Health Net 2011 Annual Report Download - page 126

HEALTH NET, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)
Recently Issued Accounting Pronouncements
In July 2011, the Financial Accounting Standards Board (FASB) issued ASU No. 2011-06, Other Expenses
(Topic 720), Fees Paid to the Federal Government by Health Insurers (a consensus of the FASB Emerging Task
Force). This update affects reporting entities that are subject to the fee imposed on health insurers mandated by
the Patient Protection and Affordable Care Act as amended by the Health Care and Education Reconciliation Act
(the Acts). The Acts impose an annual fee on health insurers for each calendar year beginning on or after
January 1, 2014. This fee is not tax deductible and allocated to the individual health insurers based on the ratio of
the amount of net premiums to the amount of health insurance for any U.S. health risk. This ASU addresses the
recognition and classification of the entity’s share of this imposed fee. The liability for the fee should be
estimated and recorded in full once the entity provides qualifying health insurance in the applicable calendar year
in which the fee is payable with a corresponding deferred cost that is amortized to expense using a straight-line
method of allocation unless another method better allocates the fee over the calendar year that it is payable. The
amendments in this update are effective for calendar years beginning after December 31, 2013, when the fee
initially becomes effective. We will evaluate the impact of this update on our consolidated financial statements.
In December 2011, the FASB issued Accounting Standards Update (ASU) No. 2011-11, Balance Sheet
(Topic 210), Disclosures about Offsetting Assets and Liabilities. The amendments in this ASU affect all entities
that have financial instruments and derivative instruments that are either (1) offset in accordance with
Section 210-20-45 or Section 815-10-45 or (2) subject to an enforceable master netting arrangement or similar
agreement. The amendments in this ASU require an entity to disclose information about offsetting and related
arrangements to enable users of financial statements to understand the effect of netting to entity’s financial
position. The information about netting arrangements should be presented in tabular format unless another format
is more appropriate. Entities should also describe the rights of setoff associated with recognized assets and
liabilities subject to an enforceable master netting arrangement. The disclosures may be grouped by type of
instrument or transaction. The disclosure requirements in this update are effective for periods beginning on or
after January 1, 2013, and must be shown for all periods presented on the balance sheet. The amendments in
ASU No. 2011-11 are not expected to have a material impact on our financial condition or results of operations.
In December 2011, the FASB issued ASU No. 2011-12, Comprehensive Income (Topic 220), Deferral of the
Effective Date for Amendments to the Presentation of Reclassifications of Items out of Accumulated Other
Comprehensive Income. Under the amendments in ASU No. 2011-05, Comprehensive Income (Topic 220),
Presentation of Comprehensive Income, entities are required to present reclassification adjustments and the
effects of those adjustments on the face of the financial statements where net income is presented, by component
of net income. The amendments in ASU No. 2011-12 supersede changes to those paragraphs in ASU
No. 2011-05 that pertain to how, when, and where reclassification adjustments are presented. This ASU defers
those changes in ASU No. 2011-05 that relate to the presentation of reclassification adjustments. All other
requirements in ASU No. 2011-05 are not affected by this ASU, including the requirement to report
comprehensive income either in a single continuous financial statement or in two separate but consecutive
financial statements. Amendments in this ASU are effective at the same time as the amendments in ASU
2011-05, for public entities for fiscal years, and interim periods within those years, beginning after December 15,
2011.
Note 3—Sale of Northeast Health Plan Subsidiaries
On December 11, 2009, we completed the Northeast Sale. See Notes 1 and 2 for additional information on
the Northeast Sale.
At the closing, United paid to us $350 million, consisting of (i) a $60 million initial minimum payment for
the commercial membership of the acquired business and the Medicare and Medicaid businesses of the Acquired
F-22