Humana 2015 Annual Report Download - page 50

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to our Medicare Advantage, or MA, business that, individually or in the aggregate, is or would reasonably be expected
to be material and adverse to us and our subsidiaries, taken as a whole. The Merger is currently expected to close in
the second half of 2016.
Business Segments
On January 1, 2015, we realigned certain of our businesses among our reportable segments to correspond with
internal management reporting changes and renamed our Employer Group segment to the Group segment. Our three
reportable segments remain Retail, Group, and Healthcare Services. The more significant realignments included
reclassifying Medicare benefits offered to groups to the Retail segment from the Group segment, bringing all of our
Medicare offerings, which are now managed collectively, together in one segment, recognizing that in some instances
we market directly to individuals that are part of a group Medicare account. In addition, we realigned our military
services business, primarily consisting of our TRICARE South Region contract previously included in the Other
Businesses category, to our Group segment as we consider this contract with the government to be a group account.
Prior period segment financial information has been recast to conform to the 2015 presentation. This is further described
in Note 2 to the consolidated financial statements included in Item 8. - Financial Statements and Supplementary Data.
We manage our business with three reportable segments: Retail, Group, and Healthcare Services. In addition, the
Other Businesses category includes businesses that are not individually reportable because they do not meet the
quantitative thresholds required by generally accepted accounting principles. These segments are based on a combination
of the type of health plan customer and adjacent businesses centered on well-being solutions for our health plans and
other customers, as described below. These segment groupings are consistent with information used by our Chief
Executive Officer to assess performance and allocate resources.
The Retail segment consists of Medicare benefits, marketed to individuals or directly via group accounts, as well
as individual commercial fully-insured medical and specialty health insurance benefits, including dental, vision, and
other supplemental health and financial protection products. In addition, the Retail segment also includes our contract
with CMS to administer the LI-NET prescription drug plan program and contracts with various states to provide
Medicaid, dual eligible, and Long-Term Support Services benefits, collectively our state-based contracts. The Group
segment consists of employer group commercial fully-insured medical and specialty health insurance benefits, including
dental, vision, and other supplemental health and voluntary insurance benefits, as well as administrative services only,
or ASO products. In addition, our Group segment includes our health and wellness products (primarily marketed to
employer groups) and military services business, primarily our TRICARE South Region contract. The Healthcare
Services segment includes services offered to our health plan members as well as to third parties, including pharmacy
solutions, provider services, home based services, and clinical programs, as well as services and capabilities to advance
population health. We will continue to report under the category of Other Businesses those businesses which do not
align with the reportable segments described above, primarily our closed-block long-term care insurance policies.
The results of each segment are measured by income before income taxes. Transactions between reportable
segments primarily consist of sales of services rendered by our Healthcare Services segment, primarily pharmacy,
provider, and home based services as well as clinical programs, to our Retail and Group customers. Intersegment sales
and expenses are recorded at fair value and eliminated in consolidation. Members served by our segments often use
the same provider networks, enabling us in some instances to obtain more favorable contract terms with providers. Our
segments also share indirect costs and assets. As a result, the profitability of each segment is interdependent. We allocate
most operating expenses to our segments. Assets and certain corporate income and expenses are not allocated to the
segments, including the portion of investment income not supporting segment operations, interest expense on corporate
debt, and certain other corporate expenses. These items are managed at a corporate level. These corporate amounts are
reported separately from our reportable segments and are included with intersegment eliminations.