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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
Form 10-K
ÈANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF
1934 For the fiscal year ended December 31, 2013
or
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT
OF 1934
For the transition period from to
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)
(952) 936-1300
(Registrant’s telephone number, including area code)
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
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, 2013 was $64,914,032,649 (based on the last reported sale
price of $65.48 per share on June 30, 2013, on the New York Stock Exchange), excluding only shares of voting stock held beneficially by directors,
executive officers and subsidiaries of the registrant.
As of January 31, 2014, there were 989,191,844 shares of the registrant’s Common Stock, $.01 par value per share, issued and outstanding.
DOCUMENTS INCORPORATED BY REFERENCE
The information required by Part III of this report, to the extent not set forth herein, is incorporated by reference from the registrant’s definitive proxy
statement relating to its 2014 Annual Meeting of Stockholders. Such proxy statement will be filed with the Securities and Exchange Commission within 120
days after the end of the fiscal year to which this report relates.

Table of contents

  • Page 1
    ... aggregate market value of voting stock held by non-affiliates of the registrant as of June 30, 2013 was $64,914,032,649 (based on the last reported sale price of $65.48 per share on June 30, 2013, on the New York Stock Exchange), excluding only shares of voting stock held beneficially by directors...

  • Page 2
    ..., Related Stockholder Matters and Issuer Purchases of Equity Securities ...Selected Financial Data ...Management's Discussion and Analysis of Financial Condition and Results of Operations ...Financial Statements ...Changes in and Disagreements with Accountants on Accounting and Financial Disclosure...

  • Page 3
    ... costs and improving consumer experience and care provider performance across eight business markets: integrated care delivery, care management, consumer engagement, distribution services, health financial services, operational services and support, health care information technology and pharmacy...

  • Page 4
    ... Group affiliates for capabilities in specialized areas, such as OptumRx pharmacy benefit products and services, certain OptumHealth care management and integrated care delivery services and OptumInsight health information and technology solutions, consulting and other services. In the United States...

  • Page 5
    ... non-employer based insurance options for purchase by individuals, including students, which are designed to meet the health coverage needs of these consumers and their families. As part of the new public health care exchange market that opened October 1, 2013, UnitedHealthcare Employer & Individual...

  • Page 6
    ... on funding type (fully insured and self-funded), line of business (e.g. small business, key accounts, public sector and national accounts), and clinical need. UnitedHealthcare Employer & Individual's spectrum of clinical programs include wellness programs; decision support; utilization management...

  • Page 7
    ...plans, Point-of-Service plans, Private-Fee-for-Service plans and Special Needs Plans (SNPs). Under the Medicare Advantage program, UnitedHealthcare Medicare & Retirement provides health insurance coverage in exchange for a fixed monthly premium per member from CMS and in some cases consumer premiums...

  • Page 8
    ...benefit of employer-funded health care coverage in exchange for a fixed monthly premium per member from the applicable state. UnitedHealthcare Community & State's primary customers oversee Medicaid plans, Children's Health Insurance Programs (CHIP), and other federal, state and community health care...

  • Page 9
    its Medicaid managed care program in terms of service, innovation and funding; the eligible population base, both immediate and long term; and the structure of the projected program. UnitedHealthcare Community & State works with its state customers to advocate for actuarially sound rates that are ...

  • Page 10
    ...for international customers, including network access and care coordination in the United States and overseas; TPA products and services for health plans and TPAs; brokerage services; practice management services for care providers; government and corporate consulting services for improving quality...

  • Page 11
    ... experience and care provider performance. Optum is organized in three reportable segments OptumHealth focuses on care management, integrated care delivery, and consumer solutions, including financial services; OptumInsight delivers operational services and support and health information technology...

  • Page 12
    ... in medical payments to physicians and other health care providers. • • OptumInsight OptumInsight provides technology, operational and consulting services to participants in the health care industry. Hospitals, physicians, commercial health plans, government agencies, life sciences companies...

  • Page 13
    ...is also helping payer clients adapt to new market models, including health insurance exchanges, consumer driven health care and engagement, pay-forvalue contracting, and population health management. Governments. OptumInsight provides services to state, federal and municipal agencies and departments...

  • Page 14
    ... public and private sector employer groups, insurance companies, Taft-Hartley Trust Funds, TPAs, managed care organizations (MCOs), Medicare-contracted plans, Medicaid plans and other sponsors of health benefit plans and individuals throughout the United States. OptumRx's distribution system...

  • Page 15
    ...business units may do business with employers who sponsor employee benefit health plans, particularly those that maintain self-funded plans. Regulations established by the DOL subject us to additional requirements for claims payment and member appeals under health care plans governed by ERISA. State...

  • Page 16
    ... network, contracting, product and rate, and financial and reporting requirements. There are laws and regulations that set specific standards for delivery of services, appeals, grievances and payment of claims, adequacy of health care professional networks, fraud prevention, protection of consumer...

  • Page 17
    ... information related to consumers and care providers. Additionally, different approaches to state privacy and insurance regulation and varying enforcement philosophies in the different states may materially and adversely affect our ability to standardize our products and services across state lines...

  • Page 18
    ...highly competitive markets. Our competitors include managed health care companies, insurance companies, HMOs, TPAs and business services outsourcing companies, health care professionals that have formed networks to contract directly with employers or with CMS, specialty benefit providers, government...

  • Page 19
    ...UnitedHealthcare Medicare & Retirement). Ms. Short is Executive Vice President and Chief Legal Officer of UnitedHealth Group and has served in that capacity since January 2013. Prior to joining UnitedHealth Group, Ms. Short served as the Managing Partner at Dorsey & Whitney LLP, an international law...

  • Page 20
    ...fail to effectively estimate, price for and manage our medical costs, the profitability of our risk-based products and services could decline and could materially and adversely affect our results of operations, financial position and cash flows. Through our risk-based benefit products, we assume the...

  • Page 21
    ...product design, negotiation of favorable provider contracts and care management programs. Total medical costs are affected by the number of individual services rendered, the cost of each service and the type of service rendered. Our premium revenue on commercial policies is typically at a fixed rate...

  • Page 22
    ... rates for our health insurance and/or managed care products are subject to regulatory review or approval in many states and by the federal government, and a number of states have enhanced (or are proposing to enhance) their rate review processes. Additionally, the final market reform rules released...

  • Page 23
    ... certain states may restrict the ability of health plans to continue to offer coverage to individuals and small employers outside of the exchanges could result in disruptions in local health care markets and adversely affect our results of operations, financial position and cash flows. Health Reform...

  • Page 24
    ... for rate increases by commercial health plans and providing funding to assist in those state-level reviews. If we are not able to secure approval for adequate premium increases to offset increases in our cost structure or if consumers forego coverage as a result of such premium increases, our...

  • Page 25
    ... our annual bids to actual prescription drug costs. Some state Medicaid programs utilize a similar process. For example, our UnitedHealthcare Medicare & Retirement and UnitedHealthcare Community & State businesses submit information relating to the health status of enrollees to CMS or state agencies...

  • Page 26
    ... managed care and health insurance products. We provide PBM services through our OptumRx and UnitedHealthcare businesses. Each business is subject to federal and state anti-kickback and other laws that govern the relationships of the business with pharmaceutical manufacturers, physicians, pharmacies...

  • Page 27
    ... our market share, including maintaining or increasing enrollments in businesses providing health benefits, our results of operations, financial position and cash flows could be materially and adversely affected. Our businesses compete throughout the United States and face significant competition in...

  • Page 28
    ... these health insurance or HMO companies, or to adequately price their contracts with these third party payers. In addition, physicians, hospitals, pharmaceutical benefit service providers, pharmaceutical manufacturers, and certain health care providers are customers of our Optum businesses. Given...

  • Page 29
    ... and payment (including disputes with enrollees, customers, and contracted and non-contracted physicians, hospitals and other health care professionals), tort (including claims related to the delivery of health care services, such as medical malpractice by health care practitioners who are employed...

  • Page 30
    ..., financial position and cash flows. During a prolonged unfavorable economic environment, state and federal budgets could be materially and adversely affected, resulting in reduced reimbursements or payments in our federal and state government health care coverage programs, including Medicare...

  • Page 31
    ... for our commercial programs, such as premium taxes on insurance companies and HMOs and surcharges or fees on select fee-for-service and capitated medical claims. Any of these developments or actions could materially and adversely affect our results of operations, financial position and cash flows...

  • Page 32
    ... fashion with other products could materially and adversely affect our results of operations, financial position and cash flows. Uncertain and rapidly evolving U.S. federal and state, non-U.S. and international laws and regulations related to the health information technology market may present...

  • Page 33
    ...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 credit ratings...

  • Page 34
    ... annual dividend rate of $1.12 per share, paid quarterly. Since June 2012, we had paid an annual cash dividend of $0.85 per share, paid quarterly. Declaration and payment of future quarterly dividends is at the discretion of the Board and may be adjusted as business needs or market conditions change...

  • Page 35
    ... Quarter 2013 Total Number of Shares Purchased as Part of Publicly Announced Plans or Programs (in millions) Maximum Number of Shares That May Yet Be Purchased Under The Plans or Programs (in millions) For the Month Ended Total Number of Shares Purchased (in millions) Average Price Paid per Share...

  • Page 36
    ...General Electric Company, International Business Machines Corporation and Johnson & Johnson. Although there are differences among the companies in terms of size and industry, like UnitedHealth Group, all of these companies are large multi-segment companies using a well-defined operating model in one...

  • Page 37
    Peer Group The companies included in our peer group are Aetna Inc., Cigna Corporation, Humana Inc. and WellPoint, Inc. We believe that this peer group reflects publicly traded peers to our UnitedHealthcare businesses. COMPARISON OF 5 YEAR CUMULATIVE TOTAL RETURN Among UnitedHealth Group, the S&P ...

  • Page 38
    ...SELECTED FINANCIAL DATA FINANCIAL HIGHLIGHTS (in millions, except percentages and per share data) 2013 For the Year Ended December 31, 2012 (a) 2011 2010 2009 Consolidated operating results Revenues ...Earnings from operations ...Net earnings attributable to UnitedHealth Group common shareholders...

  • Page 39
    ... lives and making the health system work better for everyone. We offer a broad spectrum of products and services through two distinct platforms: UnitedHealthcare, which provides health care coverage and benefits services; and Optum, which provides information and technology-enabled health services...

  • Page 40
    ...the medical care ratio will rise over time as we continue to grow in the senior and public markets and participate in the emerging public health benefit exchange market. In response to Health Reform Legislation, HHS established a review threshold of annual commercial premium rate increases generally...

  • Page 41
    ... business platform. Government Reliance on Private Sector. The government, as a benefit sponsor, has been increasingly relying on private sector programs. We expect this trend to continue as we believe the private sector provides a more flexible, better managed, higher quality health care experience...

  • Page 42
    ...the seniors we serve through Medicare Advantage. For example, we seek to intensify our medical and operating cost management, make changes to the size and composition of our care provider networks, adjust members' benefits, implement or increase member premiums over and above the monthly payments we...

  • Page 43
    ... plans are priced in many states; (2) essential health benefit requirements, which will result in benefit changes for many individual and small group policyholders; (3) actuarial value requirements, which will significantly impact benefit designs in the individual market, such as member cost sharing...

  • Page 44
    ... to noncontrolling interests ...Net earnings attributable to UnitedHealth Group common shareholders ...$ Diluted earnings per share attributable to UnitedHealth Group common shareholders ...$ Medical care ratio (a) ...Operating cost ratio ...Operating margin ...Tax rate ...Net margin ...Return on...

  • Page 45
    ... public and senior markets businesses, partially offset by the funding conversion of the large client discussed above. The year-over-year medical care ratio increased primarily due to funding reductions for Medicare Advantage products, changes in business mix favoring governmental benefit programs...

  • Page 46
    ... December 31, 2013 2012 2011 Increase/ (Decrease) 2013 vs. 2012 Increase/ (Decrease) 2012 vs. 2011 (in millions, except percentages) UnitedHealthcare Employer & Individual ...UnitedHealthcare Medicare & Retirement ...UnitedHealthcare Community & State ...UnitedHealthcare International ...Total...

  • Page 47
    ... Care Support Contract. This administrative services contract for health care operations added 2.9 million people and includes a transition period and five one-year renewals at the government's option. Medicare Advantage participation increased due to solid execution in product design, marketing...

  • Page 48
    ...and premium rate increases related to underlying medical cost trends in our UnitedHealthcare businesses and growth in our Optum health service and technology offerings. Medical Costs Medical costs increased in 2012 due to risk-based membership growth in our public and senior markets businesses, unit...

  • Page 49
    ... in the medical care ratio that was driven by effective management of medical costs and increased favorable medical reserve development. The favorable development for 2012 was driven by lower than expected health system utilization levels and increased efficiency in claims handling and processing...

  • Page 50
    ... manage our cash, investments, working capital balances and capital structure to meet the short-term and long-term obligations of our businesses while seeking to maintain liquidity and financial flexibility. Cash flows generated from operating activities are principally from earnings before non-cash...

  • Page 51
    ... equipment and capitalized software, net ...Cash dividends paid ...Customer funds administered ...Other ...Total uses of cash ...Effect of exchange rate changes on cash and cash equivalents ...Net (decrease) increase in cash ...nm = not meaningful 2013 Cash Flows Compared to 2012 Cash Flows $ 6,991...

  • Page 52
    ...; (b) increases in long-term debt, commercial paper and common stock issuances, primarily related to the Amil acquisition; (c) increases in cash paid for customer funds related to Medicare Part D and increased shareholder dividend payments. Financial Condition As of December 31, 2013, our cash, cash...

  • Page 53
    ... annual dividend rate of $1.12 per share, paid quarterly. Since June 2012, we had paid an annual cash dividend of $0.85 per share, paid quarterly. Declaration and payment of future quarterly dividends is at the discretion of the Board and may be adjusted as business needs or market conditions change...

  • Page 54
    ...'s remaining non-public shareholders. We do not have other significant contractual obligations or commitments that require cash resources. However, we continually evaluate opportunities to expand our operations, which include internal development of new products, programs and technology applications...

  • Page 55
    ... health care professional contract rate changes, medical care utilization and other medical cost trends, membership volume and demographics, the introduction of new technologies, benefit plan changes, and business mix changes related to products, customers and geography. Depending on the health care...

  • Page 56
    ... analysis of claims incurred in prior months, provider contracting and expected unit costs, benefit design, and by reviewing a broad set of health care utilization indicators including, but not limited to, pharmacy utilization trends, inpatient hospital census data and incidence data from the...

  • Page 57
    ... the applicable contracts within each defined aggregation set (e.g., by state, group size and licensed subsidiary). The most significant factors in estimating the financial performance are current and future premiums and medical claim experience, effective tax rates and expected changes in business...

  • Page 58
    ... to market information such as peer company weighted average costs of capital and peer company stock prices in the form of revenue and earnings multiples. Beyond our selection of the most appropriate risk-free rates and equity risk premiums, our most significant estimates in the discount rate...

  • Page 59
    ... exceed its estimated fair value. Consideration is given on a quarterly basis to a number of potential impairment indicators including: changes in the use of the assets, changes in legal or other business factors that could affect value, experienced or expected operating cash-flow deterioration or...

  • Page 60
    ..., making adjustments through the reporting date based upon available observable market information. For securities not actively traded, the pricing service may use quoted market prices of comparable instruments or discounted cash flow analyses, incorporating inputs that are currently observable in...

  • Page 61
    ... positions reflect our assessment of estimated future taxes to be paid on items in the consolidated financial statements. Deferred income taxes arise from temporary differences between financial reporting and tax reporting bases of assets and liabilities, as well as net operating loss and tax credit...

  • Page 62
    ... accounts receivable are limited due to the large number of employer groups and other customers that constitute our client base. As of December 31, 2013, we had an aggregate $1.8 billion reinsurance receivable resulting from the sale of our Golden Rule Financial Corporation life and annuity business...

  • Page 63
    ...-income funds, employee savings plan related investments, private equity funds, and dividend paying stocks. Valuations in non-US dollar funds are subject to foreign exchange rates. Valuations in private equity are subject to conditions affecting health care and technology stocks, and dividend paying...

  • Page 64
    ... Accounting Policies ...3. Investments ...4. Fair Value ...5. Property, Equipment and Capitalized Software ...6. Goodwill and Other Intangible Assets ...7. Medical Costs and Medical Costs Payable ...8. Commercial Paper and Long-Term Debt ...9. Income Taxes ...10. Shareholders' Equity ...11. Share...

  • Page 65
    ... Public Accounting Firm To the Board of Directors and Shareholders of UnitedHealth Group Incorporated and Subsidiaries: We have audited the accompanying consolidated balance sheets of UnitedHealth Group Incorporated and subsidiaries (the "Company") as of December 31, 2013 and 2012, and the related...

  • Page 66
    UnitedHealth Group Consolidated Balance Sheets (in millions, except per share data) December 31, 2013 December 31, 2012 Assets Current assets: Cash and cash equivalents ...Short-term investments ...Accounts receivable, net of allowances of $196 and $189 ...Other current receivables, net of ...

  • Page 67
    UnitedHealth Group Consolidated Statements of Operations For the Years Ended December 31, 2013 2012 2011 (in millions, except per share data) Revenues: Premiums ...Services ...Products ...Investment and other income ...Total revenues ...Operating costs: Medical costs ...Operating costs ...Cost of ...

  • Page 68
    UnitedHealth Group Consolidated Statements of Comprehensive Income For the Years Ended December 31, 2013 2012 2011 (in millions) Net earnings ...Other comprehensive (loss) income: Gross unrealized holding (losses) gains on investment securities during the period ...Income tax effect ...Total ...

  • Page 69
    ... ...Cash dividends paid on common shares ...Balance at December 31, 2012 ...1,019 Net earnings attributable to UnitedHealth Group common shareholders ...Other comprehensive loss ...Issuances of common shares, and related tax effects ...17 Share-based compensation, and related tax benefits ...Common...

  • Page 70
    UnitedHealth Group Consolidated Statements of Cash Flows (in millions) For the Years Ended December 31, 2013 2012 2011 Operating activities Net earnings ...$ 5,673 $ 5,526 $ 5,142 Non-cash items: Depreciation and amortization ...1,375 1,309 1,124 Deferred income taxes ...1 308 59 Share-based ...

  • Page 71
    ... premium payments received from its customers in advance of the service period are recorded as unearned revenues. Fully insured commercial products of U.S. health plans, and beginning in 2014, Medicare Advantage and Medicare Prescription Drug Benefit (Medicare Part D) plans with medical loss ratios...

  • Page 72
    ... Consolidated Financial Statements. For both risk-based and fee-based customer arrangements, the Company provides coordination and facilitation of medical services; transaction processing; customer, consumer and care professional services; and access to contracted networks of physicians, hospitals...

  • Page 73
    ... with the investment policy. Assets Under Management The Company provides health insurance products and services to members of AARP under a Supplemental Health Insurance Program (the AARP Program), and to AARP members and non-members under separate Medicare Advantage and Medicare Part D arrangements...

  • Page 74
    ... and non-affiliated clients. The Company accrues rebates as they are earned by its clients on a monthly basis based on the terms of the applicable contracts, historical data and current estimates. The PBM businesses bill these rebates to the manufacturers on a monthly or quarterly basis depending on...

  • Page 75
    ... estimates of eligible pharmacy costs and member eligibility status differences with CMS. The Company records risk-share adjustments to Premium Revenues in the Consolidated Statements of Operations and Other Policy Liabilities or Other Current Receivables in the Consolidated Balance Sheets. Drug...

  • Page 76
    ... the AARP Program (described below), health savings account deposits, deposits under the Medicare Part D program (see "Medicare Part D Pharmacy Benefits" above), accruals for premium rebate payments under Health Reform Legislation, the current portion of future policy benefits and customer balances...

  • Page 77
    accounts under experience-rated contracts. At the customer's option, these balances may be refunded or used to pay future premiums or claims under eligible contracts. Underwriting gains or losses related to the AARP Program are directly recorded as an increase or decrease to the RSF and accrue to ...

  • Page 78
    ... the fair value at date of grant, which is estimated on the date of grant using a binomial option-pricing model. Under the Company's Employee Stock Purchase Plan (ESPP) eligible employees are allowed to purchase the Company's stock at a discounted price, which is 85% of the lower market price of the...

  • Page 79
    ... A summary of short-term and long-term investments by major security type is as follows: Amortized Cost Gross Unrealized Gains Gross Unrealized Losses Fair Value (in millions) December 31, 2013 Debt securities - available-for-sale: U.S. government and agency obligations ...State and municipal...

  • Page 80
    ... by credit rating (when multiple credit ratings are available for an individual security, the average of the available ratings is used) and origination date as of December 31, 2013 were as follows: (in millions) AAA AA Non-Investment Grade Total Fair Value 2013 ...2012 ...2011 ...2010 ...2009...

  • Page 81
    ...'s investments in equity securities consist of investments in Brazilian real denominated fixedincome funds, employee savings plan related investments, private equity funds, and dividend paying stocks. The Company evaluated its investments in equity securities for severity and duration of unrealized...

  • Page 82
    ...markets. Level 2 - Other observable inputs, either directly or indirectly, including Quoted prices for similar assets/liabilities in active markets; Quoted prices for identical or similar assets/liabilities in non-active markets (e.g., few transactions, limited information, non-current prices, high...

  • Page 83
    ... the Company compares changes in the reported market values and returns to relevant market indices to test the reasonableness of the reported prices. The Company's internal price verification procedures and reviews of fair value methodology documentation provided by independent pricing services have...

  • Page 84
    ...Balance Sheets excluding AARP Program-related assets and liabilities, which are presented in a separate table below: Quoted Prices in Active Markets (Level 1) Other Observable Inputs (Level 2) Unobservable Inputs (Level 3) Total Fair and Carrying Value (in millions) December 31, 2013 Cash and cash...

  • Page 85
    ...$17,034 $17,034 $15,167 The carrying amounts reported in the Consolidated Balance Sheets for other current financial assets and liabilities approximate fair value because of their short-term nature. These assets and liabilities are not listed in the table above. A reconciliation of the beginning...

  • Page 86
    ... of the AARP Assets Under Management at fair value pursuant to the fair value option. See Note 2 for further information on the AARP Program. The following table presents fair value information about the AARP Program-related financial assets and liabilities: Quoted Prices in Active Markets (Level...

  • Page 87
    ... quarter of 2012, the Company purchased Amil, a health care company located in Brazil, providing health and dental benefits, hospital and clinical services, and advanced care management resources to nearly 7 million people. During 2013, the Company acquired all of Amil's remaining public shares...

  • Page 88
    ...) 2014 2015 2016 2017 2018 ... $500 478 449 411 332 Amortization expense relating to intangible assets for 2013, 2012 and 2011 was $519 million, $448 million and $361 million, respectively. 7. Medical Costs and Medical Costs Payable The following table provides details of the Company's net...

  • Page 89
    ... 2013, 2012, and 2011 was primarily driven by lower than expected health system utilization levels. The years ended December 31, 2012 and 2011 were also impacted by increased efficiency in claims processing and handling. The following table shows the components of the change in medical costs payable...

  • Page 90
    ... Paper and Long-Term Debt Commercial paper and senior unsecured long-term debt consisted of the following: December 31, 2013 Par Carrying Fair Value Value Value December 31, 2012 Par Carrying Fair Value Value Value (in millions, except percentages) Commercial Paper ...$ 1,115 $ 1,115 $ 1,115...

  • Page 91
    ...fair value of the interest rate swap fair value hedges on the Company's Consolidated Balance Sheet: Type of Fair Value Hedge Notional Amount (in billions) Fair Value (in millions) Balance Sheet Location December 31, 2013 Interest rate swap contracts ...December 31, 2012 Interest rate swap contracts...

  • Page 92
    ...table provides a summary of the effect of changes in fair value of fair value hedges on the Company's Consolidated Statements of Operations: (in millions) For the Years Ended December 31, 2013 2012 2011 Hedge - interest rate swap (loss) gain recognized in interest expense ...Hedged item - long-term...

  • Page 93
    ...: (in millions) 2013 2012 Deferred income tax assets: Accrued expenses and allowances ...U.S. federal and state net operating loss carryforwards ...Share-based compensation ...Long-term liabilities ...Medical costs payable and other policy liabilities ...Non-U.S. tax loss carryforwards ...Unearned...

  • Page 94
    ... tax rate, was $89 million. The Company currently files income tax returns in the United States, various states and non-U.S. jurisdictions. The U.S. Internal Revenue Service (IRS) has completed exams on the consolidated income tax returns for fiscal years 2012 and prior. The Company's 2013 tax...

  • Page 95
    ... and payment of future quarterly dividends is at the discretion of the Board and may be adjusted as business needs or market conditions change. The following table provides details of the Company's dividend payments: Payment Date Amount per Share Total Amount Paid (in millions) 2013 ...2012 ...2011...

  • Page 96
    ... value of shares granted, per share ...Total fair value of restricted shares vested ...Employee Stock Purchase Plan Number of shares purchased ...Share-Based Compensation Items Share-based compensation expense, before tax ...Share-based compensation expense, net of tax effects ...Income tax benefit...

  • Page 97
    ...a 401(k) plan for its employees. Compensation expense related to this plan was not material for the years ended December 31, 2013, 2012 and 2011. In addition, the Company maintains non-qualified, unfunded deferred compensation plans, which allow certain members of senior management and executives to...

  • Page 98
    ... customers and regulators, relating to the Company's businesses, including management and administration of health benefit plans and other services. These matters include medical malpractice, employment, intellectual property, antitrust, privacy and contract claims, and claims related to health care...

  • Page 99
    ..., hospitals and other facilities, information technology infrastructure and other resources. UnitedHealthcare Employer & Individual offers an array of consumer-oriented health benefit plans and services for large national employers, public sector employers, mid-sized employers, small businesses and...

  • Page 100
    ..., technology, operational services and consulting company providing software and information products, advisory consulting services, and business process outsourcing services and support to participants in the health care industry. Hospitals, physicians, commercial health plans, government agencies...

  • Page 101
    ... table presents the reportable segment financial information: Optum Corporate and Total Intersegment UnitedHealthcare Optum Health Optum Insight OptumRx Optum Eliminations Consolidated (in millions) 2013 Revenues - external customers: Premiums ...Services ...Products ...Total revenues - external...

  • Page 102
    ... In connection with the filing of this Annual Report on Form 10-K, management evaluated, under the supervision and with the participation of our Chief Executive Officer and Chief Financial Officer, the effectiveness of the design and operation of our disclosure controls and procedures as of December...

  • Page 103
    ...(f) under the Securities Exchange Act of 1934. The Company's internal control system is designed to provide reasonable assurance to our management and board of directors regarding the reliability of financial reporting and the preparation of consolidated financial statements for external purposes in...

  • Page 104
    ... Registered Public Accounting Firm To the Board of Directors and Shareholders of UnitedHealth Group Incorporated and Subsidiaries: We have audited the internal control over financial reporting of UnitedHealth Group Incorporated and Subsidiaries (the "Company") as of December 31, 2013, based...

  • Page 105
    ...headings "Corporate Governance," "Election of Directors" and "Section 16(a) Beneficial Ownership Reporting Compliance" in our definitive proxy statement for our 2014 Annual Meeting of Shareholders, and such required information is incorporated herein by reference. ITEM 11. EXECUTIVE COMPENSATION The...

  • Page 106
    ...and Transactions" and "Corporate Governance" in our definitive proxy statement for our 2014 Annual Meeting of Shareholders, and such required information is incorporated herein by reference. ITEM 14. PRINCIPAL ACCOUNTANT FEES AND SERVICES The information required by Item 9(e) of Schedule 14A will be...

  • Page 107
    ... Current Report on Form 8-K filed on October 26, 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 UnitedHealth Group Incorporated's Registration Statement on Form S-3/A, SEC File Number...

  • Page 108
    ... Statement dated April 13, 2011) Form of Agreement for Non-Qualified Stock Option Award to Executives under UnitedHealth Group Incorporated's 2011 Stock Incentive Plan Form of Agreement for Non-Qualified Stock Option Award for International Participants under UnitedHealth Group Incorporated's 2011...

  • Page 109
    ... to UnitedHealth Group Executive Savings Plan (2004 Statement) (incorporated by reference to Exhibit 10.1 of UnitedHealth Group Incorporated's Quarterly Report on Form 10-Q for the quarter ended September 30, 2010) Summary of Non-Management Director Compensation, effective as of October 1, 2013...

  • Page 110
    ... 10.32 to UnitedHealth Group Incorporated's Annual Report on Form 10-K for the year ended December 31, 2012) Employment Agreement, effective as of January 1, 2013, between United HealthCare Services, Inc. and Marianne D. Short Statement regarding computation of per share earnings (incorporated by...

  • Page 111
    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 112
    Schedule I Condensed Financial Information of Registrant (Parent Company Only) UnitedHealth Group Condensed Balance Sheets (in millions, except per share data) December 31, 2013 December 31, 2012 Assets Current assets: Cash and cash equivalents ...Short-term notes receivable from subsidiaries ......

  • Page 113
    Schedule I Condensed Financial Information of Registrant (Parent Company Only) UnitedHealth Group Condensed Statements of Comprehensive Income (in millions) For the Years Ended December 31, 2013 2012 2011 Revenues: Investment and other income ...Total revenues ...Operating costs: Operating costs ...

  • Page 114
    Schedule I Condensed Financial Information of Registrant (Parent Company Only) UnitedHealth Group Condensed Statements of Cash Flows (in millions) For the Years Ended December 31, 2013 2012 2011 Operating activities Cash flows from operating activities ...Investing activities Issuance of notes to ...

  • Page 115
    ... primarily to fund the purchase of Amil's remaining public shares. Additionally in 2013, the $2.6 billion term note issued in 2012 was reclassified to long-term. During 2012, the parent company completed a non-cash exchange of a $3.9 billion intercompany note to a subsidiary for a new term note of...

  • Page 116
    ...Short, As Attorney-in-Fact Director, President and Chief Executive Officer (principal executive officer) Executive Vice President and Chief Financial Officer of UnitedHealth Group and President of UnitedHealth Group Operations (principal financial officer) Senior Vice President and Chief Accounting...

  • Page 117
    ... Current Report on Form 8-K filed on October 26, 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 UnitedHealth Group Incorporated's Registration Statement on Form S-3/A, SEC File Number...

  • Page 118
    ... to UnitedHealth Group Executive Savings Plan (2004 Statement) (incorporated by reference to Exhibit 10.1 of UnitedHealth Group Incorporated's Quarterly Report on Form 10-Q for the quarter ended September 30, 2010) Summary of Non-Management Director Compensation, effective as of October 1, 2013...

  • Page 119
    ... 10.32 to UnitedHealth Group Incorporated's Annual Report on Form 10-K for the year ended December 31, 2012) Employment Agreement, effective as of January 1, 2013, between United HealthCare Services, Inc. and Marianne D. Short Statement regarding computation of per share earnings (incorporated by...

  • Page 120
    ... Statements of Changes in Shareholders' Equity, (v) Consolidated Statements of Cash Flows, and (vi) Notes to the Consolidated Financial Statements. * ** Denotes management contracts and compensation plans in which certain directors and named executive officers participate and which are being filed...