United Healthcare 2015 Annual Report Download - page 66

issuer as well as specific events or circumstances that may influence the operations of the issuer and the
Company’s intent to sell the security or the likelihood that it will be required to sell the security before recovery
of the entire amortized cost.
New information and the passage of time can change these judgments. The Company manages its investment
portfolio to limit its exposure to any one issuer or market sector, and largely limits its investments to investment
grade quality. Securities downgraded below policy minimums after purchase will be disposed of in accordance
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 D arrangements. The products and services under the AARP Program
include supplemental Medicare benefits (AARP Medicare Supplement Insurance), hospital indemnity insurance,
including insurance for individuals between 50 to 64 years of age and other related products.
Pursuant to the Company’s agreement, AARP Program assets are managed separately from its general
investment portfolio and are used to pay costs associated with the AARP Program. These assets are invested at
the Company’s discretion, within investment guidelines approved by AARP. The Company does not guarantee
any rates of return on these investments and, upon any transfer of the AARP Program contract to another entity,
the Company would transfer cash equal in amount to the fair value of these investments at the date of transfer to
that entity. Because the purpose of these assets is to fund the medical costs payable, the rate stabilization fund
(RSF) liabilities and other related liabilities associated with this AARP contract, assets under management are
classified as current assets, consistent with the classification of these liabilities.
The effects of changes in other balance sheet amounts associated with the AARP Program also accrue to the
overall benefit of the AARP policyholders through the RSF balance. Accordingly, the Company excludes the
effect of such changes in its Consolidated Statements of Cash Flows. For more detail on the RSF, see “Other
Policy Liabilities” below.
Other Current Receivables
Other current receivables include amounts due from pharmaceutical manufacturers for rebates and Medicare Part
D drug discounts, reinsurance and other miscellaneous amounts due to the Company.
The Company’s pharmacy care services businesses contract with pharmaceutical manufacturers, some of which
provide rebates based on use of the manufacturers’ products by its affiliated and non-affiliated clients. The
Company accrues rebates as they are earned by its clients on a monthly basis based on the terms of the applicable
contracts, historical data and current estimates. The pharmacy care services businesses bill these rebates to the
manufacturers on a monthly or quarterly basis depending on the contractual terms and records rebates
attributable to affiliated clients as a reduction to medical costs. The Company generally receives rebates from
two to five months after billing. As of December 31, 2015 and 2014, total pharmaceutical manufacturer rebates
receivable included in other receivables in the Consolidated Balance Sheets amounted to $2.6 billion and $1.5
billion, respectively.
For details on the Company’s Medicare Part D receivables see “Medicare Part D Pharmacy Benefits” below.
For details on the Company’s reinsurance receivable see “Future Policy Benefits and Reinsurance Receivable”
below.
64