Aetna 2013 Annual Report Download - page 104

Annual Report- Page 98
5. Operating Expenses
For 2013, 2012 and 2011, selling expenses (which include broker commissions, the variable component of our
internal sales force compensation and premium taxes) and general and administrative expenses were as follows:
(Millions) 2013 2012 2011
Selling expenses $ 1,348.6 $ 1,105.5 $ 1,104.8
General and administrative expenses:
Salaries and related benefits 4,139.5 3,115.3 3,284.3
Other general and administrative expenses 3,157.3 2,655.6 2,415.3
Total general and administrative expenses (1) 7,296.8 5,770.9 5,699.6
Total operating expenses $ 8,645.4 $ 6,876.4 $ 6,804.4
(1) In 2013, includes: transaction, integration-related and restructuring costs of $314.6 million and a reduction of expenses related to reversal
of an allowance on a reinsurance recoverable of $42.2 million. In 2012, includes: a litigation-related charge of $120.0 million, transaction
and integration-related costs of $16.2 million and a severance and facilities charge of $37.0 million. In 2011, includes a charge of $137.0
million related to the voluntary early retirement program that we announced in July 2011.
Refer to the reconciliation of operating earnings to net income attributable to Aetna in Note 19 beginning on
page 135 for additional information.
6. Health Care Costs Payable
The following table shows the components of the change in health care costs payable during 2013, 2012 and 2011:
(Millions) 2013 2012 2011
Health care costs payable, beginning of the period $ 2,992.5 $ 2,675.5 $ 2,630.9
Less: Reinsurance recoverables 3.8 3.3 1.7
Health care costs payable, beginning of the period, net 2,988.7 2,672.2 2,629.2
Acquisition of businesses 1,440.1 — 89.4
Add: Components of incurred health care costs
Current year 33,344.8 23,875.6 22,047.9
Prior years (448.8) (146.7) (394.4)
Total incurred health care costs 32,896.0 23,728.9 21,653.5
Less: Claims paid
Current year 30,112.7 21,067.7 19,642.9
Prior years 2,608.0 2,344.7 2,057.0
Total claims paid 32,720.7 23,412.4 21,699.9
Disposition of business (42.3) — —
Health care costs payable, end of period, net 4,561.8 2,988.7 2,672.2
Add: Reinsurance recoverables 8.5 3.8 3.3
Health care costs payable, end of the period $ 4,570.3 $ 2,992.5 $ 2,675.5
Our prior year estimates of health care costs payable decreased by approximately $449 million, $147 million and
$394 million in 2013, 2012 and 2011, respectively, resulting from claims being settled for amounts less than
originally estimated. These reductions were primarily the result of lower health care cost trends as well as the actual
claim submission time being faster than we assumed in establishing our health care costs payable in the prior year.
This development does not directly correspond to an increase in our current year operating results as these
reductions were offset by estimated current period health care costs when we established our estimate of the current
year health care costs payable.
The acquisition of Coventry resulted in a $1.4 billion increase in health care costs payable at the Effective Date
(refer to Note 3 beginning on page 91 for additional information).