United Healthcare 2015 Annual Report Download

Download and view the complete annual report

Please find the complete 2015 United Healthcare annual report below. You can navigate through the pages in the report by either clicking on the pages listed below, or by using the keyword search tool below to find specific information within the annual report.

Page out of 113

  • 1
  • 2
  • 3
  • 4
  • 5
  • 6
  • 7
  • 8
  • 9
  • 10
  • 11
  • 12
  • 13
  • 14
  • 15
  • 16
  • 17
  • 18
  • 19
  • 20
  • 21
  • 22
  • 23
  • 24
  • 25
  • 26
  • 27
  • 28
  • 29
  • 30
  • 31
  • 32
  • 33
  • 34
  • 35
  • 36
  • 37
  • 38
  • 39
  • 40
  • 41
  • 42
  • 43
  • 44
  • 45
  • 46
  • 47
  • 48
  • 49
  • 50
  • 51
  • 52
  • 53
  • 54
  • 55
  • 56
  • 57
  • 58
  • 59
  • 60
  • 61
  • 62
  • 63
  • 64
  • 65
  • 66
  • 67
  • 68
  • 69
  • 70
  • 71
  • 72
  • 73
  • 74
  • 75
  • 76
  • 77
  • 78
  • 79
  • 80
  • 81
  • 82
  • 83
  • 84
  • 85
  • 86
  • 87
  • 88
  • 89
  • 90
  • 91
  • 92
  • 93
  • 94
  • 95
  • 96
  • 97
  • 98
  • 99
  • 100
  • 101
  • 102
  • 103
  • 104
  • 105
  • 106
  • 107
  • 108
  • 109
  • 110
  • 111
  • 112
  • 113

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, 2015
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)
Delaware 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.
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, 2015 was $114,440,856,791 (based on the last reported sale
price of $122.00 per share on June 30, 2015, 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 29, 2016, there were 950,673,998 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 2016 Annual Meeting of Shareholders. 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
    ... company (as defined in Rule 12b-2 of the Exchange Act). Yes ' The aggregate market value of voting stock held by non-affiliates of the registrant as of June 30, 2015 was $114,440,856,791 (based on the last reported sale price of $122.00 per share on June 30, 2015, on the New York Stock Exchange...

  • Page 2
    ... Market Risk ...Financial Statements ...Changes in and Disagreements With Accountants on Accounting and Financial Disclosure ...Controls and Procedures ...Other Information ...Part III Item 10. Item 11. Item 12. Item 13. Item 14. Directors, Executive Officers and Corporate Governance ...Executive...

  • Page 3
    ... Community & State manages health care benefit programs on behalf of state Medicaid and community programs and their participants. UnitedHealthcare Global includes Amil, a health care company providing health and dental benefits and hospital and clinical services to employer groups and...

  • Page 4
    ... help coordinate patient care, improve affordability of medical care, analyze cost trends, manage pharmacy benefits, work with care providers more effectively and create a simpler consumer experience. In the United States, UnitedHealthcare arranges for discounted access to care through networks that...

  • Page 5
    ... Products. Traditional products include a full range of medical benefits and network options from managed plans, such as Choice and Options PPO, to more traditional indemnity products. The plans offer a full spectrum of covered services, including preventive care, direct access to specialists...

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

  • Page 7
    ... care management and clinical management programs, a nurse health line service, 24-hour access to health care information, access to discounted health services from a network of care providers and administrative services. UnitedHealthcare Medicare & Retirement's seniors-focused care management model...

  • 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
    ...UnitedHealthcare Community & State coordinates resources among family, physicians, other health care providers, and government and community-based agencies and organizations to facilitate continuous and effective care. The LTSS market represents only 6% of the total Medicaid population, yet accounts...

  • Page 10
    ...range of product offerings, benefit designs, price points and value, including indemnity products. Amil's products include various administrative services such as network access and administration, care management and personal health services and claims processing. Other Operations. UnitedHealthcare...

  • Page 11
    ... entities (which includes states, CMS, DoD, the Veterans Administration and other federal procurement agencies). As provider reimbursement models evolve, care providers are emerging as a fourth market for the health management, financial services and local care delivery businesses. OptumHealth is...

  • Page 12
    ..., phone and in-person interaction to assist individuals in selecting and understanding their benefits. OCS provides contact center support, multimodal software, data analysis and licensed sales agents that help clients acquire, retain and service large populations of health care consumers. Financial...

  • Page 13
    ... benefits across nearly all of UnitedHealthcare's businesses with services, including patient support and clinical programs designed to ensure quality and deliver value for consumers. OptumRx also provides pharmacy care services to non-affiliated external clients, including a number of health 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
    ... to the risk of paying a portion of an impaired or insolvent insurance company's claims through state guaranty association assessments. Pharmacy Regulation. OptumRx's businesses include home delivery and specialty pharmacies that must be licensed as pharmacies in the states in which they are located...

  • 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
    ... and Chief Financial Officer Vice Chairman of UnitedHealth Group and Chief Executive Officer of Optum Senior Vice President and Chief Accounting Officer Executive Vice President and Chief Legal Officer Executive Vice President, Human Capital Our Board of Directors elects executive officers annually...

  • Page 19
    ... Investments concluding her tenure there as head of Human Resources. Additional Information UnitedHealth Group Incorporated was incorporated in January 1977 in Minnesota. On July 1, 2015, UnitedHealth Group Incorporated changed its state of incorporation from Minnesota to Delaware pursuant to a plan...

  • Page 20
    ..., price for and manage our medical costs in an effective manner, 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 risk...

  • Page 21
    ... of paying a portion of an impaired or insolvent insurance company's claims through state guaranty association assessments. Certain of our businesses provide products or services to various government agencies. Our relationships with these government agencies are subject to the terms of contracts...

  • Page 22
    ...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 participate in various federal, state and local government health care benefit...

  • Page 23
    ... of reimbursement or payment levels, reduce our participation in certain service areas or markets, or increase our administrative or medical costs under such programs. Revenues for these programs depend on periodic funding from the federal government or applicable state governments and allocation of...

  • Page 24
    ... health 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...

  • Page 25
    ... effectively to maintain or increase 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...

  • Page 26
    ... health plan enrollees in these areas. Our business, results of operations, financial position and cash flows could be materially and adversely affected if we do not compete effectively in our markets, if we set rates too high or too low in highly competitive markets, if we do not design and price...

  • Page 27
    ...statutes), contract and labor disputes, tax claims and claims related to disclosure of certain business practices. We are also party to certain class action lawsuits brought by health care professional groups and consumers. In addition, we operate in jurisdictions outside of the United States, where...

  • 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
    ..., state and federal budgetary pressures could cause the affected governments to impose new or a higher level of taxes or assessments 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...

  • Page 30
    ... information systems, or if our technology products do not operate as intended, our business could be materially and adversely affected. Our ability to price adequately our products and services, to provide effective service to our customers in an efficient and uninterrupted fashion, and to report...

  • Page 31
    ... sensitive personal information as well as proprietary or confidential information relating to our business or third-parties. Some of the data we process, store and transmit may be outside of the United States due to our information technology systems and international business operations. We...

  • Page 32
    ... ratings, should they occur, could materially increase our costs of or ability to access funds in the debt and capital markets and otherwise materially increase our operating costs. ITEM 1B. UNRESOLVED STAFF COMMENTS None. ITEM 2. PROPERTIES To support our business operations in the United States...

  • Page 33
    ... MARKET PRICES AND HOLDERS Our common stock is traded on the New York Stock Exchange (NYSE) under the symbol UNH. On January 29, 2016, there were 13,501 registered holders of record of our common stock. The per share high and low common stock sales prices reported by the NYSE and cash dividends...

  • Page 34
    ...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 35
    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 36
    ITEM 6. SELECTED FINANCIAL DATA 2015 (a) For the Year Ended December 31, 2014 2013 2012 (b) 2011 (in millions, except percentages and per share data) Consolidated operating results Revenues ...Earnings from operations ...Net earnings attributable to UnitedHealth Group common stockholders ......

  • Page 37
    ... risk market remains highly competitive in both the small group and large group markets. We expect broad-based competition to continue as the industry adapts to individual and employer needs amid reform changes. Health Reform Legislation included an annual, nondeductible insurance industry tax...

  • Page 38
    ... activities include managing costs across all health care categories, including specialty pharmacy spending, as new therapies are introduced at high costs and older drugs have unexpected price increases. Delivery System and Payment Modernization. The health care market continues to change based on...

  • Page 39
    ... 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 the member premiums that supplement the monthly payments...

  • Page 40
    ... products in the individual public exchange market in 2017. RESULTS SUMMARY The following table summarizes our consolidated results of operations and other financial information: For the Years Ended December 31, 2015 2014 2013 Increase/ (Decrease) 2015 vs. 2014 Increase/ (Decrease) 2014 vs. 2013...

  • Page 41
    ... Part II, Item 8, "Financial Statements" for more information on this reclassification. Medical care ratio is calculated as medical costs divided by premium revenue. Net earnings margin attributable to UnitedHealth Group stockholders. Return on equity is calculated as annualized net earnings divided...

  • Page 42
    ...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, 2015 2014 2013 Increase/ (Decrease) 2015 vs. 2014 Increase/ (Decrease) 2014 vs. 2013 (in millions, except percentages) Revenues...

  • Page 43
    ... 215 4% The increase in commercial risk-based enrollment was the result of strong participation in UnitedHealthcare's individual public exchange products and favorable annual renewal activity and new business wins in the employer group segment. Medicare Advantage participation increased year-over...

  • Page 44
    ... 31, 2014 increased due to risk-based membership growth in our public and senior markets businesses. To the extent possible, we included the reform fees and related tax impacts in our pricing; since the ACA Fees are included in operating costs, this decreased our medical care ratio in 2014. This...

  • Page 45
    ... cost reserve development. Partially offsetting these factors were growth in our public and senior markets businesses, reduced levels of per-member inpatient hospital utilization and revenue true-ups. Optum Total revenues increased for the year ended December 31, 2014 primarily due to pharmacy...

  • Page 46
    ... (111) (151) 3,209 $ 81 1,349 2015 Cash Flows Compared to 2014 Cash Flows Cash flows provided by operating activities in 2015 increased primarily due to growth in risk-based products, which increased medical costs payable and an increase in CMS risk share payables, which increased other policy 44

  • Page 47
    ... (a) a change in investment activity from net purchases in 2013 to net sales in 2014; (b) an increase in Part D subsidy receivables causing a change in customer funds administered; and (c) increased levels of cash used to repurchase common stock. Financial Condition As of December 31, 2015, our cash...

  • Page 48
    ..., a significant downgrade in our credit ratings or adverse conditions in the capital markets may increase the cost of borrowing for us or limit our access to capital. Share Repurchase Program. We expect continued moderated share repurchase activity through 2016 following the acquisition of Catamaran...

  • Page 49
    ... variances in medical care consumption, 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...

  • Page 50
    ... 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 indicators, including but not limited to, pharmacy utilization trends, inpatient hospital census data and...

  • Page 51
    ...medical costs payable and actual medical costs payable, excluding AARP Medicare Supplement Insurance and any potential offsetting impact from premium rebates, 2015 net earnings would have increased or decreased by $83 million. Revenues We derive a substantial portion of our revenues from health care...

  • Page 52
    ... the reporting unit level. Operating productivity. We forecast expected operating cost levels based on historical levels and expectations of future operating cost levels. Capital levels. The operating and long-term capital requirements for each business are considered. • • • Discount rates...

  • Page 53
    ... OF CREDIT RISK Investments in financial instruments such as marketable securities and accounts receivable may subject us to concentrations of credit risk. Our investments in marketable securities are managed under an investment policy authorized by our Board of Directors. This policy limits the...

  • Page 54
    ... 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, 2015 and 2014 on our investment income and interest expense per annum and the fair value of...

  • Page 55
    ... 31, 2015, we had $1.6 billion of investments in equity securities, consisting of investments in non-U.S. dollar 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...

  • Page 56
    ...of Estimates and Significant Accounting Policies ...3. Business Combination ...4. Investments ...5. Fair Value ...6. Property, Equipment and Capitalized Software ...7. Goodwill and Other Intangible Assets ...8. Medical Costs Payable ...9. Commercial Paper and Long-Term Debt ...10. Income Taxes ...11...

  • Page 57
    ... of America. We have 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, 2015, based on the criteria established in Internal Control-Integrated Framework (2013...

  • Page 58
    UnitedHealth Group Consolidated Balance Sheets (in millions, except per share data) December 31, 2015 December 31, 2014 Assets Current assets: Cash and cash equivalents ...Short-term investments ...Accounts receivable, net of allowances of $333 and $260 ...Other current receivables, net of ...

  • Page 59
    UnitedHealth Group Consolidated Statements of Operations (in millions, except per share data) For the Years Ended December 31, 2015 2014 2013 Revenues: Premiums ...Products ...Services ...Investment and other income ...Total revenues ...Operating costs: Medical costs ...Operating costs ...Cost of ...

  • Page 60
    UnitedHealth Group Consolidated Statements of Comprehensive Income (in millions) For the Years Ended December 31, 2015 2014 2013 Net earnings ...Other comprehensive loss: Gross unrealized (losses) gains on investment securities during the period ...Income tax effect ...Total unrealized (losses) ...

  • Page 61
    ... Shares Amount Capital Earnings Investments Losses Interest (in millions) Total Equity Balance at January 1, 2013 ...1,019 $ Net earnings ...Other comprehensive loss ...Issuances of common stock, and related tax effects ...17 Share-based compensation, and related tax benefits ...Common stock...

  • Page 62
    UnitedHealth Group Consolidated Statements of Cash Flows (in millions) For the Years Ended December 31, 2015 2014 2013 Operating activities Net earnings ...Noncash items: Depreciation and amortization ...Deferred income taxes ...Share-based compensation ...Other, net ...Net change in other ...

  • Page 63
    ...) converted into an outstanding share of common stock of UnitedHealth Group Incorporated as a Delaware corporation after the reincorporation (UNH Delaware). The reincorporation was a tax-free reorganization under the U.S. Internal Revenue Code and did not affect the Company's business operations. 61

  • Page 64
    ...home delivery and specialty pharmacy facilities, and from administrative services, including claims processing and formulary design and management. Product revenues include ingredient costs (net of rebates), a negotiated dispensing fee and customer co-payments for drugs dispensed through the Company...

  • Page 65
    ... 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 66
    ... with the Company's 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...

  • Page 67
    ... 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 Discount. Health...

  • Page 68
    Pharmacy benefit costs and administrative costs under the contract are expensed as incurred and are recognized in medical costs and operating costs, respectively, in the Consolidated Statements of Operations. The final 2015 risk-share amount is expected to be settled during the second half of 2016, ...

  • Page 69
    ... 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. Changes in the RSF are reported in medical costs in the Consolidated Statement of Operations. As of December 31, 2015 and 2014...

  • Page 70
    ... is based on 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...

  • Page 71
    ...In May 2014, the Financial Accounting Standards Board (FASB) issued Accounting Standard Update (ASU) No. 2014-09, "Revenue from Contracts with Customers (Topic 606)" (ASU 2014-09) as modified by ASU No. 2015-14, "Revenue from Contracts with Customers (Topic 606): Deferral of the Effective Date." ASU...

  • Page 72
    ... services similar to OptumRx to a broad client portfolio, including health plans and employers serving 35 million people, and provides health care information technology solutions to the pharmacy benefits management industry. The Company paid for the acquisition primarily with the proceeds of new...

  • Page 73
    ...4. Investments 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, 2015 Debt securities - available-for-sale: U.S. government and agency obligations ...State and...

  • Page 74
    ... by unfavorable changes in the credit quality associated with these securities. At each reporting period, the Company evaluates securities for impairment when the fair value of the investment is less than its amortized cost. The Company evaluated the underlying credit quality and credit ratings of...

  • Page 75
    ...2015 2014 2013 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 76
    ... value. The pricing service normally derives the security prices through recently reported trades for identical or similar securities, and, if necessary, makes adjustments through the reporting date based upon available observable market information. For securities not actively traded, the pricing...

  • Page 77
    ... 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 78
    ...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, 2015 Debt securities - held-to-maturity: U.S. government and agency obligations ...State and municipal obligations ...Corporate...

  • Page 79
    ... of the AARP Program assets under management at fair value pursuant to the fair value option. See Note 2 for further detail 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 80
    ... $445 million, respectively. Amortization expense for capitalized software for 2015, 2014 and 2013 was $430 million, $422 million and $411 million, respectively. 7. Goodwill and Other Intangible Assets Changes in the carrying amount of goodwill, by reportable segment, were as follows: (in millions...

  • Page 81
    ... ended December 31, 2015 and 2014, the favorable medical cost reserve development was due to a number of individual factors that were not material. The net favorable development for the year ended December 31, 2013 was primarily driven by lower than expected health system utilization levels. 79

  • Page 82
    ... paper, term loan and senior unsecured long-term debt consisted of the following: Par Value December 31, 2015 Carrying Fair Value Value Par Value December 31, 2014 Carrying Fair Value Value (in millions, except percentages) Commercial paper ...Floating rate term loan due July 2016 (c) ...4.875...

  • Page 83
    ... corporate purposes. As of December 31, 2015, no amounts had been drawn on any of the bank credit facilities. The annual interest rates, which are variable based on term, are calculated based on the London Interbank Offered Rate (LIBOR) plus a credit spread based on the Company's senior unsecured...

  • Page 84
    ...for income taxes and the effective tax rate for the years ended December 31 is as follows: (in millions, except percentages) 2015 2014 2013 Tax provision at the U.S. federal statutory rate ...Health insurance industry tax ...State income taxes, net of federal benefit ...Tax-exempt investment income...

  • Page 85
    ...in millions) 2015 2014 Deferred income tax assets: Accrued expenses and allowances ...U.S. federal and state net operating loss carryforwards ...Share-based compensation ...Nondeductible liabilities ...Medical costs payable and other policy liabilities ...Non-U.S. tax loss carryforwards ...Unearned...

  • Page 86
    ... and the expiration of statutes of limitations in certain major jurisdictions. The Company classifies interest and penalties associated with uncertain income tax positions as income taxes within its Consolidated Statement of Operations. During 2015, 2014, and 2013, the Company recognized $11 million...

  • Page 87
    ... 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) 2015 ...2014 ...2013 ...12. Share-Based...

  • Page 88
    ...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 89
    Share-Based Compensation Recognition and Estimates The principal assumptions the Company used in calculating grant-date fair value for stock options and SARs were as follows: 2015 For the Years Ended December 31, 2014 2013 Risk-free interest rate ...1.6% - 1.7% Expected volatility ...22.3% - 24.1% ...

  • Page 90
    ... 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 91
    ... businesses share significant common assets, including a contracted network of physicians, health care professionals, hospitals and other facilities, information technology infrastructure and other resources. UnitedHealthcare Employer & Individual offers an array of consumer-oriented health benefit...

  • Page 92
    ... the changing health system landscape. OptumRx offers pharmacy care services and programs, including retail pharmacy network management services, home delivery and specialty pharmacy services, manufacturer rebate contracting and administration, benefit plan design and consultation, claims processing...

  • Page 93
    ...the reportable segment financial information: Optum (in millions) Optum Corporate and UnitedHealthcare OptumHealth OptumInsight OptumRx Eliminations Optum Eliminations Consolidated 2015 Revenues - external customers: Premiums ...$ Products ...Services ...Total revenues - external customers ...Total...

  • Page 94
    ... 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 31, 2015. Based upon that...

  • Page 95
    ...(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 96
    ...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 reasonable...

  • Page 97
    ... Chief Executive Officer The Directors' Council, a company focused on improving the governance processes of corporate boards Rodger A. Lawson Chairman E*TRADE Financial Corporation and Retired President and Chief Executive Officer Fidelity Investments - Financial Services Glenn M. Renwick Chairman...

  • Page 98
    ...information, as of December 31, 2015, concerning shares of common stock authorized for issuance under all of our equity compensation plans: (a) Number of securities to be issued upon exercise of outstanding options, warrants and rights (in millions) (b) Weighted-average exercise price of outstanding...

  • Page 99
    ... Company files Annual Reports on Form 10-K, Quarterly Reports on Form 10-Q and Current Reports on Form 8-K pursuant to the Securities Exchange Act of 1934 under Commission File No. 1-10864. EXHIBIT INDEX** 2.1 Arrangement Agreement, dated as of March 29, 2015, among UnitedHealth Group Incorporated...

  • Page 100
    ...UnitedHealth Group Incorporated's Annual Report on Form 10-K for the year ended December 31, 2012) Form of Agreement for Restricted Stock Unit Award to Executives under UnitedHealth Group Incorporated's 2011 Stock Incentive Plan, as amended and restated in 2015, for awards made after January 1, 2016...

  • Page 101
    ... to UnitedHealth Group Executive Savings Plan (2004 Statement) (incorporated by reference to Exhibit 10.2 to UnitedHealth Group Incorporated's Quarterly Report on Form 10-Q for the quarter ended September 30, 2015) Summary of Non-Management Director Compensation, effective as of January 1, 2016 99...

  • Page 102
    ...) Amendment to Employment Agreement and Agreement for Supplemental Executive Retirement Pay, effective as of December 31, 2008, between United HealthCare Services, Inc. and Stephen J. Hemsley (incorporated by reference to Exhibit 10.22 to UnitedHealth Group Incorporated's Annual Report on Form 10...

  • Page 103
    ... 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 (incorporated by reference to Exhibit 10.34 to UnitedHealth Group Incorporated's Annual Report on Form 10-K for the year ended December 31...

  • Page 104
    ... Registered Public Accounting Firm To the Board of Directors and Stockholders 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, 2015 and 2014, and...

  • Page 105
    Schedule I Condensed Financial Information of Registrant (Parent Company Only) UnitedHealth Group Condensed Balance Sheets (in millions, except per share data) December 31, 2015 December 31, 2014 Assets Current assets: Cash and cash equivalents ...Short-term notes receivable from subsidiaries ......

  • Page 106
    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, 2015 2014 2013 Revenues: Investment and other income ...Total revenues ...Operating costs: Operating costs ...

  • Page 107
    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, 2015 2014 2013 Operating activities Cash flows from operating activities ...Investing activities Issuance of notes to ...

  • Page 108
    ... in 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. Intercompany Notes. In July 2015, the parent company issued $4.8 billion in...

  • Page 109
    ..., thereunto duly authorized. Dated: February 9, 2016 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 persons on behalf of...

  • Page 110
    ...UnitedHealth Group Incorporated's Annual Report on Form 10-K for the year ended December 31, 2012) Form of Agreement for Restricted Stock Unit Award to Executives under UnitedHealth Group Incorporated's 2011 Stock Incentive Plan, as amended and restated in 2015, for awards made after January 1, 2016...

  • Page 111
    ... Group Incorporated's Current Report on Form 8-K filed on May 27, 2011) Form of Agreement for Performance-based Restricted Stock Unit Award to Executives under UnitedHealth Group Incorporated's 2011 Stock Incentive Plan, as amended and restated in 2015, for awards made after January 1, 2016...

  • Page 112
    ...) Amendment to Employment Agreement and Agreement for Supplemental Executive Retirement Pay, effective as of December 31, 2008, between United HealthCare Services, Inc. and Stephen J. Hemsley (incorporated by reference to Exhibit 10.22 to UnitedHealth Group Incorporated's Annual Report on Form 10...

  • Page 113
    ... 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 (incorporated by reference to Exhibit 10.34 to UnitedHealth Group Incorporated's Annual Report on Form 10-K for the year ended December 31...