Health Net 2009 Annual Report Download - page 80

management and help desk support. The remaining term of this contract is approximately four years, and total
estimated future minimum commitments under the agreement are approximately $225.4 million.
On September 30, 2008, we entered into an agreement with Cognizant Technology Solutions U.S.
Corporation (Cognizant) to outsource our software applications development and management activities to
Cognizant. Under the terms of the agreement, Cognizant will, among other things, provide us with: application
development services, testing and monitoring services, application maintenance and support services, project
management services and cross functional services. The remaining term of this contract is approximately four
years, and the total estimated future commitments under the agreement are approximately $84.7 million.
On January 23, 2009, we entered into another agreement with Cognizant to outsource a substantial portion
of our claims processing activities to Cognizant. Under the terms of the agreement, Cognizant will, among other
things, provide us with claims adjudication, adjustment, audit and process improvement services. The remaining
term of this contract is approximately five years, and the total estimated future commitments under the agreement
are approximately $13.0 million.
Under the Stock Purchase Agreement, we retain financial responsibility for the profits or losses, subject to
specified adjustments, of the Acquired Companies for the period beginning on the closing date and ending on the
earlier of (i) the second anniversary of the closing date and (ii) the date that all of the United Administrative
Services Agreements are terminated. We expect the United Administrative Services Agreements to be in effect
for approximately two years following the closing of the transaction, and anticipate that these profits or losses
and the other expenses we incur in performing the administrative services could be significant.
Under the Stock Purchase Agreement, we also will be entitled to 50% of the profits or losses associated with
the Acquired Companies’ Medicare business for the year ended December 31, 2010 (subject to a cap of $10
million of profit or loss). In the event that the Acquired Companies renew the Medicare contract for the acquired
business for the year ended December 31, 2011, United will be entitled to all of the after tax profits and losses
relating to the business for that year (subject to certain limitations). We have agreed to administer the Medicare
business of the Acquired Companies for 2010 and for 2011 (only if the related Medicare contract is not
transferred to a non-Acquired Company affiliate of United as of January 1, 2011). We expect to administer the
Medicaid business of the Acquired Companies until no later than June 30, 2010, which is the termination date for
the related Medicaid contract. See “Item 1. Business—Segment Information—Northeast Operations Segment”
for additional detail on the Northeast Sale.
We have excluded from the table above amounts already recorded in our current liabilities on our
consolidated balance sheet as of December 31, 2009. We have also excluded from the table above various
contracts we have entered into with our health care providers, health care facilities, the federal government and
other contracts that we have entered into for the purpose of providing health care services. We have excluded
those contracts that allow for cancellation without significant penalty, obligations that are contingent upon
achieving certain goals and contracts for goods and services that are fulfilled by vendors within a short time
horizon and within the normal course of business.
The future contractual obligations in the contractual obligations table are estimated based on information
currently available. The timing of and the actual payment amounts may differ based on actual events.
Surety Bonds
In order to secure judgment pending our appeal in the AmCareco litigation, we obtained surety bonds
totaling $114.7 million, which are further secured by letters of credit issued in December 2005 in the amounts of
$88.1 million. See Notes 6 and 13 to the consolidated financial statements for additional information.
78