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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-K
(Mark One)
ÈANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF
1934 FOR THE FISCAL YEAR ENDED DECEMBER 31, 2009
OR
‘TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT
OF 1934
Commission file number: 1-10864
UNITEDHEALTH GROUP INCORPORATED
(Exact name of registrant as specified in its charter)
MINNESOTA 41-1321939
(State or other jurisdiction of
incorporation or organization)
(I.R.S. Employer
Identification No.)
UNITEDHEALTH GROUP CENTER
9900 BREN ROAD EAST
MINNETONKA, MINNESOTA 55343
(Address of principal executive offices) (Zip Code)
Registrant’s telephone number, including area code: (952) 936-1300
Securities registered pursuant to Section 12(b) of the Act:
COMMON STOCK, $.01 PAR VALUE NEW YORK STOCK EXCHANGE, INC.
(Title of each class) (Name of each exchange on which registered)
Securities registered pursuant to Section 12(g) of the Act: NONE
Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act. Yes ÈNo ‘
Indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or Section 15(d) of the Act. Yes ‘No È
Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange
Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has
been subject to such filing requirements for the past 90 days. Yes ÈNo ‘
Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive
Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding
12 months (or for such shorter period that the registrant was required to submit and post such files). Yes ÈNo ‘
Indicate by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K (§229.405 of this chapter) is not contained
herein, and will not be contained, to the best of registrant’s knowledge, in definitive proxy or information statements incorporated by
reference in Part III of this Form 10-K or any amendment to this Form 10-K. È
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer or a smaller reporting
company. See the definitions of “large accelerated filer,” “accelerated filer” and “smaller reporting company” in Rule 12b-2 of the
Exchange Act. (Check one):
Large accelerated filer ÈAccelerated filer ‘
Non-accelerated filer ‘Smaller reporting company ‘
(Do not check if a smaller reporting company)
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act) Yes ‘No È
The aggregate market value of voting stock held by non-affiliates of the registrant as of June 30, 2009 was $28,599,603,374 (based on the
last reported sale price of $24.98 per share on June 30, 2009, on the New York Stock Exchange).*
As of February 3, 2010, there were 1,157,533,379 shares of the registrant’s Common Stock, $.01 par value per share, issued and
outstanding.
Note that in Part III of this report on Form 10-K, we incorporate by reference certain information from our Definitive Proxy Statement for
the Annual Meeting of Shareholders to be held on May 25, 2010. This document will be filed with the Securities and Exchange
Commission (SEC) within the time period permitted by the SEC. The SEC allows us to disclose important information by referring to it in
that manner. Please refer to such information.
* Only shares of voting stock held beneficially by directors, executive officers and subsidiaries of the Company have been excluded in
determining this number.

Table of contents

  • Page 1
    ...Act) Yes ' No È The aggregate market value of voting stock held by non-affiliates of the registrant as of June 30, 2009 was $28,599,603,374 (based on the last reported sale price of $24.98 per share on June 30, 2009, on the New York Stock Exchange).* As of February 3, 2010, there were 1,157,533,379...

  • Page 2
    ... of Operations ...Financial Statements and Supplementary Data ...Changes in and Disagreements with Accountants on Accounting and Financial Disclosure ...Other Information ...PART III Item 10. Item 11. Item 12. Item 13. Item 14. Directors, Executive Officers and Corporate Governance ...Executive...

  • Page 3
    ... are provided to the participants in the health system itself, ranging from employers and health plans to physicians and life sciences companies through our OptumHealth, Ingenix and Prescription Solutions businesses. Our revenues are derived from premiums on risk-based products; fees from management...

  • Page 4
    ... of medical services, customer and health care professional services and access to a contracted network of physicians, hospitals and other health care professionals. Large employer groups, such as those serviced by UnitedHealthcare National Accounts, typically use self-funded arrangements...

  • Page 5
    ... the hospitals in the Health Benefits network. The consolidated purchasing capacity represented by the individuals UnitedHealth Group serves makes it possible for UnitedHealthcare to contract for cost-effective access to a large number of conveniently located care professionals. Directly or through...

  • Page 6
    ...its insurance company affiliates to approximately 3.8 million AARP members. Additional Ovations services include a nurse healthline service, a lower cost standardized Medicare supplement offering that provides consumers with a national hospital network, 24-hour access to health care information, and...

  • Page 7
    ... provides health insurance coverage to eligible Medicaid beneficiaries in exchange for a fixed monthly premium per member from the applicable state. AmeriChoice also offers government agencies a number of diverse management service programs, including a clinical care consulting program, disease...

  • Page 8
    ... health care costs. Programs include wellness and prevention, disease management, case management, physical health programs, complex condition management, specialized provider networks, personalized health portals and consumer marketing services. Care Solutions also provides benefit administration...

  • Page 9
    ...physician practice revenue cycle management, including integrated electronic medical record systems, revenue and payment cycle management for payer and health care professional organizations, payment accuracy solutions, decision-support portals for evaluation of health benefits and treatment options...

  • Page 10
    ... 2009 by servicing internal customers in our Health Benefits segment, as well as external employer groups, union trusts, managed care organizations, Medicare-contracted plans, Medicaid plans and TPAs, including mail service only and carve-out accounts. Prescription Solutions' integrated PBM services...

  • Page 11
    ...The administrative simplification provisions of the Health Insurance Portability and Accountability Act of 1996, as amended (HIPAA), apply to both the group and individual health insurance markets, including self-funded employee benefit plans. HIPAA requires guaranteed health care coverage for small...

  • Page 12
    ... rules for claims payment and member appeals under health care plans governed by ERISA. Additionally, some states require licensure or registration of companies providing third-party claims administration services for health care plans. FDIC. The Federal Deposit Insurance Corporation (FDIC) has...

  • Page 13
    ... of the state in which the mail order pharmacy is located, although some states require that we also comply with certain laws in that state. Our mail order pharmacies maintain certain Medicare and state Medicaid provider numbers as pharmacies providing services under these programs. Participation in...

  • Page 14
    ..., TPAs and business services outsourcing companies, health care professionals that have formed networks to directly contract with employers or with CMS, specialty benefit providers, government entities, disease management companies, and various health information and consulting companies. For our...

  • Page 15
    ... member of the Board of Directors since February 2000. Mr. Hemsley served as President and Chief Operating Officer from 2004 to November 2006. He joined UnitedHealth Group in 1997 and held various executive positions with the Company from 1997 to 2004. Mr. Mikan is Executive Vice President and Chief...

  • Page 16
    ...as Chief Executive Officer of Specialized Care Services (now OptumHealth). Mr. Wichmann joined UnitedHealth Group in 1998 and held various executive positions with the Company from 1998 to 2004. Mr. Zamoff is Executive Vice President, General Counsel and Assistant Secretary of UnitedHealth Group and...

  • Page 17
    ...premium revenues to pay the costs of health care services delivered to these customers. The profitability of our risk-based products depends in large part on our ability to predict, price for, and effectively manage medical costs. We manage medical costs through underwriting criteria, product design...

  • Page 18
    ... both our medical and operating cost management in response to these rate reductions, there can be no assurance that we will be able to execute successfully on these or other strategies to address changes in the Medicare Advantage program. Our results of operations, financial position and cash...

  • Page 19
    ... in our membership levels and premium and fee revenues and could adversely affect our results of operations. In addition, a prolonged economic downturn could negatively impact the financial position of hospitals and other care providers and therefore could adversely affect our contracted rates with...

  • Page 20
    ... the United States and face competition in all of the geographic markets in which we operate. We compete with other companies on the basis of many factors, including price of benefits offered and cost and risk of alternatives, location and choice of health care providers, quality of customer service...

  • Page 21
    ... changes, including changes that may reduce the number of persons enrolled or eligible, reduce the amount of reimbursement or payment levels, or increase our administrative or medical costs under such programs. For example, CMS recently implemented a reduction in Medicare Advantage reimbursements...

  • Page 22
    ... affect our business and results of operations. In any particular market, physicians and health care providers could refuse to contract, demand higher payments, or take other actions that could result in higher medical costs, less desirable products for customers or difficulty meeting regulatory or...

  • Page 23
    ... health care providers with whom we contract will properly manage the costs of services, maintain financial solvency or avoid disputes with other providers. Any of these events could have an adverse effect on the provision of services to our members and our operations. In addition, some providers...

  • Page 24
    ...contracted and non-contracted physicians, hospitals and other health care professionals), tort, contract disputes and claims related to disclosure of certain business practices. We are also party to certain class action lawsuits brought by health care professional groups. We are largely self-insured...

  • Page 25
    ... adversely affect our results of operations. Fluctuations in the fixed income or equity markets could impair our profitability and capital position. Volatility in interest rates affects our interest income and the market value of our investments in debt securities of varying maturities, which...

  • Page 26
    ... the integrity or availability of our data or to strategically implement new or upgrade or consolidate existing information systems, our business could be materially adversely affected. Our ability to adequately price our products and services, to provide effective service to our customers in...

  • Page 27
    ... the competitive position of insurance companies. Ratings information is broadly disseminated and generally used throughout the industry. We believe our claims paying ability and financial strength ratings are important factors in marketing our products to certain of our customers. Our debt ratings...

  • Page 28
    ...Securities (a) Fourth Quarter 2009 Total Number of Shares Purchased as Part of Publicly Announced Plans or Programs Maximum Number of Shares That May Yet Be Purchased Under The Plans or Programs(a) For the Month Ended Total Number of Shares Purchased Average Price Paid per Share October 31, 2009...

  • Page 29
    ... first graph compares the cumulative five-year total return to shareholders on UnitedHealth Group's common stock relative to the cumulative total returns of the S&P 500 index and a customized peer group (the "Fortune 50 Group"), an index of certain Fortune 50 companies for the five-year period ended...

  • Page 30
    ... industry, like UnitedHealth Group, all of these companies are large multi-segment companies using a well-defined operating model in one or more broad sectors of the economy. COMPARISON OF 5 YEAR CUMULATIVE TOTAL RETURN Among UnitedHealth Group, the S&P 500 Index and the Fortune 50 Group $160 $140...

  • Page 31
    ... The companies included in our peer group are Aetna Inc., Cigna Corporation, Coventry Health Care, Inc., Humana Inc. and WellPoint, Inc. We believe that this peer group reflects our peers in the health care industry. COMPARISON OF 5 YEAR CUMULATIVE TOTAL RETURN Among UnitedHealth Group, the S&P 500...

  • Page 32
    ...'s Discussion and Analysis of Financial Condition and Results of Operations and Consolidated Financial Statements and Notes to the Consolidated Financial Statements. (a) On January 1, 2006, we began serving as a plan sponsor offering Medicare Part D drug insurance coverage under a contract with CMS...

  • Page 33
    ... that self-insure the health care costs of their employees and employees' dependants. For both risk-based and fee-based health care benefit arrangements, we provide coordination and facilitation of medical services; transaction processing; health care professional services; and access to contracted...

  • Page 34
    ... medical care ratio government-sponsored public sector programs, will change the dynamics of our results. Operating Costs. Operating costs are primarily comprised of costs related to employee compensation and benefits, agent and broker commissions, premium taxes and assessments, professional fees...

  • Page 35
    ... on health insurers and health care benefits, guaranteed coverage requirements, elimination of pre-existing condition exclusions or annual lifetime maximum limits, restrictions on our ability to price products based on our underwriting standards, or restructuring the Medicare or Medicaid programs...

  • Page 36
    ... AIM Healthcare Services, Inc. On June 1, 2009, we acquired all of the outstanding shares of AIM Healthcare Services, Inc. (AIM) for approximately $440 million in cash. AIM is a leading provider of payment accuracy solutions for health care payer and hospital clients in all 50 states. This...

  • Page 37
    ... administrator of medical benefits and also provides care facilitation services, specialty health solutions and pharmacy benefit management (PBM) services. This transaction allows us to expand the capacity of our existing benefits administration businesses and enables existing and new customers...

  • Page 38
    Operating costs for 2008 included $882 million for settlement of two class action lawsuits related to our historical stock option practices and related legal costs, $350 million for the settlement of class action litigation related to reimbursement for out-of-network medical services, $50 million ...

  • Page 39
    .... 2008 Increase (Decrease) 2008 vs. 2007 (in thousands, except percentages) 2009 2008 2007 Commercial risk-based ...Commercial fee-based ...Total commercial ...Medicare Advantage ...Medicaid ...Standardized Medicare supplement ...Total public and senior ...Total people served by Health Benefits...

  • Page 40
    ... for 2009 were primarily driven by new business development in large-scale public sector care and behavioral health programs for state clients, which were partially offset by a decline in individuals served through commercial products. As of December 31, 2009 and 2008, OptumHealth provided services...

  • Page 41
    ... served by public and senior markets businesses, premium rate increases for medical cost inflation and acquisitions completed in 2008, partially offset by a decline in individuals served through both UnitedHealthcare risk-based products and Medicare Part D prescription drug plans. Investment and...

  • Page 42
    ... where price increases, net of customer benefit package changes, did not fully match the rise in medical costs, and an increased mix of national account pharmaceutical benefit business, which typically carries a higher medical care ratio. Health Benefits' operating margin was 6.7% for the year ended...

  • Page 43
    ...in our profitability may have a negative impact on our liquidity. The diversity of our businesses, our geographic and customer diversity and our disciplined underwriting and pricing processes for our risk-based businesses, which seek to match premium rate increases with future expected medical costs...

  • Page 44
    ... of two class action lawsuits related to our historical stock option practices, the 2009 increase in medical costs payable driven by membership growth in risk-based products in the public and senior markets businesses, and the effect of changes to our receivable and payable balances with CMS...

  • Page 45
    ... value measurements. Our investment portfolio has a weighted average duration of 2.1 years and a weighted average credit rating of "AA" as of December 31, 2009. Included in the debt securities balance were $3.0 billion of state and municipal obligations that are guaranteed by third parties. A number...

  • Page 46
    ... on our balance sheet and reduce our debt service cost. We used cash on hand to fund the purchase of the notes. Share Repurchases. Under our Board of Directors' authorization, we maintain a common share repurchase program. Repurchases may be made from time to time at prevailing prices in the...

  • Page 47
    ... Costs Each reporting period, we estimate our obligations for medical care services that have been rendered on behalf of insured consumers but for which claims have either not yet been received or processed and for liabilities for physician, hospital and other medical cost disputes. We develop...

  • Page 48
    ..., health care professional contract rate changes, medical care utilization and other medical cost trends, membership volume and demographics, benefit plan changes, and business mix changes related to products, customers and geography. Depending on the health care professional and type of service...

  • Page 49
    ...receive health care services. Customers are typically billed monthly at a contracted rate per eligible person multiplied by the total number of people eligible to receive services, as recorded in our records. Employer groups generally provide us with changes to their eligible population one month in...

  • Page 50
    ... impairment analysis include financial projections of free cash flow (including significant assumptions about operations, capital requirements and income taxes), long-term growth rates for determining terminal value, and discount rates. Where available and appropriate, comparative market multiples...

  • Page 51
    ... of fair value to cost will not occur in the near term, we recognize the impairment in net earnings. New information and the passage of time can change these judgments. We manage our investment portfolio to limit our exposure to any one issuer or market sector, and largely limit our investments...

  • Page 52
    ...respect to accounts receivable are limited due to the large number of employer groups that constitute our customer base. As of December 31, 2009, we had an aggregate $2.0 billion reinsurance receivable resulting from the sale of our Golden Rule Financial Corporation life and annuity business in 2005...

  • Page 53
    ... 31, 2009, we had $577 million of equity securities and venture capital funds, a portion of which were invested in various public and non-public companies concentrated in the areas of health care delivery and related information technologies. Market conditions that affect the value of health care or...

  • Page 54
    ... also audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States), the Company's internal control over financial reporting as of December 31, 2009, based on the criteria established in Internal Control - Integrated Framework issued by the Committee of...

  • Page 55
    UnitedHealth Group Consolidated Balance Sheets (in millions, except per share data) December 31, 2009 2008 ASSETS Current assets: Cash and cash equivalents ...Short-term investments ...Accounts receivable, net of allowances of $220 and $148 ...Assets under management ...Deferred income taxes ......

  • Page 56
    UnitedHealth Group Consolidated Statements of Operations (in millions, except per share data) For the Year Ended December 31, 2009 2008 2007 REVENUES: Premiums ...Services ...Products ...Investment and other income ...Total revenues ...OPERATING COSTS: Medical costs ...Operating costs ...Cost of ...

  • Page 57
    ... of common stock, and related tax benefits ...Common stock repurchases ...Share-based compensation, and related tax benefits ...Common stock dividend ($0.03 per share) ...Balance at December 31, 2009 ... Retained Earnings $14,376 4,654 - - See Notes to the Consolidated Financial Statements. 55

  • Page 58
    ... income taxes ...Share-based compensation ...Other ...Net change in other operating items, net of effects from acquisitions and changes in AARP balances: Accounts receivable ...Other assets ...Medical costs payable ...Accounts payable and other liabilities ...Other policy liabilities ...Unearned...

  • Page 59
    ... medicine as the standard for care, and providing relevant, actionable data that physicians, health care professionals, consumers, employers and other participants in health care can use to make better, more informed decisions. Through its diversified family of businesses, the Company leverages core...

  • Page 60
    ... of medical services; transaction processing; customer, consumer and care professional services; and access to contracted networks of physicians, hospitals and other health care professionals. Through the Company's Prescription Solutions pharmacy benefits management (PBM) business, revenues...

  • Page 61
    ... the impairment in net earnings. New information and the passage of time can change these judgments. The Company manages its investment portfolio to limit its exposure to any one issuer or market sector, and largely limits its investments to U.S. government and agency securities; state and municipal...

  • Page 62
    ... D prescription drug insurance coverage under contracts with CMS. Under the Medicare Part D program, there are six separate elements of payment received by the Company during the plan year. These payment elements are as follows CMS Premium. CMS pays a fixed monthly premium per member to the Company...

  • Page 63
    ... drug benefits. The Company records premium payments received in advance of the applicable service period in Unearned Revenues in the Consolidated Balance Sheets. The Catastrophic Reinsurance Subsidy and the Low-Income Member Cost Sharing Subsidy represent cost reimbursements under the Medicare...

  • Page 64
    UNITEDHEALTH GROUP NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS-(Continued) As of January 1, 2010, certain changes were made to the Medicare Part D coverage by CMS, including The initial coverage limit increased to $2,830 from $2,700 in 2009. The catastrophic coverage begins at $6,440 as compared...

  • Page 65
    ...Consolidated Financial Statements), health savings account deposits, deposits under the Medicare Part D program (see "Medicare Part D Pharmacy Benefits Contract" above), and the current portion of future policy benefits. Customer balances represent excess customer payments and deposit accounts under...

  • Page 66
    ...Consolidated Balance Sheets. The Company evaluates the financial condition of the reinsurer and only records the reinsurance receivable to the extent of probable recovery. Policy Acquisition Costs The Company's commercial health insurance contracts typically have a one-year term and may be cancelled...

  • Page 67
    ... Statements, or do not apply to its operations. 3. Acquisitions On June 1, 2009, all of the outstanding shares of AIM Healthcare Services, Inc. (AIM) were acquired for approximately $440 million in cash. AIM is a leading provider of payment accuracy solutions for health care payer and hospital...

  • Page 68
    ..., the Company acquired all of the outstanding shares of Fiserv Health, Inc. (Fiserv Health), a subsidiary of Fiserv, Inc., for approximately $740 million in cash. Fiserv Health is a leading administrator of medical benefits and also provides care facilitation services, specialty health solutions and...

  • Page 69
    UNITEDHEALTH GROUP NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS-(Continued) 4. Investments The amortized cost, gross unrealized gains and losses, and fair value of investments, by type, were as follows: Amortized Cost Gross Unrealized Gains Gross Unrealized Losses Fair Value (in millions) ...

  • Page 70
    UNITEDHEALTH GROUP NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS-(Continued) The fair value of the Company's mortgage-backed securities by credit rating and non-U.S. agency mortgagebacked securities by origination as of December 31, 2009 were as follows: (in millions) AAA AA A BBB Non-Investment ...

  • Page 71
    UNITEDHEALTH GROUP NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS-(Continued) The fair value of investments with gross unrealized losses by investment type and length of time that individual securities have been in a continuous unrealized loss position were as follows (a): Less Than 12 Months Gross ...

  • Page 72
    ... the areas of health care delivery and related information technologies. Market conditions that affect the value of health care and related technology stocks will likewise impact the value of the Company's equity portfolio. The equity securities and venture capital funds were evaluated for severity...

  • Page 73
    ... Company compares changes in the reported market values and returns to relevant market indices to test the reasonableness of the reported prices. Based on the Company's internal price verification procedures and review of fair value methodology documentation provided by independent pricing services...

  • Page 74
    ... are classified as Level 2. Debt Securities. The estimated fair values of debt securities held as available-for-sale are based on quoted market prices and/or other market data for the same or comparable instruments and transactions in establishing the prices. Fair values of debt securities that do...

  • Page 75
    UNITEDHEALTH GROUP NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS-(Continued) Equity Securities. Equity securities are held as available-for-sale investments. Fair value estimates for Level 1 and Level 2 publicly traded equity securities are based on quoted market prices and/or other market data for...

  • Page 76
    ... equity securities. Senior Unsecured Notes. The fair values of the senior unsecured notes are estimated based on third-party quoted market prices for the same or similar issues. The carrying amounts reported in the Consolidated Balance Sheets for cash and cash equivalents, accounts and other current...

  • Page 77
    ... Company develops estimates for medical costs incurred but not reported using an actuarial process that is consistently applied, centrally controlled and automated. The actuarial models consider factors such as time from date of service to claim receipt, claim backlogs, care provider contract rate...

  • Page 78
    UNITEDHEALTH GROUP NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS-(Continued) The following table shows the components of the change in medical costs payable for the years ended December 31: (in millions) 2009 2008 2007 Medical costs payable, beginning of period ...Acquisitions ...Reported medical ...

  • Page 79
    ... had been adjusted based upon the applicable interest rate swap fair values in accordance with the fair value hedge short-cut method of accounting. (d) These notes have been classified with the current maturities of long-term debt in the Consolidated Balance Sheet as of December 31, 2009 due to the...

  • Page 80
    ... holder to require the Company to repurchase the notes at the accreted value at certain annual dates in the future, beginning on November 15, 2010; therefore, these notes have been classified with the current maturities of long-term debt in the Consolidated Balance Sheet as of December 31, 2009. In...

  • Page 81
    ... benefit of low market interest rates. As of the swap contracts' termination date, the cumulative adjustment to the carrying value of the Company's debt was $513 million, which is being amortized over a weighted-average period of 3.5 years as a reduction to interest expense. As of December 31, 2009...

  • Page 82
    ... states in which the Company operates, this decreased the Company's effective income tax rate in 2009. The components of deferred income tax assets and liabilities as of December 31 are as follows: (in millions) 2009 2008 Deferred income tax assets: Share-based compensation ...Medical costs payable...

  • Page 83
    ...Insurance Commissioners. These standards, among other things, require these subsidiaries to maintain specified levels of statutory capital, as defined by each state, and restrict the timing and amount of dividends and other distributions that may be paid to their parent companies. Except in the case...

  • Page 84
    .... In February 2010, the Board renewed and increased the Company's share repurchase program, and authorized the Company to repurchase up to 120 million shares of its common stock. 12. Share-Based Compensation and Other Employee Benefit Plans The Company's 2002 Stock Incentive Plan (Plan), as amended...

  • Page 85
    ...'s reported Net Earnings nor Earnings per Share. The Company uses historical data to estimate option and SAR exercises and forfeitures within the valuation model. The expected lives of options and SARs granted represents the period of time that the awards granted are expected to be outstanding based...

  • Page 86
    ... to pay these individuals for the additional tax costs relating to such stock options exercised in 2006 and early 2007. For any outstanding stock options subject to additional tax under Section 409A that were granted to nonexecutive officer employees, the Company increased the exercise price and...

  • Page 87
    ... each plan and were $216 million and $182 million as of December 31, 2009 and 2008, respectively. 13. AARP The Company provides health insurance products and services to members of AARP under a Supplemental Health Insurance Program (the Program), and separate Medicare Advantage and Medicare Part...

  • Page 88
    ... STATEMENTS-(Continued) AARP Medicare Supplement Insurance business are directly recorded as an increase or decrease to the RSF. The primary components of the underwriting results are premium revenue, medical costs, investment income, administrative expenses, member service expenses, marketing...

  • Page 89
    ... Financial Statements and were as follows: Quoted Prices in Active Markets (Level 1) Other Observable Inputs (Level 2) Unobservable Inputs (Level 3) (in millions) Total Fair Value December 31, 2009 Cash and cash equivalents ...Debt securities: U.S. government and agency obligations ...State...

  • Page 90
    ... design and management of its service offerings. The Company records liabilities for its estimates of probable costs resulting from these matters where appropriate. These matters include, but are not limited to, claims relating to health care benefits coverage, medical malpractice actions, contract...

  • Page 91
    ... System (PHCS) and Medical Data Research (MDR) database products owned by Ingenix, Inc. Both products are used by a number of health plans and employers as tools that help determine the amount to reimburse members who receive physician services outside their managed care networks. When the new...

  • Page 92
    UNITEDHEALTH GROUP NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS-(Continued) current and former officers and directors in the United States District Court for the District of Minnesota. The consolidated amended complaint was brought on behalf of the Company by several pension funds and other ...

  • Page 93
    ... change how the Company does business, restrict revenue and enrollment growth, increase the Company's health care and administrative costs and capital requirements, and increase the Company's liability in federal and state courts for coverage determinations, contract interpretation and other actions...

  • Page 94
    UNITEDHEALTH GROUP NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS-(Continued) The following table presents reporting segment financial information as of and for the years ended December 31: Health Benefits Prescription Solutions Corporate and Intersegment Eliminations (in millions) 2009 Revenues - ...

  • Page 95
    UNITEDHEALTH GROUP NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS-(Continued) 16. Quarterly Financial Data (Unaudited) Selected quarterly financial information for all quarters of 2009 and 2008 is as follows: (in millions, except per share data) March 31 For the Quarter Ended June 30 September 30 ...

  • Page 96
    ... the filing of this Form 10-K, management evaluated, under the supervision and with the participation of the Company's Chief Executive Officer and Chief Financial Officer, the effectiveness of the design and operation of the Company's disclosure controls and procedures as of December 31, 2009. Based...

  • Page 97
    ... Independent Registered Public Accounting Firm, appearing under Item 9A, which expresses an unqualified opinion on the effectiveness of the Company's internal controls over financial reporting as of December 31, 2009. STEPHEN J. HEMSLEY Stephen J. Hemsley President and Chief Executive Officer GEORGE...

  • Page 98
    ... internal control over financial reporting is a process designed by, or under the supervision of, the company's principal executive and principal financial officers, or persons performing similar functions, and effected by the company's board of directors, management, and other personnel to provide...

  • Page 99
    ... UnitedHealth Group 1993 Employee Stock Purchase Plan, as amended. Includes 6,170,280 options to acquire shares of common stock that were originally issued under the United HealthCare Corporation 1998 Broad-Based Stock Incentive Plan, as amended, which was not approved by the Company's shareholders...

  • Page 100
    ... and Transactions" and "Corporate Governance" in our definitive proxy statement for the Annual Meeting of Shareholders to be held May 25, 2010, and such required information is incorporated herein by reference. ITEM 14. PRINCIPAL ACCOUNTANT FEES AND SERVICES The information required by Item 9(e) of...

  • Page 101
    ... the Company's Current Report on Form 8-K dated October 23, 2009) Senior Indenture, dated as of November 15, 1998, between United HealthCare Corporation and The Bank of New York (incorporated by reference to Exhibit 4.1 to the Company's Registration Statement on Form S-3/A, SEC File Number 333-66013...

  • Page 102
    ...Exhibit 10(e) of the Company's Annual Report on Form 10-K for the year ended December 31, 2003) First Amendment to UnitedHealth Group Executive Savings Plan (2004 Statement) (incorporated by reference to Exhibit 10.3 to the Company's Current Report on Form 8-K dated October 31, 2006) 100 *10.2 *10...

  • Page 103
    ....1 to the Company's Current Report on Form 8-K dated November 7, 2006) Agreement for Supplemental Executive Retirement Pay, effective April 1, 2004, between UnitedHealth Group Incorporated and Stephen J. Hemsley (incorporated by reference to Exhibit 10(b) to the Company's Quarterly Report on Form 10...

  • Page 104
    ... materials from UnitedHealth Group Incorporated's Annual Report on Form 10-K for the year ended December 31, 2009, filed on February 10, 2010, formatted in XBRL (eXtensible Business Reporting Language): (i) Consolidated Balance Sheets, (ii) Consolidated Statements of Operations, (iii) Consolidated...

  • Page 105
    Schedule I Report of Independent Registered Public Accounting Firm To the Board of Directors and Shareholders of UnitedHealth Group Incorporated and subsidiaries: We have audited the consolidated financial statements of UnitedHealth Group Incorporated and subsidiaries (the "Company") as of December ...

  • Page 106
    ... (Parent Company Only) UnitedHealth Group Condensed Balance Sheets (in millions, except per share data) December 31, 2009 2008 ASSETS Current assets: Cash and cash equivalents ...Deferred income taxes ...Prepaid expenses and other current assets ...Total current assets ...Equity in net assets...

  • Page 107
    Schedule I Condensed Financial Information of Registrant (Parent Company Only) UnitedHealth Group Condensed Statements of Operations (in millions) For the Year Ended December 31, 2009 2008 2007 REVENUES: Investment and other income ...Total revenues ...OPERATING COSTS: Operating costs ...Interest ...

  • Page 108
    Schedule I Condensed Financial Information of Registrant (Parent Company Only) UnitedHealth Group Condensed Statements of Cash Flows (in millions) For the Year Ended December 31, 2009 2008 2007 OPERATING ACTIVITIES Cash flows from operating activities ...INVESTING ACTIVITIES Capital contributions ...

  • Page 109
    ...31, 2009, 2008 and 2007 1. Basis of Presentation UnitedHealth Group's parent company financial information has been derived from its consolidated financial statements and should be read in conjunction with the consolidated financial statements included in this Form 10-K. The accounting policies for...

  • Page 110
    ... duly authorized. Dated: February 10, 2010 UNITEDHEALTH GROUP INCORPORATED By STEPHEN J. HEMSLEY Stephen J. Hemsley President and Chief Executive Officer /S/ Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below by the following persons on behalf of...

  • Page 111
    ... the Company's Current Report on Form 8-K dated October 23, 2009) Senior Indenture, dated as of November 15, 1998, between United HealthCare Corporation and The Bank of New York (incorporated by reference to Exhibit 4.1 to the Company's Registration Statement on Form S-3/A, SEC File Number 333-66013...

  • Page 112
    ....1 to the Company's Current Report on Form 8-K dated November 7, 2006) Agreement for Supplemental Executive Retirement Pay, effective April 1, 2004, between UnitedHealth Group Incorporated and Stephen J. Hemsley (incorporated by reference to Exhibit 10(b) to the Company's Quarterly Report on Form 10...

  • Page 113
    ... materials from UnitedHealth Group Incorporated's Annual Report on Form 10-K for the year ended December 31, 2009, filed on February 10, 2010, formatted in XBRL (eXtensible Business Reporting Language): (i) Consolidated Balance Sheets, (ii) Consolidated Statements of Operations, (iii) Consolidated...

  • Page 114
    ... ** Denotes management contracts and compensation plans in which certain directors and named executive officers participate and which are being filed pursuant to Item...of long-term debt are not filed. The Company will furnish copies thereof to the SEC upon request(c) Financial Statement Schedule 112

  • Page 115
    ... UnitedHealth Group Directors' Compensation Deferral Plan (the "Plan"); WHEREAS, Section 10.1 of the Plan permits the Compensation and Human Resources Committee of the Company's Board of Directors (the "Committee") to amend the Plan at any time; and WHEREAS, on June 2, 2009, the Board of Directors...

  • Page 116
    ...may be amended from time to time, or a successor plan, evidencing the right to receive a share of UnitedHealth Group common stock (or a cash payment equal to the fair market value of a share of United Health Group common stock) at some future date. 4. A new sentence is added after the first sentence...

  • Page 117
    ... the form of a lump sum. Payment shall be made (or in the case of vested Deferred Stock Units, such Units will be converted into shares of UnitedHealth Group common stock) as soon as administratively practicable after such Valuation Date (but not later than the last day of February of the year when...

  • Page 118
    ... (or in the case of vested Deferred Stock Units, such Units will be converted into shares of UnitedHealth Group common stock) as soon as practicable after such determination (but not later than the last day of February of the year following the Valuation Date); provided that payment shall only be...

  • Page 119
    ...(or in the case of vested Deferred Stock Units, such Units will be converted into shares of UnitedHealth Group common stock) as soon as practicable after such determination (but not later than the last day of February of the year following the Annual Valuation Date); provided that payment shall only...

  • Page 120
    ...in its entirety to read as follows: "8.10. Distributions in Cash or Stock. Unless otherwise determined by the Committee, in its sole discretion, Deferred Stock Units shall be converted into shares of common stock of UnitedHealth Group. All other distributions from this Plan shall be made in cash." 6

  • Page 121
    ... 31, 2009 December 31, 2008 December 31, 2007 December 31, 2006 December 31, 2005 Earnings: Earnings before income taxes ...Add back: ...Fixed charges ...Total earnings available for fixed charges ...Fixed Charges: Interest, capitalized and expensed ...Interest component of rental payments ...Total...

  • Page 122
    ... Financial, Inc. Citipsych Management Solutions Pty. Ltd. ClinPharm International Limited Commonwealth Administrators, LLC Conflict Management Solutions Pty. Ltd. Corporate Support Ltd. DBP Services of New York IPA, Inc. DCG Resource Options, LLC Definity Health Corporation Dental Benefit Providers...

  • Page 123
    ... Network Systems, Inc. Envision Care Alliance Inc. Evercare Collaborative Solutions, Inc. IL DE ME DE SC Costa Rica DE IL DE Dental Benefit Providers, Inc. United HealthCare Services, Inc. National Benefit Resources, Inc. National Benefit Resources, Inc. UnitedHealthcare Insurance Company...

  • Page 124
    ... Care Services Family Home Hospice, Inc. FHP Reinsurance Limited Focus EAP Ltd. FOHP, Inc. Global Works Systems, Inc. Golden Rule Financial Corporation Golden Rule Insurance Company Great Lakes Health Plan, Inc. H & W Indemnity, Ltd. Harrington Health Services, Inc. Health Net Insurance of New York...

  • Page 125
    ... Consulting, Inc. Mid Atlantic Medical Services, LLC UnitedHealth International, Inc. Hygeia Corporation Ingenix International (Netherlands) B.V. Ingenix Pharmaceutical Services, Inc. Ingenix International (Netherlands) B.V. Ingenix Pharmaceutical Services, Inc. OptumHealth Allies UnitedHealth...

  • Page 126
    ... Business As IBA Health and Life Assurance Company Indrad Services Pty. Ltd. Indrad Unit Trust Information Network Corporation Ingenix Canada Partnership Ingenix Holdings, LLC Ingenix International (Czech Republic), s.r.o. Ingenix International (Finland) Oy Ingenix International (Hong Kong) Limited...

  • Page 127
    ... Care Health Plan OptumHealth, Inc. HealthAtoZ.com UnitedHealth Group Incorporated UnitedHealthcare, Inc. UnitedHealthcare, Inc. Mid Atlantic Medical Services, LLC Southwest Medical Associates, Inc. OptumHealth, Inc. Managed Care Solutions NBR Insurance Services Stop Loss International Corporation...

  • Page 128
    ... Health Plan Administrators, Inc. CO IN PacifiCare Health Plan Administrators, Inc. PacifiCare Health Systems, LLC. PacifiCare Health Systems, LLC PacifiCare International Limited PacifiCare Life and Health Insurance Company PacifiCare Life Assurance Company DE Ireland IN CO UnitedHealth Group...

  • Page 129
    ...PPC International, LLC United Behavioral Health United HealthCare Services, Inc. PPC International, LLC Personal Performance Consultants UK Limited Personal Performance Consultants UK Limited Personal Performance Consultants UK Limited Personal Performance Consultants UK Limited 4 PacifiCare Secure...

  • Page 130
    .... Sierra Health Services, Inc. Sierra Health-Care Options, Inc. Sierra Home Medical Products, Inc. Sierra Military Health Services, LLC Sierra Nevada Administrators, Inc. Southwest Medical Associates, Inc. Southwest Michigan Health Network Inc. Special Risk International, Inc. Spectera of New York...

  • Page 131
    ... Plan & Unison Advantage United Behavioral Health of New York, I.P.A., Inc. United Health Foundation United Healthcare International Mauritius Limited United HealthCare of Louisiana, Inc. United HealthCare of Mississippi, Inc. NY MN Mauritius LA MS United Behavioral Health UnitedHealth Group...

  • Page 132
    ... HealthCare Evaluation Services Healthmarc HealthPro Health Professionals Review Managed Care for the Aged Optum Personal Decision Services SeniorCare Select & Design UHC Management UHC Management Company UHC Management Company, Inc. Unimerica Workplace Benefits United HealthCare Corporation United...

  • Page 133
    ... our reports dated February 10, 2010, relating to the consolidated financial statements and financial statement schedule of UnitedHealth Group Incorporated and the effectiveness of UnitedHealth Group Incorporated's internal control over financial reporting, appearing in this Annual Report on Form 10...

  • Page 134
    ..., to sign an Annual Report on Form 10-K for the year ended December 31, 2009 for UnitedHealth Group Incorporated, and any and all amendments thereto, and to file the same, with all exhibits thereto, and other documents in connection therewith, with the Securities and Exchange Commission, granting...

  • Page 135
    ... of Principal Executive Officer I, Stephen J. Hemsley, certify that: 1. 2. I have reviewed this Annual Report on Form 10-K of UnitedHealth Group Incorporated (the "registrant"); Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material...

  • Page 136
    ... of Principal Financial Officer I, George L. Mikan III, certify that: 1. 2. I have reviewed this Annual Report on Form 10-K of UnitedHealth Group Incorporated (the "registrant"); Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material...

  • Page 137
    ...Hemsley President and Chief Executive Officer /s/ Certification of Principal Financial Officer In connection with the Annual Report of UnitedHealth Group Incorporated (the "Company") on Form 10-K for the period ended December 31, 2009 as filed with the Securities and Exchange Commission on the date...