Aetna 2014 Annual Report Download - page 98

Annual Report- Page 92
5. Operating Expenses
For 2014, 2013 and 2012, selling expenses (which include broker commissions, the variable component of our
internal sales force compensation and premium taxes) and general and administrative expenses were as follows:
(Millions) 2014 2013 2012
Selling expenses $ 1,653.0 $ 1,348.6 $ 1,105.5
General and administrative expenses:
Salaries and related benefits 4,543.5 4,139.5 3,115.3
Other general and administrative expenses (1) 4,641.2 3,157.3 2,655.6
Total general and administrative expenses (2) 9,184.7 7,296.8 5,770.9
Total operating expenses $ 10,837.7 $ 8,645.4 $ 6,876.4
(1) In 2014, includes fees mandated by the ACA comprised primarily of the HIF of $605.3 million and our estimated contribution to the
funding of the reinsurance program of $335.5 million. Refer to Note 2 beginning on page 80 for additional information on fees mandated
by the ACA.
(2) In 2014, includes: a non-cash settlement charge incurred in connection with the Aetna Pension Plan of $111.6 million; transaction and
integration-related costs of $200.7 million and a release of a litigation-related reserve of $103.0 million. In 2013, includes: transaction,
integration-related and restructuring costs of $314.6 million and a reduction of expenses related to reversal of an allowance on a
reinsurance recoverable of $42.2 million. In 2012, includes: a litigation-related charge of $120.0 million, transaction and integration-
related costs of $16.2 million and a severance and facilities charge of $37.0 million.
Refer to the reconciliation of operating earnings to net income attributable to Aetna in Note 19 beginning on
page 132 for additional information.
6. Health Care Costs Payable
The following table shows the components of the change in health care costs payable during 2014, 2013 and 2012:
(Millions) 2014 2013 2012
Health care costs payable, beginning of the period $ 4,547.4 $ 2,992.5 $ 2,675.5
Less: Reinsurance recoverables 8.5 3.8 3.3
Health care costs payable, beginning of the period, net 4,538.9 2,988.7 2,672.2
Acquisition of businesses 29.2 1,417.2 —
Add: Components of incurred health care costs
Current year 41,327.5 33,344.8 23,875.6
Prior years (580.8) (448.8) (146.7)
Total incurred health care costs 40,746.7 32,896.0 23,728.9
Less: Claims paid
Current year 35,850.7 30,112.7 21,067.7
Prior years 3,848.8 2,608.0 2,344.7
Total claims paid 39,699.5 32,720.7 23,412.4
Disposition of business —(42.3) —
Health care costs payable, end of period, net 5,615.3 4,538.9 2,988.7
Add: Reinsurance recoverables 5.8 8.5 3.8
Health care costs payable, end of the period $ 5,621.1 $ 4,547.4 $ 2,992.5
Our estimates of prior years’ health care costs payable decreased by approximately $581 million, $449 million and
$147 million in 2014, 2013 and 2012, respectively, resulting from claims being settled for amounts less than
originally estimated, primarily due to lower health care cost trends as well as the actual claim submission time
being faster than we assumed in establishing our health care costs payable in the prior year. This development does
not directly correspond to an increase in our current year operating results as these reductions were offset by
estimated current period health care costs when we established our estimate of the current year health care costs
payable.