Aetna 2006 Annual Report Download - page 49

Page 47
Notes to Consolidated Financial Statements
Unless the context otherwise requires, references to the terms “we,” “our” or “us” used throughout these Notes
refer to Aetna Inc. (a Pennsylvania corporation) (“Aetna”) and its subsidiaries (collectively, the “Company”).
1. Organization
Our operations include three business segments:
• Health Care consists of medical, pharmacy benefits management, dental and vision plans offered on both a
Risk basis (where we assume all or a majority of the risk for medical and dental care costs) and an
employer-funded basis (where the plan sponsor under an administrative services contract (“ASC”) assumes
all or a majority of this risk). Medical plans include point-of-service (“POS”), health maintenance
organization (“HMO”), preferred provider organization (“PPO”) and indemnity benefit (“Indemnity”)
products. Medical plans also include health savings accounts (“HSAs”) and Aetna HealthFund®,
consumer-directed plans that combine traditional POS or PPO and/or dental coverage, subject to a
deductible, with an accumulating benefit account (which may be funded by the plan sponsor and/or the
member in the case of HSAs). We also offer specialty products, such as medical management and data
analytics services, behavioral health plans and stop loss insurance, as well as products that provide access
to our provider network in select markets.
• Group Insurance primarily includes group life insurance products offered on a Risk basis, including basic
group term life insurance, group universal life, supplemental or voluntary programs and accidental death
and dismemberment coverage. Group Insurance also includes group disability products offered on both a
Risk and an ASC basis which consist primarily of short-term and long-term disability insurance (and
products which combine both), as well as long-term care products, which provide benefits offered to cover
the cost of care in private home settings, adult day care, assisted living or nursing facilities, primarily on a
Risk basis. As a result of the Broadspire Disability acquisition on March 31, 2006 (refer to Note 3 on page
57), Group Insurance also includes absence management services, including short-term and long-term
disability administration and leave management, to employers.
In 2006, we announced our intention to exit the long-term care insurance market and no longer solicit or
accept new long-term care customers. Over the next two to three years, we expect to work with our
customers on an orderly transition of this product to other carriers. This decision did not have a material
impact on our financial condition or results of operations.
• Large Case Pensions manages a variety of retirement products (including pension and annuity products)
primarily for tax qualified pension plans. These products provide a variety of funding and benefit payment
distribution options and other services. The Large Case Pensions segment includes certain discontinued
products (refer to Note 20 beginning on page 84 for additional information).
The three segments are distinct businesses that offer different products and services. Our Chief Executive Officer
evaluates financial performance and makes resource allocation decisions at these segment levels. The accounting
policies of the segments are the same as those described in the summary of significant accounting policies in Note 2
beginning on page 48. We evaluate the performance of these business segments based on operating earnings (net
income or loss, excluding net realized capital gains and losses and certain other items) (refer to Note 19 beginning
on page 82 for segment financial information).