Humana 2012 Annual Report Download - page 15

and sophisticated data analytics. Our approach to primary, physician-directed care for our members aims to
provide quality care that is consistent, integrated, cost-effective, and member-focused. The model is designed to
improve health outcomes and affordability for individuals and for the health system as a whole, while offering
our members a simple, seamless healthcare experience. The discussion that follows describes the products
offered by each of our segments.
Our Retail Segment Products
This segment is comprised of products sold on a retail basis to individuals including medical and
supplemental benefit plans described in the discussion that follows. The following table presents our premiums
and services revenue for the Retail segment by product for the year ended December 31, 2012:
Retail Segment
Premiums and
Services Revenue
Percent of
Consolidated
Premiums and
Services Revenue
(dollars in millions)
Premiums:
Individual Medicare Advantage ................ $20,788 53.7 %
Individual Medicare stand-alone PDP ........... 2,587 6.7 %
Total individual Medicare ................ 23,375 60.4 %
Individual commercial ....................... 1,004 2.6 %
Individual specialty ......................... 171 0.4%
Total premiums ........................ 24,550 63.4 %
Services ...................................... 24 0.1%
Total premiums and services revenue ....... $24,574 63.5 %
Individual Medicare
We have participated in the Medicare program for private health plans for over 25 years and have
established a national presence, offering at least one type of Medicare plan in all 50 states. We have a
geographically diverse membership base that we believe provides us with greater ability to expand our network
of PPO and HMO providers. We employ strategies including health assessments and clinical guidance programs
such as lifestyle and fitness programs for seniors to guide Medicare beneficiaries in making cost-effective
decisions with respect to their health care. We believe these strategies result in cost savings that occur from
making positive behavior changes.
Medicare is a federal program that provides persons age 65 and over and some disabled persons under the
age of 65 certain hospital and medical insurance benefits. CMS, an agency of the United States Department of
Health and Human Services, administers the Medicare program. Hospitalization benefits are provided under
Part A, without the payment of any premium, for up to 90 days per incident of illness plus a lifetime reserve
aggregating 60 days. Eligible beneficiaries are required to pay an annually adjusted premium to the federal
government to be eligible for physician care and other services under Part B. Beneficiaries eligible for Part A and
Part B coverage under original Medicare are still required to pay out-of-pocket deductibles and coinsurance.
Throughout this document this program is referred to as original Medicare. As an alternative to original
Medicare, in geographic areas where a managed care organization has contracted with CMS pursuant to the
Medicare Advantage program, Medicare beneficiaries may choose to receive benefits from a Medicare
Advantage organization under Medicare Part C. Pursuant to Medicare Part C, Medicare Advantage organizations
contract with CMS to offer Medicare Advantage plans to provide benefits at least comparable to those offered
under original Medicare. Our Medicare Advantage plans are discussed more fully below. Prescription drug
benefits are provided under Part D.
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