Cigna 2015 Annual Report Download - page 68
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PART II
ITEM 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations
mitigation programs, consisting of approximately $100 million for
Risk Mitigation Programs
reinsurance and approximately $75 million each for the risk
See Note 2(R) to the Consolidated Financial Statements for a adjustment and risk corridor programs. After-tax benefits reported
description of and our accounting policy for these programs that below for each program in 2015 also included the effects of updates to
commenced in 2014. 2014 coverage year amounts based on CMS data received in June
2015.
In 2015, shareholders’ net income included after-tax benefits of
approximately $250 million related to the 2015 coverage year risk
The following table presents the after-tax benefits to shareholders’ net income from these programs for the years ended December 31, 2015 and
2014 and our net receivable balances as of December 31, 2015 and 2014.
After-tax Impact on
Shareholders’ Net Income
(1)
For the Years Ended Net Receivable Balance
(2)
December 31, As of December 31,
(In millions)
2015 2014 2015 2014
Reinsurance $ 125 $ 109 $ 158 $ 167
Risk Adjustment 92 49 118 76
Risk Corridor 49 40 134 62
Total $ 266 $ 198 $ 410 $ 305
(1) After-tax impacts reported in 2015 included an increase for the 2014 coverage year of approximately $20 million based on CMS data received in June 2015. For the 2015 coverage year, we
have accrued reinsurance recoveries at the 50% coinsurance rate prescribed by Health Care Reform.
(2) Net receivables for the risk adjustment and risk corridor programs are reported in premiums, accounts and notes receivable. For the reinsurance program, receivables are reported in reinsurance
recoverables.
In 2015, we received approximately $300 million related to the 2014 required by Health Care Reform. If CMS’ risk corridor program
risk mitigation programs. CMS paid substantially all amounts due collections, including carryovers from prior years, are insufficient to
under the 2014 reinsurance and risk adjustment programs. In satisfy its payment obligations, CMS has stated that it will explore
addition, CMS paid approximately 13% of insurers’ 2014 coverage other funding sources subject to the availability of appropriations that
year risk corridor receivables. CMS has acknowledged its legal may require congressional approval. We are continuing to monitor
obligation to pay insurers under the risk corridor program for the developments related to the risk corridor program.
balance of the 2014 coverage year as well as the 2015 coverage year, as
38 CIGNA CORPORATION - 2015 Form 10-K