IHC Health Plans, Inc. - Page 13

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               Group was licensed to operate an HMO in Utah and Wyoming.              
          In 1991, HCFA recognized Group as a federally qualified HMO.                
               In 1991, Group filed with respondent an application for                
          recognition as an organization that is exempt from taxation                 
          pursuant to section 501(c)(3).  In June 1999, respondent denied             
          Group’s application for tax-exempt status.                                  
               3.  IHC Benefit Assurance Company                                      
               In May 1992, petitioner organized IHC Benefit Assurance                
          Company (Benefit), a taxable business corporation, to underwrite            
          traditional indemnity health insurance risks, particularly                  
          point-of-service options offered by petitioner, Care, and Group.            
          Petitioner was Benefit’s sole shareholder.                                  
               4.  Management Services                                                
               Health Services provided management services to petitioner             
          and its affiliates on a centralized basis, including legal                  
          services, human resources, public relations, and treasury                   
          functions.  Each affiliate was subject to an annual intercompany            
          overhead allocation charge for these services.                              
               Petitioner provided general management and administrative              
          services to Care and Group including marketing, sales,                      
          enrollment, customer service, claims processing, underwriting and           
          actuarial services, provider relations and contracting,                     
          management information systems, and general accounting services.            

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Last modified: May 25, 2011