Humana 2010 Annual Report Download - page 111

Humana Inc.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)
Benefit expenses associated with military services and provisions associated with future policy benefits
excluded from the previous table were as follows for the years ended December 31, 2010, 2009 and 2008:
2010 2009 2008
(in thousands)
Military services ......................... $3,059,492 $3,019,655 $2,819,787
Future policy benefits ..................... 305,875 73,130 64,338
Total .............................. $3,365,367 $3,092,785 $2,884,125
The increase in benefit expenses associated with future policy benefits payable during 2010 relates to
reserve strengthening for our closed block of long-term care policies acquired in connection with the 2007 KMG
America Corporation, or KMG, acquisition more fully described in Note 18.
10. INCOME TAXES
The provision for income taxes consisted of the following for the years ended December 31, 2010, 2009 and
2008:
2010 2009 2008
(in thousands)
Current provision:
Federal ................................. $785,888 $532,722 $336,870
States and Puerto Rico .................... 63,262 56,155 30,829
Total current provision ................ 849,150 588,877 367,699
Deferred benefit ............................. (198,978) (26,792) (22,005)
Provision for income taxes ............. $650,172 $562,085 $345,694
The provision for income taxes was different from the amount computed using the federal statutory rate for
the years ended December 31, 2010, 2009 and 2008 due to the following:
2010 2009 2008
(in thousands)
Income tax provision at federal statutory rate ....... $612,347 $560,616 $347,497
States, net of federal benefit and Puerto Rico ....... 30,865 28,968 12,412
Tax exempt investment income .................. (23,776) (21,327) (21,253)
Nondeductible executive compensation ............ 12,655 55 30
Contingent tax benefits ......................... 0 (16,781) 0
Other, net ................................... 18,081 10,554 7,008
Provision for income taxes .................. $650,172 $562,085 $345,694
The provision for income taxes for 2010 reflects a $12.7 million estimated impact from new limitations on
the deductibility of annual compensation in excess of $500,000 per employee as mandated by the Health
Insurance Reform Legislation.
The liability for unrecognized tax benefits was $16.8 million at December 31, 2008 and $16.0 million at
December 31, 2007. This liability, which was released in 2009 as a result of settlements associated with the
completion of the audit of our U.S. income tax returns for 2005 and 2006, reduced tax expense $16.8 million in
2009. As of December 31, 2010, we do not have material uncertain tax positions reflected in our consolidated
balance sheet.
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