CVS 2015 Annual Report Download - page 82

80 CVS Health
Notes to Consolidated Financial Statements
The Company finances a portion of its store development program through sale-leaseback transactions. The properties
are generally sold at net book value, which generally approximates fair value, and the resulting leases generally qualify
and are accounted for as operating leases. The operating leases that resulted from these transactions are included in
the previous table. The Company does not have any retained or contingent interests in the stores and does not provide
any guarantees, other than a guarantee of lease payments, in connection with the sale-leaseback transactions. Proceeds
from sale-leaseback transactions totaled $411 million in 2015, $515 million in 2014 and $600 million in 2013.
8 | Medicare Part D
The Company offers Medicare Part D benefits through SilverScript, which has contracted with CMS to be a PDP
and, pursuant to the Medicare Prescription Drug, Improvement and Modernization Act of 2003, must be a risk-bear-
ing entity regulated under state insurance laws or similar statutes.
SilverScript is a licensed domestic insurance company under the applicable laws and regulations. Pursuant to these
laws and regulations, SilverScript must file quarterly and annual reports with the National Association of Insurance
Commissioners (“NAIC”) and certain state regulators, must maintain certain minimum amounts of capital and surplus
under a formula established by the NAIC and must, in certain circumstances, request and receive the approval of
certain state regulators before making dividend payments or other capital distributions to the Company. The Company
does not believe these limitations on dividends and distributions materially impact its financial position.
The Company has recorded estimates of various assets and liabilities arising from its participation in the Medicare
Part D program based on information in its claims management and enrollment systems. Significant estimates
arising from its participation in this program include: (i) estimates of low-income cost subsidy, reinsurance amounts,
and coverage gap discount amounts ultimately payable to or receivable from CMS based on a detailed claims recon-
ciliation that will occur in the following year; (ii) an estimate of amounts receivable from or payable to CMS under
a risk-sharing feature of the Medicare Part D program design, referred to as the risk corridor and (iii) estimates for
claims that have been reported and are in the process of being paid or contested and for our estimate of claims that
have been incurred but have not yet been reported.
As of December 31, 2015 and 2014, amounts due from CMS included in accounts receivable were $1.6 billion and
$1.8 billion, respectively.
9 | Pension Plans and Other Postretirement Benefits
Defined Contribution Plans
The Company sponsors voluntary 401(k) savings plans that cover all employees who meet plan eligibility require-
ments. The Company makes matching contributions consistent with the provisions of the plans.
At the participant’s option, account balances, including the Company’s matching contribution, can be transferred
without restriction among various investment options, including the Company’s common stock fund under one of
the defined contribution plans. The Company also maintains a nonqualified, unfunded Deferred Compensation Plan
for certain key employees. This plan provides participants the opportunity to defer portions of their eligible compensa-
tion and receive matching contributions equivalent to what they could have received under the CVS Health 401(k) Plan
absent certain restrictions and limitations under the Internal Revenue Code. The Company’s contributions under the
above defined contribution plans were $251 million, $238 million and $235 million in 2015, 2014 and 2013, respectively.
Defined Benefit Pension Plans
As of December 31, 2015, the Company sponsored seven defined benefit pension plans. Two of the plans are
tax-qualified plans that are funded based on actuarial calculations and applicable federal laws and regulations. The
other five plans are unfunded nonqualified supplemental retirement plans. As of December 31, 2014 and 2013, the
Company sponsored nine defined benefit pension plans. Four of the plans were tax-qualified plans and the other
five plans were unfunded nonqualified supplemental retirement plans. Most of the plans were frozen in prior periods.