Health Net 2010 Annual Report Download - page 116

HEALTH NET, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)
Our accumulated other comprehensive income (loss) are as follows:
For the Years Ended
December 31,
2010 2009 2008
(Dollars in millions)
Investments:
Unrealized gains (losses) on investments available-for-sale as of January 1 ......... $ 1.0 $ (7.3) $ (0.1)
Net change in unrealized gains (losses) on investments available-for-sale ........... 19.3 37.8 (10.1)
Reclassification of unrealized (gains) losses to earnings ......................... (15.0) (29.5) 2.9
Unrealized gains (losses) on investments available-for-sale as of December 31 ...... 5.3 1.0 (7.3)
Defined benefit pension plans:
Prior service cost and net loss amortization as of January 1 ...................... (0.9) 0.4 (1.1)
Net change in prior service cost and net loss amortization ....................... (3.9) (1.3) 1.5
Prior service cost and net loss amortization as of December 31 ................... (4.8) (0.9) 0.4
Accumulated other comprehensive income (loss) .............................. $ 0.5 $ 0.1 $ (6.9)
Taxes Based on Premiums
We provide services in certain states, which require premium taxes to be paid by us based on membership or
billed premiums. These taxes are paid in lieu of or in addition to state income taxes and totaled $54.3 million in
2010, $75.7 million in 2009 and $48.0 million in 2008. These amounts are recorded in general and administrative
expenses on our consolidated statements of operations.
Income Taxes
We record deferred tax assets and liabilities based on differences between the book and tax bases of assets
and liabilities. The deferred tax assets and liabilities are calculated by applying enacted tax rates and laws to
taxable years in which such differences are expected to reverse. We establish a valuation allowance in
accordance with the provisions of the Income Taxes Topic of FASB codification. We continually review the
adequacy of the valuation allowance and recognize the benefits from our deferred tax assets only when an
analysis of both positive and negative factors indicate that it is more likely than not that the benefits will be
realized.
We file tax returns in many tax jurisdictions. Often, application of tax rules within the various jurisdictions
is subject to differing interpretation. Despite our belief that our tax return positions are fully supportable, we
believe that it is probable certain positions will be challenged by taxing authorities, and we may not prevail on
the positions as filed. Accordingly, we maintain a liability for the estimated amount of contingent tax challenges
by taxing authorities upon examination. We analyze the amount at which each tax position meets a “more likely
than not” standard for sustainability upon examination by taxing authorities. Only tax benefit amounts meeting or
exceeding this standard will be reflected in tax provision expense and deferred tax asset balances. Any
differences between the amounts of tax benefits reported on tax returns and tax benefits reported in the financial
statements is recorded in a liability for unrecognized tax benefits. The liability for unrecognized tax benefits is
reported separately from deferred tax assets and liabilities and classified as current or noncurrent based upon the
expected period of payment. See Note 11 for additional disclosures.
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