Humana 2013 Annual Report Download - page 23

personnel and for retired military personnel and their dependents. Currently, three health benefit options are
available to TRICARE beneficiaries. In addition to a traditional indemnity option, participants may enroll in an
HMO-like plan with a point-of-service option or take advantage of reduced copayments by using a network of
preferred providers, similar to a PPO.
We have participated in the TRICARE program since 1996 under contracts with the DoD. On April 1, 2012,
we began delivering services under our current TRICARE South Region contract that the Defense Health
Agency, or DHA (formerly known as the TRICARE Management Activity), awarded to us on February 25, 2011.
Under the current contract, we provide administrative services, including offering access to our provider
networks and clinical programs, claim processing, customer service, enrollment, and other services, while the
federal government retains all of the risk of the cost of health benefits. Accordingly, we account for revenues
under the current contract net of estimated health care costs similar to an administrative services fee only
agreement. Our current TRICARE South Region contract covers approximately 3,101,800 eligible beneficiaries
as of December 31, 2013 in Florida, Georgia, South Carolina, Mississippi, Alabama, Tennessee, Louisiana,
Arkansas, Texas, Oklahoma, and Kentucky (the Fort Campbell area only). The South Region is one of the three
regions in the United States as defined by the Department of Defense. We have subcontracted with third parties
to provide selected administration and specialty services under the contract. The current 5-year South Region
contract, which expires March 31, 2017, is subject to annual renewals on April 1 of each year during its term at
the government’s option. On January 27, 2014, we received notice from the DHA of its intent to exercise its
option to extend the TRICARE South Region contract through March 31, 2015.
Puerto Rico Medicaid
Our Puerto Rico Medicaid business consisted of contracts with the Puerto Rico Health Insurance
Administration, or PRHIA, for the East, Southeast, and Southwest. On June 26, 2013, the Puerto Rico Health
Insurance Administration notified us of its election not to renew these contracts which ended June 30, 2013.
Contractual transition provisions required the continuation of insurance coverage for beneficiaries through
September 30, 2013 and also require an additional period of time thereafter to process residual claims.
Closed Block of Long-Term Care Insurance Policies
We have a non-strategic closed block of approximately 33,300 long-term care insurance policies associated
with our acquisition of KMG America Corporation in 2007. Long-term care insurance policies are intended to
protect the insured from the cost of long-term care services including those provided by nursing homes, assisted
living facilities, and adult day care as well as home health care services. No new policies have been written since
2005 under this closed block.
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