Humana 2005 Annual Report Download - page 86

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Humana Inc.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)
The following table presents details of our other intangible assets included in other non-current assets in the
accompanying consolidated balance sheets at December 31, 2005 and 2004:
Weighted
Average
Life
2005 2004
Cost
Accumulated
Amortization Net Cost
Accumulated
Amortization Net
(in thousands)
Other intangible assets:
Subscriber contracts ........ 10.5 yrs $103,251 $18,483 $ 84,768 $ 97,256 $82,343 $14,913
Provider contracts .......... 15.0 yrs 10,300 1,202 9,098 22,428 11,022 11,406
Licenses and other ......... 17.8 yrs 12,890 2,741 10,149 5,790 1,787 4,003
Total other intangible
assets .............. 11.5 yrs $126,441 $22,426 $104,015 $125,474 $95,152 $30,322
7. MEDICAL AND OTHER EXPENSES PAYABLE
Activity in medical and other expenses payable was as follows for the years ended December 31, 2005,
2004 and 2003:
2005 2004 2003
(in thousands)
Balances at January 1 ................. $ 1,422,010 $ 1,272,156 $ 1,142,131
Acquisitions ......................... 37,375 71,063 —
Incurred related to:
Current year ..................... 11,765,662 10,763,105 9,955,491
Prior years ...................... (114,192) (93,458) (76,070)
Total incurred ............... 11,651,470 10,669,647 9,879,421
Paid related to:
Current year ..................... (9,979,449) (9,504,331) (8,710,393)
Prior years ...................... (1,221,724) (1,086,525) (1,039,003)
Total paid ................... (11,201,173) (10,590,856) (9,749,396)
Balances at December 31 .............. $ 1,909,682 $ 1,422,010 $ 1,272,156
Amounts incurred related to prior years vary from previously estimated liabilities as the claims ultimately
are settled. Negative amounts reported for incurred related to prior years result from claims being ultimately
settled for amounts less than originally estimated (favorable development).
As summarized in the previous table, claim reserve balances at December 31, 2004 ultimately settled during
2005 for $114.2 million less than the amounts originally estimated, representing 1.1% of medical claim expenses
recorded in 2004. During 2004, claim reserve balances at December 31, 2003 ultimately settled for $93.5 million
less than the amounts originally estimated, representing 0.9% of medical claim expenses recorded in 2003. This
$20.7 million change in the amounts incurred related to prior years for 2005 as compared to 2004 resulted
primarily from favorable development in our TRICARE line of business as a result of less than expected
utilization in the latter half of 2004.
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