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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, 2014
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, 2014 was $78,282,268,950 (based on the last reported sale
price of $81.75 per share on June 30, 2014, 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 30, 2015, there were 953,695,161 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 2015 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
    ... market value of voting stock held by non-affiliates of the registrant as of June 30, 2014 was $78,282,268,950 (based on the last reported sale price of $81.75 per share on June 30, 2014, on the New York Stock Exchange), excluding only shares of voting stock held beneficially by directors, executive...

  • Page 2
    ... and Results of Operations ...Financial Statements ...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 Compensation...

  • Page 3
    ... across eight business markets: local care delivery, care management, consumer engagement, distribution services, health financial services, operational services and support, health care information technology and pharmacy services. Through UnitedHealthcare and Optum, in 2014, we managed over $165...

  • Page 4
    ... the risk of both medical and administrative costs for its customers in return for a monthly premium, which is typically a fixed rate per individual served for a one-year period. When providing administrative and other management services to customers that elect to self-fund the health care costs of...

  • Page 5
    ... encourage consumer choice. Direct-to-consumer sales are also supported by participation in multi-carrier health insurance marketplaces for individuals and small groups through exchanges. In 2014, UnitedHealthcare Employer & Individual participated in 13 state public health care exchanges, including...

  • Page 6
    ... care. Essential Benefits Products. UnitedHealthcare Employer & Individual's portfolio of lower cost products provides value to consumers through innovative plan designs and unique network programs like UnitedHealth Premium®, which guide people to physicians recognized for providing high-quality...

  • 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
    ... employer-funded health care coverage, in exchange for a monthly premium per member from the state program. In some cases, these premiums are subject to experience or risk adjustments. UnitedHealthcare Community & State's primary customers oversee Medicaid plans, Children's Health Insurance Programs...

  • Page 9
    ... participates in international markets through national "in country" and cross-border strategic approaches. UnitedHealthcare Global's cross-border health care business provides comprehensive health benefits, care management and care delivery for multinational employers, governments and individuals 7

  • Page 10
    ... insurance solutions. Optum Optum is a health services business serving the broad health care marketplace, including Those who need care: the consumers who need the right support, information, resources and products to achieve their health goals. Those who provide care: pharmacies, physicians...

  • Page 11
    ...which it manages or administers delivery of the products or services in exchange for a fixed fee per individual served. For its financial services offerings, OptumHealth charges fees and earns investment income on managed funds. OptumHealth sells its products primarily through its direct sales force...

  • Page 12
    ..., market aggregators and employers meet the needs of the consumers they serve. OptumHealth provides call center support, multimodal communications software, data analysis and trained nurses that help clients acquire, retain and service large populations of health care consumers. Financial Services...

  • Page 13
    ... medications are the fastest growing pharmacy expenditures. OptumRx also provides PBM services to non-affiliated external clients, including public and private sector employer groups, insurance companies, Taft-Hartley Trust Funds, TPAs, managed care organizations (MCOs), Medicare-contracted plans...

  • Page 14
    ... cost to members, required premium rebates if certain medical loss ratios (MLRs) are not satisfied, granted members new and additional appeal rights, created new premium rate review processes, established a system of state and federal exchanges through which consumers can purchase health coverage...

  • 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
    ... set specific standards for delivery of services, appeals, grievances and payment of claims, adequacy of health care professional networks, fraud prevention, protection of consumer health information, pricing and underwriting practices and covered benefits and services. State health care anti-fraud...

  • Page 17
    ... operate in 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...

  • Page 18
    ... to maintain or increase our market share, including by maintaining or increasing enrollments in businesses providing health benefits, our results of operations, financial position and cash flows could be materially and adversely affected. See Part I, Item 1A, "Risk Factors," for additional...

  • Page 19
    ... of the Public and Senior Markets Group. 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
    ... our capitated members, our results of operations could be materially and adversely affected. We manage medical costs through underwriting criteria, product design, negotiation of favorable provider contracts and care management programs. Total medical costs are affected by the number of individual...

  • Page 21
    ... maintain regulatory approvals to market many of our products, increase prices for certain regulated products, and complete certain acquisitions and dispositions or integrate certain acquisitions. For example, premium rates for our health insurance and managed care products are subject to regulatory...

  • Page 22
    ... and small employers and requires insurers participating on the health insurance exchanges to offer a minimum level of benefits and includes guidelines on setting premium rates and coverage limitations. While risk adjustment applies to most individual and small group plans in the commercial markets...

  • Page 23
    ... payer and as a service provider to payers, we are exposed to additional risks associated with program funding, enrollments, payment adjustments, audits and government investigations that could materially and adversely affect our business, results of operations, financial position and cash flows. We...

  • Page 24
    ... status of each beneficiary as supported by data from health care providers for Medicare Advantage plans, as well as, for Medicare Part D plans, risk-sharing provisions based on a comparison of costs predicted in our annual bids to actual prescription drug costs. Some state Medicaid programs utilize...

  • Page 25
    ... results of operations, financial position and cash flows. Our businesses providing PBM services face regulatory and other risks and uncertainties associated with the PBM industry that may differ from the risks of our business of providing managed care and health insurance products. We provide PBM...

  • Page 26
    ... managements' attention and result in negative publicity. 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...

  • Page 27
    ... ability to market products or to be profitable in those areas could be materially and adversely affected. We have capitation arrangements with some physicians, hospitals and other health care providers. Capitation arrangements limit our exposure to the risk of increasing medical costs, but expose...

  • Page 28
    ...-branded Medicare Supplement insurance to AARP members and other AARP-branded products and services to Medicare beneficiaries. If we fail to meet the needs of our alliance or joint venture partners, including by developing additional products and services, providing high levels of service, pricing...

  • Page 29
    ... ability to increase premiums or result in the cancellation by certain customers of our products and services. These conditions could lead to a decrease in our membership levels and premium and fee revenues and could materially and adversely affect our results of operations, financial position and...

  • Page 30
    ...our service offerings. Further, unfavorable economic conditions could adversely impact the customers of our Optum businesses, including health plans, HMOs, hospitals, care providers, employers and others, which could, in turn, materially and adversely affect Optum's financial results. Our investment...

  • Page 31
    ... medical cost estimates and establishing appropriate pricing, have difficulty preventing, detecting and controlling fraud, have disputes with customers, physicians and other health care professionals, become subject to regulatory sanctions or penalties, incur increases in operating expenses...

  • Page 32
    .... 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 impact both the cost and availability of future borrowings. Each of the credit rating agencies reviews its ratings periodically. Our...

  • Page 33
    ... PURCHASES OF EQUITY SECURITIES MARKET PRICES AND HOLDERS Our common stock is traded on the New York Stock Exchange (NYSE) under the symbol UNH. On January 30, 2015, there were 13,946 registered holders of record of our common stock. The per share high and low common stock sales prices reported...

  • Page 34
    ... Quarter 2014 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 35
    ...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 36
    Peer Group The companies included in our peer group are Aetna Inc., Anthem Inc., Cigna Corporation and Humana 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 500 ...

  • Page 37
    ITEM 6. SELECTED FINANCIAL DATA 2014 For the Year Ended December 31, 2013 2012 (a) 2011 2010 (in millions, except percentages and per share data) Consolidated operating results Revenues ...Earnings from operations ...Net earnings attributable to UnitedHealth Group common shareholders ...Return on...

  • Page 38
    ... information and technology-enabled health services. We have four reportable segments across our two business platforms, UnitedHealthcare and Optum UnitedHealthcare, which includes UnitedHealthcare Employer & Individual, UnitedHealthcare Medicare & Retirement, UnitedHealthcare Community & State...

  • Page 39
    ... primary drivers of prescription drug trends continue to be unit cost pressure on brand name drugs and a shift towards expensive new specialty medications, including new hepatitis C therapies. Delivery System and Payment Modernization. The health care market continues to change based on demographic...

  • Page 40
    ... fee-for-service reimbursement rates. These factors affected our plan benefit designs, market participation, growth prospects and expectation of earnings for our Medicare Advantage plans for 2015. Health Reform Legislation directed HHS to establish a program to reward high-quality Medicare Advantage...

  • Page 41
    ... in 13 state public exchanges, including four individual and nine small group exchanges. In 2015, we are participating in 23 individual exchanges and in 12 small group exchanges. Health Reform Legislation also provided for optional expanded Medicaid coverage that became effective in January 2014. We...

  • Page 42
    ... 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 earnings margin ...Return on...

  • Page 43
    ... number of individuals served in our public and senior markets businesses and growth across all of Optum's businesses. Medical Costs and Medical Care Ratio Medical costs during the year ended December 31, 2014 increased due to risk-based membership growth in our public and senior markets businesses...

  • Page 44
    ...II, Item 8, "Financial Statements" for more information on our segments. The following table presents a summary of the reportable segment financial information: For the Years Ended December 31, 2014 2013 2012 Increase/ (Decrease) 2014 vs. 2013 Increase/ (Decrease) 2013 vs. 2012 (in millions, except...

  • Page 45
    ... a continued competitive environment and a decrease in individual policy customers due to customers moving to public exchanges. The decrease in number of people served under commercial fee-based arrangements was primarily attributable to the loss of a large state employer account. Medicare Advantage...

  • Page 46
    ... 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, and reduced levels of favorable medical cost reserve development. 44

  • Page 47
    ... related to 2012 acquisitions in local care delivery, and organic growth. Earnings from operations and operating margins in 2013 increased primarily due to revenue growth and an improved cost structure across the business, including local care delivery, population health and wellness solutions, and...

  • Page 48
    ... AND CAPITAL RESOURCES Liquidity Introduction We manage our liquidity and financial position in the context of our overall business strategy. We continually forecast and manage our cash, investments, working capital balances and capital structure to meet the short-term and long-term obligations...

  • Page 49
    ... 2012 Increase/ (Decrease) 2014 vs. 2013 Increase/ (Decrease) 2013 vs. 2012 (in millions) Sources of cash: Cash provided by operating activities ...Sales and maturities of investments, net of purchases ...Customer funds administered ...Proceeds from common stock issuances ...Issuances of long-term...

  • Page 50
    ... 31, 2014. Long-Term Debt. Periodically, we access capital markets and issue long-term debt for general corporate purposes, for example, to meet our working capital requirements, to refinance debt, to finance acquisitions or for share repurchases. In December 2014, we issued $2.0 billion in senior...

  • Page 51
    ...For more information on our share repurchase program, see Note 10 of Notes to the Consolidated Financial Statements included in Part II, Item 8, "Financial Statements." Dividends. In June 2014, our Board of Directors increased our quarterly cash dividend to shareholders to an annual dividend rate of...

  • Page 52
    ... 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 professional and type of service...

  • Page 53
    ... our medical costs payable estimates for the most recent three months. Medical cost trend factors are developed through a comprehensive 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...

  • Page 54
    ... care insurance premiums. We recognize premium revenues in the period eligible individuals are entitled to 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. Our Medicare...

  • Page 55
    ...-Business Trends above and the discussion in the "Medical Costs Payable" critical accounting estimate above. Similar factors, including historical and expected medical cost trend levels, are considered in estimating our long-term medical trends at the reporting unit level. Operating productivity...

  • Page 56
    ... using comparisons 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...

  • Page 57
    ... earnings and report net unrealized gains or losses, net of income tax effects, as other comprehensive income and as a separate component in shareholders' equity. We continually monitor the difference between the cost and fair value of our investments. As of December 31, 2014, our available-for-sale...

  • Page 58
    ... 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 59
    ... municipal securities and corporate debt obligations that are investment grade. Concentrations of credit risk with respect to accounts receivable are limited due to the large number of employer groups and other customers that constitute our client base. As of December 31, 2014, we had an aggregate...

  • Page 60
    ...and losses on investments in available-for-sale securities are reported in comprehensive income. The following tables summarize the impact of hypothetical changes in market interest rates across the entire yield curve by 1% point or 2% points as of December 31, 2014 and 2013 on our investment income...

  • Page 61
    ... fixed-income funds; employee savings plan related investments; venture capital funds; and dividend paying stocks. Valuations in non-U.S. dollar funds are subject to foreign exchange rates. Valuations in venture capital funds are subject to conditions affecting health care and technology stocks, and...

  • Page 62
    ... Accounting Policies ...3. Investments ...4. Fair Value ...5. Property, Equipment and Capitalized Software ...6. Goodwill and Other Intangible Assets ...7. Medical Costs Payable ...8. Commercial Paper and Long-Term Debt ...9. Income Taxes ...10. Shareholders' Equity ...11. Share-Based Compensation...

  • Page 63
    ... the standards of the Public Company Accounting Oversight Board (United States), the Company's internal control over financial reporting as of December 31, 2014, based on the criteria established in Internal Control-Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of...

  • Page 64
    UnitedHealth Group Consolidated Balance Sheets December 31, 2014 December 31, 2013 (in millions, except per share data) Assets Current assets: Cash and cash equivalents ...Short-term investments ...Accounts receivable, net of allowances of $260 and $196 ...Other current receivables, net of ...

  • Page 65
    UnitedHealth Group Consolidated Statements of Operations For the Years Ended December 31, 2014 2013 2012 (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 66
    UnitedHealth Group Consolidated Statements of Comprehensive Income For the Years Ended December 31, 2014 2013 2012 (in millions) Net earnings ...Other comprehensive loss: Gross unrealized gains (losses) on investment securities during the period ...Income tax effect ...Total unrealized gains (...

  • Page 67
    UnitedHealth Group Consolidated Statements of Changes in Shareholders' Equity Accumulated Other Comprehensive Income (Loss) Net Unrealized Gains (Losses) on Investments Foreign Currency Translation Losses (in millions) Common Stock Shares Amount Additional Paid-In Capital Retained Earnings ...

  • Page 68
    ......Deferred income taxes ...Share-based compensation ...Other, net ...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...

  • Page 69
    ... from the Company's 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 as calculated...

  • Page 70
    ... 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 71
    ... quality. Securities downgraded below policy minimums after purchase will be disposed of in accordance 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...

  • Page 72
    ... Part D prescription drug insurance coverage under contracts with CMS. Under the Medicare Part D program, there are seven 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...

  • Page 73
    ... eligible individuals are entitled to receive prescription 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...

  • Page 74
    ... the development of internal-use software, including external direct costs of materials and services and applicable payroll costs of employees devoted to specific software development. The Company calculates depreciation and amortization using the straight-line method over the estimated useful lives...

  • Page 75
    ...To date, the Company has not been required to fund any underwriting deficits. Changes in the RSF are reported in medical costs in the Consolidated Statement of Operations. As of December 31, 2014 and 2013, the balance in the RSF was $1.5 billion and $1.3 billion, respectively. Future Policy Benefits...

  • Page 76
    ... market price of the Company's common stock at the beginning or at the end of the six-month purchase period. Share-based compensation expense for all programs is recognized in operating costs in the Company's Consolidated Statements of Operations. Net Earnings Per Common Share The Company computes...

  • Page 77
    ... are intended to limit the gains and losses of individual and small group qualified health plans. Plans are required to calculate the U.S. Department of Health and Human Services (HHS) risk corridor ratio of allowable costs (defined as medical claims plus quality improvement costs adjusted for the...

  • Page 78
    ...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, 2014 Debt securities - available-for-sale: U.S. government and agency obligations ...State and municipal obligations ...Corporate...

  • Page 79
    ... 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, 2014 were as follows: (in millions) AAA AA A Non-Investment Grade Total Fair Value 2014 ...2013 ...2012 ...2011 ...2010...

  • Page 80
    ... unrealized loss position. Therefore, the Company believes these losses to be temporary. The Company's investments in equity securities consist of investments in Brazilian real denominated fixedincome funds, employee savings plan related investments, venture capital funds, and dividend paying stocks...

  • Page 81
    ...2014 2013 2012 Total OTTI ...Portion of loss recognized in other comprehensive income ...Net OTTI recognized in earnings ...Gross realized losses from sales ...Gross realized gains from sales ...Net realized gains (included in investment and other income on the Consolidated Statements of Operations...

  • Page 82
    ... 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 83
    ... Rate Swaps. Fair values of the Company's swaps are estimated using the terms of the swaps and publicly available information including market yield curves. Because the swaps are unique and not actively traded but are valued using other observable inputs, the fair values are classified as Level...

  • Page 84
    ...Quoted Prices in Active Markets (Level 1) Other Observable Inputs (Level 2) Unobservable Inputs (Level 3) Total Fair Value Total Carrying Value (in millions) December 31, 2014 Debt securities - held-to-maturity: U.S. government and agency obligations ...State and municipal obligations ...Corporate...

  • Page 85
    ... a recurring basis using Level 3 inputs were $74 million of available-for-sale debt securities as of December 31, 2014, which were not significant. The Company elected to measure the entirety of the AARP Program assets under management at fair value pursuant to the fair value option. See Note 2 for...

  • Page 86
    ... $4,236 $840 - - 840 - - $840 $31,286 939 (621) 31,604 1,835 (499) $32,940 In 2014, acquisitions were not material to the Company's Consolidated Financial Statements. The gross carrying value, accumulated amortization and net carrying value of other intangible assets were as follows: December 31...

  • Page 87
    ... change in medical costs payable for the years ended December 31: (in millions) 2014 2013 2012 Medical costs payable, beginning of period ...Acquisitions ...Reported medical costs: Current year ...Prior years ...Total reported medical costs ...Claim payments: Payments for current year ...Payments...

  • Page 88
    ... rate swap contracts. See below for more information on the Company's interest rate swaps. The Company's long-term debt obligations also included $150 million and $121 million of other financing obligations, of which $34 million were current as of both December 31, 2014 and December 31, 2013...

  • Page 89
    ... revolving bank credit facilities with 23 banks, which mature in November 2019 and November 2015, respectively. These facilities provide liquidity support for the Company's $4.0 billion commercial paper program and are available for general corporate purposes. There were no amounts outstanding under...

  • Page 90
    ...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, 2014 2013 2012 Hedge - interest rate swap gain (loss) recognized in interest expense ...Hedged item - long-term...

  • Page 91
    ...: (in millions) 2014 2013 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 92
    ... 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 2013 and prior. The Company's 2014 tax year is under advance review by the IRS under its Compliance Assurance Program. With...

  • Page 93
    ...discretion of the Board and may be adjusted as business needs or market conditions change. The following table provides details of the Company's 2014 dividend payments: Payment Date Amount per Share Total Amount Paid (in millions) 2014 ...2013 ...2012 ...11. Share-Based Compensation $1.4050 1.0525...

  • Page 94
    ...date fair 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...

  • Page 95
    ... Payments 2015 ...2016 ...2017 ...2018 ...2019 ...Thereafter ... $491 386 329 293 240 464 The Company provides guarantees related to its service level under certain contracts. If minimum standards are not met, the Company may be financially at risk up to a stated percentage of the contracted fee...

  • Page 96
    ... suits brought by members, care providers, consumer advocacy organizations, 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...

  • Page 97
    ... a review of medical records maintained by care providers and may result in retrospective adjustments to payments made to health plans. CMS has not communicated how the final payment adjustment under its methodology will be implemented. The Company cannot reasonably estimate the range of loss, if...

  • Page 98
    ..., addressing their unique needs for preventive and acute health care services as well as services dealing with chronic disease and other specialized issues for older individuals. UnitedHealthcare Community & State's primary customers oversee Medicaid plans, the Children's Health Insurance Program...

  • Page 99
    ...On January 1, 2014, the Company realigned certain of its businesses to respond to changes in the markets it serves and the opportunities that are emerging as the health system evolves. The Company's Optum business platform took responsibility for certain technology operations and business processing...

  • Page 100
    ... the reportable segment financial information: Optum (in millions) 2014 Revenues - external customers: Premiums ...Services ...Products ...Total revenues - external customers ...Total revenues - intersegment ...Investment and other income ...Total revenues ...Earnings from operations ...Interest...

  • Page 101
    ...financial information for all quarters of 2014 and 2013 is as follows: (in millions, except per share data) March 31 For the Quarter Ended June 30 September 30 December 31 2014 Revenues ...Operating costs ...Earnings from operations ...Net earnings ...Net earnings attributable to UnitedHealth Group...

  • Page 102
    ... Control-Integrated Framework (2013). Based on our assessment and the COSO criteria, we believe that, as of December 31, 2014, the Company maintained effective internal control over financial reporting. The Company's independent registered public accounting firm has audited the Company's internal...

  • Page 103
    ... 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, 2014, based...

  • Page 104
    ... J. Hemsley Chief Executive Officer UnitedHealth Group Michele J. Hooper President and Chief Executive Officer The Directors' Council, a company focused on improving the governance processes of corporate boards Gail R. Wilensky, Ph.D. Senior Fellow Project HOPE, an international health foundation...

  • Page 105
    ...under the headings "Executive Compensation," "Director Compensation," "Corporate Governance - Risk Oversight" and "Compensation Committee Interlocks and Insider Participation" in our definitive proxy statement for our 2015 Annual Meeting of Shareholders, and such required information is incorporated...

  • Page 106
    ... 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 107
    ... to Executives under UnitedHealth Group Incorporated's 2011 Stock Incentive Plan (incorporated by reference to Exhibit 10.3 to UnitedHealth Group Incorporated's Current Report on Form 8-K filed on May 27, 2011) Form of Agreement for Initial Deferred Stock Unit Award to Non-Employee Directors under...

  • Page 108
    ... 30, 2010) Fifth Amendment to UnitedHealth Group Executive Savings Plan (2004 Statement) (incorporated by reference to Exhibit 10.2 of UnitedHealth Group Incorporated's Quarterly Report on Form 10-Q for the quarter ended September 30, 2014) Summary of Non-Management Director Compensation, effective...

  • Page 109
    ... 10.1 to UnitedHealth Group Incorporated's Quarterly Report on Form 10-Q for the quarter ended September 30, 2011) Separation and Release Agreement, effective as of November 9, 2014, between United HealthCare Services, Inc. and Gail K. Boudreaux Employment Agreement, effective as of December 1, 2006...

  • Page 110
    ... materials from UnitedHealth Group Incorporated's Annual Report on Form 10-K for the year ended December 31, 2014, filed on February 10, 2015, formatted in XBRL (eXtensible Business Reporting Language): (i) Consolidated Balance Sheets, (ii) Consolidated Statements of Operations, (iii) Consolidated...

  • Page 111
    ... 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 31, 2014...

  • Page 112
    ... Financial Information of Registrant (Parent Company Only) UnitedHealth Group Condensed Balance Sheets (in millions, except per share data) December 31, 2014 December 31, 2013 Assets Current assets: Cash and cash equivalents ...Short-term notes receivable from subsidiaries ...Deferred income taxes...

  • Page 113
    ... Condensed Financial Information of Registrant (Parent Company Only) UnitedHealth Group Condensed Statements of Comprehensive Income For the Years Ended December 31, 2014 2013 2012 (in millions) Revenues: Investment and other income ...Total revenues ...Operating costs: Operating costs ...Interest...

  • 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, 2014 2013 2012 Operating activities Cash flows from operating activities ...Investing activities Issuance of notes to ...

  • Page 115
    ...Part II, Item 8, "Financial Statements." 2. Subsidiary Transactions Investment in Subsidiaries. UnitedHealth Group's investment in subsidiaries is stated at cost plus equity in undistributed earnings of subsidiaries. Transactions With Subsidiaries. During 2014 the parent company issued intercompany...

  • Page 116
    ...behalf by the undersigned, thereunto duly authorized. Dated: February 10, 2015 UNITEDHEALTH GROUP INCORPORATED By /s/ STEPHEN J. HEMSLEY Stephen J. Hemsley Chief Executive Officer Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below by the following...

  • 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
    ... 30, 2010) Fifth Amendment to UnitedHealth Group Executive Savings Plan (2004 Statement) (incorporated by reference to Exhibit 10.2 of UnitedHealth Group Incorporated's Quarterly Report on Form 10-Q for the quarter ended September 30, 2014) Summary of Non-Management Director Compensation, effective...

  • Page 119
    ... 10.1 to UnitedHealth Group Incorporated's Quarterly Report on Form 10-Q for the quarter ended September 30, 2011) Separation and Release Agreement, effective as of November 9, 2014, between United HealthCare Services, Inc. and Gail K. Boudreaux Employment Agreement, effective as of December 1, 2006...

  • Page 120
    ...1, 2013, between United HealthCare Services, Inc. and Marianne D. Short (incorporated by reference to Exhibit 10.34 to UnitedHealth Group Incorporated's Annual Report on Form 10-K for the year ended December 31, 2013) Employment Agreement, effective as of December 15, 2006, between United HealthCare...