Claimsexceed the Group’s maximum annual liability for the period as

Calculated in Section V.A. of this Agreement, BCBSF/HOI will pay a settlement amount equal to suchexcess to the Group.

 

3.     If Actual Incurred Claims areless than or equal to the Group’s maximum annual liability for the period ascalculated in Section V. A. of this Agreement, there will be no settlementpayment due.

 

# **E.     Example ofCalculation of the Group’s Maximum Annual Liability**

 
| **Plan Type** | ** ** | **Avg No. of  Insureds** | ** ** | **Annual Individual  Excess Liability Limit** | ** ** | **Aggregate Liability  per Plan Type** | ** ** | **Group’s  Maximum  Annual Liability** | ** ** |
|--------------------|------------|------------------------------------|------------|--------------------------------------------------------------|------------|-------------------------------------------------------|------------|--------------------------------------------------|------------|
| HMO                |       | [*]                                |       | [*]                                                          |       | [*]                                                   |       |                                             |       |
| PPO                |       | [*]                                |       | [*]                                                          |       | [*]                                                   |       |                                             |       |
| Blue Options       |       | [*]                                |       | [*]                                                          |       | [*]                                                   |       |                                             |       |
|               |       | [*]                                |       |                                                         |       | [*]                                                   |       | [*]                                              |       |

 

Based on the calculationsabove, if Actual Incurred Claims exceed [*], BCBSF/HOI will pay a settlementamount equal to such excess to the Group. If Actual Incurred Claims are less than or equal to [*] no settlementpayment shall be due.

 

## **VI.**          TerminationProvisions

 

A.    On any Minimum Premium Chargedue date, the Plan may terminate this Agreement if one or more of the followingconditions exists, but written notice of its intent to do so must be given tothe Group at least ninety  (90) days inadvance.

 

1.     Exceptfor the public or private sale of common or preferred stock or theincorporation of the Group’s partnerships which does not result in a materialchange in the ownership or legal structure of the Group, there is a materialchange in the ownership or legal structure of the Group and the Group has notsought and received approval from the Plan for such a change, such approval notto be unreasonably withheld.

 

2.     Exceptfor the public or private sale of common or preferred stock or theincorporation of the

 

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*** THIS CONFIDENTIALINFORMATION HAS BEEN OMITTED AND FILED SEPARATELY WITH THE SECURITIES ANDEXCHANGE COMMISSION.**

 

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**CONFIDENTIAL TREATMENT REQUESTEDBY GEVITY HR, INC.**

 

Group’s partnershipswhich does not result in a material change in the ownership or legal structureof the Group, the Group merges with or is acquired by another legal entity andthe Group has not sought and received approval from the Plan for such a change,such approval not to be unreasonably withheld.

 

3. TheGroup acquires another legal entity with more than [*] client employees in thestate of Florida that are not then covered by a BCBSF/HOI plan, and the Grouphas not sought and received approval from BCBSF/HOI to merge such acquiredemployees into the Plan, such approval not to be unreasonably withheld. If,however, BCBSF/HOI does not approve the merger of the acquired employees intoBCBSF/HOI, the acquired legal entity would be in breach of a contractualcommitment if it were to merge the acquired employees into a BCBSF/HOI plan.The Group will be allowed to continue with the current carrier or provide forsuch employees’ healthcare coverage under an alternative carrier plan asselected by the Group.  This decisionwill be reviewed annually with BCBSF/HOI for continuation, as BCBSF/HOI may beinterested in providing the coverage to this population.

 

4. Bankruptcy by theGroup.

 

B.    This Agreement may beterminated on any Anniversary Date by either party by giving the other party atleast one hundred and eighty (180) calendar days prior written notice of suchtermination.

 

C.    If the Group fails to pay toBCBSF/HOI the Administrative Expense, Annual Excess Liability Charge or theClaim Liability Charge in accordance with the provisions of Section IIIand Section IV respectively, of this Agreement, BCBSF/HOI may terminatethis Agreement at any time with written notice.

 

D.    Upon termination of thisAgreement by either party for any reason, including termination for non-paymentof any charges/fees due under this Agreement, BCBSF/HOI shall continue toinvoice the Group and the Group shall continue to pay to BCBSF/HOI the ClaimLiability Charge, subject to the Annual Excess Liability Coverage limitation,in accordance with the provisions of Sections IV and V of this Agreement, for aperiod of eighteen (18) months immediately following the date this Agreementterminated.

 

##### **VII.**        Modificationof Rates

 

Charges/maximum amountsfor the term of this Agreement will remain in effect, as set forth in Exhibit A,provided there is no material change to the Product Offering(s), or Group’s newor renewal underwriting or rating process or factors as determined byBCBSF/HOI;  In the event there is achange in the total enrollment of [*] or greater during any [*] period, or amaterial change in the Product Offering(s), BCBSF/HOI reserves the right to review andmodify the rates and factors in exhibit A, either up or down, to compensate forchanges in the risk factors.  Any ratechanges shall be mutually agreed to by the Group and BCBSF/HOI.  Notwithstanding the foregoing, upon theeffective date of termination of this Agreement all Minimum Premium Charges andAnnual Excess Liability Charges shall no longer be due.

 

In the event of a ratemodification, the modified rates will be set forth and presented to the Groupon a revised Exhibit A within 45 days. The Group and BCBSF/HOI shallcooperate with each other in the 

 

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* **THIS CONFIDENTIAL INFORMATION HAS BEEN OMITTED AND FILED SEPARATELYWITH THE SECURITIES AND EXCHANGE COMMISSION.**

 

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**CONFIDENTIAL TREATMENT REQUESTEDBY GEVITY HR, INC.**

 

development and executionof rate modification communications and effective date for the required ratechange in order to minimize disruption and attrition of the Group’sclients.  All other provisions of thisAgreement shall remain in effect without modification.

 

##### **VIII.**       Products

 

A.    BCBSF/HOI will offer the products set forth in Exhibit B titled “MinimumPremium Accounting Agreement Product Sheet” to the Group.   Exhibit B is hereby incorporated byreference into and made a part of this Agreement.  Exhibit B may be modified from time totime with the mutual consent of the parties.

 

B.    It is specificallyacknowledged that the Benefits Contracts are insured health benefit products(i.e., not self-insured or administrative services only) and consequentially:

 

1.     Are subject to the laws ofthe State of Florida that regulate insurance.

 

2.     Given that each is aninsurance product the benefit of rebates, including but not limited to healthcare provider rebates and pharmacy rebates, are exclusively taken into accountin the calculation of the amount of the applicable Minimum Premium Charge.  The Group is therefore not entitled to anycredit for any such rebates beyond such inclusion in the pricing of the BenefitContracts.

 

3.     The above referenced productswill be offered to employees of clients of the Group working in Florida. Anyemployees of clients of the Group working outside the State of Florida may beinsured through an alternate carrier. Any employees outside the State ofFlorida that are employed by a client headquartered in Florida may be insuredthrough an alternate carrier or may be covered through the BlueCard arrangementprovided no more than [*] of the client’s enrollment is outside the State ofFlorida or BCBSF/HOI agrees to provide coverage to such client.   The Benefit Contracts may be amended, changedor replaced from time to time with the mutual consent of the parties, and arehereby incorporated by reference into and made a part of this Agreement.

 

C.    BCBSF/HOI and the Group agreethat during the term of this Agreement the Group will offer BCBSF/HOI healthproducts [*] to employees of its clients working in Florida whose clientemployers contract with the Employer/Plan Sponsor for services includingprovision of health insurance through the Plan on or after October 1,2008.  No other health plans will beoffered during the contract period, unless mutually agreed to by both parties.If, however, during the term of this Agreement BCBSF/HOI’s Provider Networksare significantly diminished in a particular service area so as to no longerprovide a competitive commercially desirable healthcare option and BCBSF/HOIcannot provide alternative providers in that particular area or cannot arrangefor quality healthcare provider services, the Group may elect to cover thosespecifically affected employees under an alternative carrier plan with theconsent of BCBSF/HOI which will not be unreasonably withheld.

 

**IX.****           The Offering ofBCBSF/HOI Products**

 

A.    The Group will make theProduct Offerings available to its client’s employees (i.e. Employer/PlanSponsor’s co-employees) when the applicable client has contracted with theEmployer/Plan Sponsor for services including provision of health insurancethrough the Plan in the following manner:

 

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1.     The Group will require everyindividual client group to offer to its employees working in the State of Floridathe product offerings as defined in Section VIII; provided, however, aclient group may enter into a No Benefits Contract with the Group.

 

2.     The Group will conduct at oneannual enrollment per year or more with the mutual consent of BCBSF/HOI*.*The annual enrollment will be conducted for a reasonableperiod of time and will commence approximately 60-90 days before the annualcoverage period begins.

 

3.     BCBSF/HOI’s marketingmaterials including , product designs, network information, and other pertinentinformation will be available to the Group to make the selection of the ProductOfferings available to its employees. BCBSF/HOI, in consultation with the Group, shall determine theappropriate quantity of marketing materials to make available to the Group.

 

4.     The Group will ensure that allof its new clients and make best efforts to ensure that all of its existingclients (who contract with the Employer/Plan Sponsor for services includingprovision of health insurance through the Plan on or after October 1,2008)  meet [*] participation of eligibleemployees after waivers for other coverage. In addition, the group will ensure that all new clients and make bestefforts to ensure that all of its existing clients contribute at least [*] ofthe lowest cost plan offered.  The Groupwill monitor compliance with these requirements on a quarterly basis and, uponrequest by BCBSF/HOI, will provide copies of the monitoring reports toBCBSF/HOI.

 

**X.**            Enrollment

 

A.    As of the first day of theterm of this Agreement, the Group will have delivered to BCBSF/HOI enrollmentinformation regarding eligible and properly enrolled members, as defined by theBenefit Contracts.  BCBSF/HOI shall beentitled to rely on the information furnished to it by the Group, and the Groupshall hold BCBSF/HOI harmless for any inaccuracy or failure to provide suchinformation in a timely manner.  TheGroup shall deliver to BCBSF/HOI all employee and dependent eligibility statuschanges on a weekly basis, or more frequently as mutually agreed by theparties.

 

The Group shall rely onthe Plan rules to determine timely enrollment for newly eligibleemployees. However, occasionally, due to Group error, an enrollment may not bereported to BCBSF/HOI timely.   BCBSF/HOIwill accept these retroactive additions as determined by the Group.

 

B.    The Group shall notifyBCBSF/HOI of any termination of coverage of an individual within [*] days ofthe termination date, whenever possible, however, BCBSF/HOI will acceptretroactive terminations as determined by the Group. The Group shall be liablefor all claims/capitation paid on enrollment(s) that have retroactivetermination dates.  For retroactiveterminations within [*] days BCBSF/HOI will make every reasonable attempt torecoup claims paid, however, no efforts will be made to recover Pharmacy claimsand claims less than [*] and in those cases where recoveries cannot beobtained, the Group retains liability for those costs.

 

C.    The Group shall notifyBCBSF/HOI of any retroactive addition or retroactive termination of 

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*** THIS CONFIDENTIALINFORMATION HAS BEEN OMITTED AND FILED SEPARATELY WITH THE SECURITIES ANDEXCHANGE COMMISSION.**

 

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coverageof an individual within [*] days of the effective date of such addition ortermination.

 

**XI.****           Administrative Policies**

 

A.            Enrollment Methodology

 

The Group’s humanresource staff will enroll each new client group’s employees via the Group’sBenefit Election Form or other acceptable method (IVR or web application).On a [*] basis, the Group will present to BCBSF an automated enrollmentfile.  Enrollments will be accepted assubmitted from the Group. BCBSF/HOI’s assigned Personal Service Representative(PSR) will review discrepancy reports produced from the automated enrollmentfile and work reports directly with the Group’s assigned staff member toresolve all enrollment(s) on a timely basis.

 

B.            Identification Cards

Identification cards will be issued by BCBSF/HOI to each member enrolled within[*][working days of receipt of the completed enrollment information.

 

C.            Terminations

Terminations are removed on the date of termination.  BCBSF/HOI will generate Certificates ofCreditable Coverage (COC) and submit directly to each member at the address onfile for all terminated contracts.

 

D.            HOI Primary CarePhysician Assignment

 

If an HOI member does notchoose a Primary Care Physician (PCP), BCBSF/HOI will assign a PCP based on themember’s home address.  A letter will begenerated advising the member that a PCP was assigned and offering them theoption to change if they so desire.  Themember may call the customer service number on their identification card toinitiate the change.  When a memberchanges their PCP, the effective date of the change is determined by the timeof the month the change is requested.  Ifa member requests a change between the 1st and 15th ofthe month, the member is eligible to utilize the new PCP the 1st ofthe following month.  Changes requestedafter the 15th of the month, will be effective the 1st ofthe second month following the month the member made the request (Example:  PCP change requested January 20th.  PCP would be effective March 1st.)

 

E.             Eligibility

BCBSF/HOI and the Group have agreed to accept enrollment as determined by theGroup in accordance with the Plan. An eligible employee and/or dependent mustenroll within the initial eligibility period as determined in accordance withthe Plan or wait until the next Annual Enrollment Period unless a qualifiedfamily or employment event occurs under which a member has an additional periodto enroll under a Special Enrollment Period if set forth in the Plan.

 

1.             The Group’sBenefit Election Form

 

Each employee applyingfor coverage must complete a Benefit Election Form or be enrolled throughthe Gevity web application.

 

2.             Status Change Form

 

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Any membership change,i.e., marriage, divorce, addition of newborns, etc., will require completion ofa Status Change form (paper or through the Gevity web application).  The Group will retain adequate documentationof status change requests for a reasonable period of time in the eventBCBSF/HOI requires copies to respond to an enrollment inquiry. All qualifyingevents have a notification timeframe mandated by the Plan.  To the extent allowed by State law, newbornswill be covered back to the date of birth.

 

If changes are notsubmitted within the specified time frames, the member must wait until the nextannual enrollment to make changes except under HIPAA requirements for specialenrollment.

 

F.           COBRA

 

The Group has chosen toadminister COBRA on an internal basis. COBRA enrollment will be provided to BCBSF/HOI on a weekly basisdirectly to the assigned PSR of the Membership/Billing Area.  Unless otherwise stated, the Group will beresponsible for all COBRA administration including notificationrequirements.  All previously statedenrollment guidelines will apply.

 

G.          Overage Dependent Status Verification

 

BCBSF/HOI is responsible forverifying overage dependent children’s eligibility status on at least an annualbasis.  Any overage dependent who is nolonger eligible will be reported to the Group so coverage can be terminated.

 

H.          Disabled Dependent Verification

 

BCBSF/HOI is responsible forverifying the disability status of overage dependent children on at least anannual basis.  Any overage dependentchild who is no longer disabled will be reported to the Group so coverage canbe terminated.

 

I.            Creditable Coverage

 

The Group will report toBCBSF/HOI the amount of creditable time to be applied to satisfy thepre-existing condition exclusion limitation for those members providing thatinformation at time of eligibility.  Ifthis information is not supplied, BCBSF/HOI will deny the impacted claim.  The denial advises the member that if theyhad previous coverage a credit may be applicable and to please contact customerservice.  Once information is receivedand reviewed, the claim will be reprocessed and pre-existing conditionlimitation updated in their system.  The Group will not track creditable time intheir system.

 

## **XII.**         GroupReporting Requirements

 

A.            Uponrequest, the Group will provide BCBSF/HOI with the necessary reports to ensurecompliance with participation and contribution goals as described in Section IX,4. above.

 

B.            Uponrequest, the Group will provide to BCBSF/HOI the industry classification codes(SIC) of the enrolled client groups.

 

C.            Uponrequest, the Group will provide to BCBSF/HOI enrollment data by county, orother such 

 

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informationmaintained by the Group that may be required to adequately evaluate risk.

 

D.            Uponrequest, the Group will provide to BCBSF/HOI, business practice informationrelated to the following:

 

·      monitoring of participationlevels and contribution levels

·      financial statements

·      benefits administrationprocess including enrollment, premium remittance and

·      reconciliation and newclient/employee orientation

 

**XIII.****                        BCBSF/HOIReporting Requirements**

 

BCBSF/HOIwill provide the Group access to Monthly Paid Claims Reports, QuarterlyIncurred But Not Reported (IBNR) Reports, Annual Account Specific Reporting,and Ad Hoc reports as requested by the Group and mutually agreed upon by bothparties, to the extent permitted under the federal Privacy Rules of theHealth Insurance Portability and Accountability Act – AdministrationSimplification (HIPAA-AS) of 1996.  Inthe event the Group executes and provides to BCBSF/HOI a Group Health PlanRepresentation of Compliance Letter, such document shall be incorporated intoand made a part of this Agreement.

 

**XIV.****                       Renewal**

 

ThisAgreement shall automatically renew/extend for additional one year period(s) oneach Anniversary Date (October 1st) at the rates then in effect (the renewal rates), unless either partynotifies the other party of its intent not to extend this Agreement at leastone hundred and eighty (180)  calendardays prior to the applicable Anniversary Date. The renewal rates/charges/maximum amounts/collateral will be negotiatedby the parties and set forth and presented to the Group on a revised Exhibit A.

 

## **XV.**                           Collateral

 

The Group shall provide BCBSF/HOI collateral to secureGevity’s payment obligations under this Agreement in the amounts set forth in Exhibit A.   The collateral shall be provided in the formof an irrevocable letter of credit issued in favor of BCBSF/HOI which shallautomatically increase in accordance with the schedule specified in Exhibit A.   BCBSF/HOI shall be entitled to draw from theletter of credit only in the event the Group fails to meet its paymentobligations as set forth in Sections III, IV or VII of this Agreement. The formof letter of credit must be acceptable to BCBSF/HOI.

 

The Group upon 60 days prior written notice toBCBSF/HOI may replace the outstanding letter of credit with cash collateralequal to the outstanding letter of credit to be held in an interest-bearingtrust or escrow account in favor of BCBSF/HOI (with interest accruing andpayable to the Group on a quarterly basis). If the Group elects to replace the letter of credit in accordance withthe foregoing, the parties will select a trustee bank and enter into a trustparticipation agreement (or similar agreement) acceptable to both parties.

 

Followingthe termination or expiration of this contract, and provided the Group iscurrent with respect to its financial obligations to BCBSF/HOI, the collateralshall be reduced to [*] of its then current value at the end of the third,sixth and ninth month and fully released at the end of the twelfth month,exclusive of any known or pending claims, including any potential cases inlitigation.

 

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### **XVI.**                       Performance Standards and PerformanceIncentive Plan

 

A.    BCBSF/HOI shall meet thefollowing Performance Standards and be measured pursuant to BCBSF/HOI ‘sstandard audit procedures:

 

#### Claim Processing

 
| **Category**                              | ** ** | **Penalty** | ** ** | **Incentive** |
|-------------------------------------------|------------|-------------|------------|---------------|
| Financial Accuracy                        |       | [*]         |       | [*]           |
| Payment Accuracy                          |       | [*]         |       | [*]           |
| Processing Accuracy                       |       | [*]         |       | [*]           |
| Claims processed within  30 calendar days |       | [*]         |       | [*]           |

 

Customer Service

 
| **Category**                          | ** ** | **Penalty** | ** ** | **Incentive** |
|---------------------------------------|------------|-------------|------------|---------------|
| Average Hold Time for  Incoming Calls |       | [*]         |       | [*]           |
| Abandon  rate                         |       | [*]         |       | [*]           |
| Closure  of open inquiries            |       | [*]         |       | [*]           |
| Closure  of open inquiries            |       | [*]         |       | [*]           |

 

#### Account Management

 

The Group will beresponsible for creating and maintaining an account management survey questionnaire.  The survey questionnaire to be completed byThe Group will measure account management performance in the areas of productand service knowledge, professionalism, proactive management, accessibility,and responsiveness.

 

B.    The Performance StandardPenalty/Incentive

 

The PerformanceIncentive/Penalty will be in effect for Claim Processing and Customer Servicestandards only.  Account Managementcategories will be monitored, but are not subject to incentive/penalty paymentsat this time.  The Group reserves theright, at a future date, to open discussions with BCBSF to include AccountManagement activities, and Eligibility as account specific reporting metricsbecome available, in the Penalty/Incentive calculation.

 

1.     BCBSF/HOIwill be subject to a [*] reduction in the Minimum Premium Rates (set forth in Exhibit A)for the quarter if three of four claims processing performance standards arebelow the percentages (set forth above) for the quarter.

 

2.     BCBSF/HOIwill be subject to a [*] reduction in the Minimum Premium Rates (set forth in Exhibit A)for the quarter if three of four customer service performance standards arebelow the percentages (set forth above) for the quarter.

 

3.   BCBSF/HOI will receive a [*]increase in the Minimum Premium Rates (set forth in Exhibit A) 

 

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for thequarter if all four of the claims processing performance standards are met orexceeded for the quarter.

 

4.   BCBSF/HOI will receive a [*]increase in the Minimum Premium Rates (set forth in Exhibit A) for thequarter if all four of the customer service performance standards are met orexceeded for the quarter.

 

5.   BCBSF/HOI’s Operational Unitswill report their Performance Standard scores on a monthly basis to BCBSF/HOI’sMarketing Staff.  Each quarter Marketingwill provide the Group with monthly results and calculate the incentive/penaltybased on quarterly results.

 

6.   Within [*] days following theclose of the contract period BCBSF will prepare an annual Performance StandardPenalty/Incentive expense settlement based on the quarterly outcomes and presentit to the Group.  If based on the expensesettlement an incentive is due the Group will pay the full amount of theexpense settlement within [*] calendar days after receipt of the invoice.  If based on the expense settlement a penaltyis due BCBSF/HOI will credit the next administrative expense and annual excessliability charge invoice.

 

C.    Performance Audit

 

The Group has the rightto perform, or have performed by a mutually agreed upon third party, an auditof BCBSF/HOI’s Operational performance on an annual basis.

 

The focus of the auditwill be the preceding contract year (e.g. audit is in 2009 for 2008 contractperiod).  The audit will be limited to areasonable number of statistically valid claims not to exceed [*].  Any request for audits outside the abovementioned will require mutual agreement of the Group and BCBSF/HOI.

 

BCBSF/HOI will [*].

 

BCBSF/HOI requiresreasonable advance notification of at least 60 days prior to the audit.

 

### **XVII.**      General

 

A.            Inconsistencies

 

If theprovisions of this Agreement are, in any way, inconsistent with the provisionsof the Product Offerings, then the provisions of the Agreement shall prevail,and the other provisions shall be deemed modified but only to the extentnecessary to implement the intent of the parties herein.

 

B.            Survival

 

Therights and obligations of the parties, as set forth herein, shall survive thetermination of this Agreement to the extent necessary to effectuate the intentof the parties as expressed herein.

 

C.            Waiverof Breach

 

Thefailure by either party, at any time, to enforce or to require the strictadherence to any provision of this Agreement shall not be deemed to be a waiverof such provision or any other 

 

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**CONFIDENTIAL TREATMENT REQUESTEDBY GEVITY HR, INC.**

 

provision of this Agreement.

 

D.            Governing Law

 

ThisAgreement, and the rights of the parties hereunder, shall be construedaccording to the laws of the State of Florida.

 

E.             Severance

 

In theevent any provision of this Agreement is deemed to be invalid or unenforceable,all other provisions shall remain in full force and effect.

 

F.             Amendment

 

ThisAgreement may be amended at any time upon mutual written agreement of bothparties, except that BCBSF/HOI or the Group may make changes necessary tocomply with state and federal laws.  Inthe event such changes are necessary, BCBSF/HOI or the Group will provideappropriate written notice to the other party.

 

G.            Entire Agreement

 

ThisAgreement, which includes the Exhibits, Master Policy, Benefit Election Form,Status Change Form, Member Handbook, True Group Application for coverage, andthe Product Offerings, which are hereby incorporated by reference, constitutethe entire Agreement between the Group and BCBSF/HOI.  Any prior agreements, promises, orrepresentations, either oral or written, relating to the subject matter of thisAgreement, and not expressly set forth in this Agreement, are of no force oreffect.

 

H.            Notices

 

Anynotice, required or permitted under this Agreement, shall be deemed given ifhand delivered or if mailed by United States mail, or an overnight mail service(e.g. Federal Express), postage prepaid, to the applicable address as set forthabove or to such other address as a party may designate, in writing, to theother party.  Such notice shall be deemedeffective as of the date so deposited or delivered.

 

I.              Provider Networks

 

BCBSF/HOI’sHealth Care Provider Networks are subject to change and may be modified at anytime during the term of this Agreement without notice to or the consent of theGroup.

 

J.             MarketingFund

 

BCBSF/HOI willshare in the cost of marketing materials up to [*] per plan year.  The Group or the Group’s approved vendor willsubmit a detailed invoice to BCBSF/HOI Corporate Accounts for the marketingmaterials no later than 30 days following the end of the plan year.

 

K.            Trainingand enrollment support

 

BCBSF/HOI willprovide up to [*] training sessions of not more than one half day in length forthe Group’s staff.  In addition BCBSF/HOIwill provide up to [*] on site visits of no more than one half day in length toprovide enrollment support for clients with [*] or more eligible employees.  All training and enrollment support will becoordinated through the Group’s headquarters and mutually agreed to by the Group and BCBSF/HOI.

 

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INWITNESS WHEREOF each of the parties to this Agreement, through their dulyauthorized representative, hereby acknowledges that they have read andunderstand this Agreement and agree to be bound by its terms.

 

 
|   | **BLUE  CROSS AND BLUE SHIELD OF FLORIDA, INC./** |
|--------|---------------------------------------------------|
|   | **HEALTH  OPTIONS, INC.**                         |
|   |                                              |
|   | Signature:                                        | /s/ Alan Guzzino |
|   |                                              |   |
|   | Print Name:                                       | Alan Guzzino |
|   |                                              |   |
|   | Title:                                            | Vice President |
|   |                                              |   |
|   | Date:                                             | 9-29-2008 |
|   |                                              |
|   |                                              |
|   | **Gevity  HR, Inc.**                         |
|   |                                              |
|   | Signature:                                        | /s/ Edwin E.  Hightower, Jr. |
|   |                                              |   |
|   | Print Name:                                       | Edwin E.  Hightower, Jr. |
|   |                                              |   |
|   | Title:                                            | Senior Vice  President and Chief Legal Officer |
|   |                                              |   |
|   | Date:                                             | 10-1-2008 |
|   |                                              |
|   | **Gevity  Health & Welfare Plan**        |
|   |                                              |
|   | Signature:                                        | /s/ Edwin E. Hightower, Jr. |
|   |                                              |   |
|   | Print Name:                                       | Edwin E.  Hightower, Jr. |
|   |                                              |   |
|   | Title:                                            | Senior Vice  President and Chief Legal Officer |
|   |                                              |   |
|   | Date:                                             | 10-1-2008 |
|        |                                                   |  |  |

 

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**EXHIBITA**

 

**MINIMUMPREMIUM ACCOUNTING AGREEMENT**

**RATESHEET**

**FOR**

# **GEVITY HR, INC. – GROUP No. 56953**

**10/1/2008– 9/30/2009**

 

**[*THISCONFIDENTIAL INFORMATION HAS BEEN OMITTED AND FILED SEPARATELY WITH THESECURITIES AND EXCHANGE COMMISSION*]**

 

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**EXHIBIT B**

 

**MINIMUM PREMIUM ACCOUNTING AGREEMENT**

**PRODUCT SHEET**

**FOR**

**GEVITY  HR, INC. – GROUP No. 56953**

**10/1/2008 – 9/30/2009**

 

**[*THISCONFIDENTIAL INFORMATION HAS BEEN OMITTED AND FILED SEPARATELY WITH THESECURITIES AND EXCHANGE COMMISSION*]**

 

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