Humana 2014 Annual Report Download - page 113
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Humana Inc.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)
105
Benefits expense associated with military services and provisions associated with future policy benefits excluded
from the previous table was as follows for the years ended December 31, 2014, 2013 and 2012:
2014 2013 2012
(in millions)
Military services $ 11 $ (27) $ 908
Future policy benefits 32 354 136
Total $ 43 $ 327 $ 1,044
Military services benefit expense for 2014 reflects expenses associated with our contracts with the Veterans
Administration. Military services benefit expense for 2013 reflects the beneficial effect of a favorable settlement of
contract claims with the DoD partially offset by expenses associated with our contracts with the Veterans Administration.
Due to the transition to the current TRICARE South Region contract on April 1, 2012, which is accounted for as an
administrative services only contract as more fully described in Note 2 there was no military services benefits payable
at December 31, 2014 or 2013. This transition is also the primary reason for the decline in military services benefits
expense from 2012 to 2013.
The higher benefits expense associated with future policy benefits payable during 2013 relates to reserve
strengthening for our closed block of long-term care insurance policies acquired in connection with the 2007 KMG
America Corporation, or KMG, acquisition more fully described in Note 18.
11. INCOME TAXES
The provision for income taxes consisted of the following for the years ended December 31, 2014, 2013 and 2012:
2014 2013 2012
(in millions)
Current provision:
Federal $ 1,006 $ 595 $ 708
States and Puerto Rico 81 53 61
Total current provision 1,087 648 769
Deferred (benefit) provision (64)42(80)
Provision for income taxes $ 1,023 $ 690 $ 689
The provision for income taxes was different from the amount computed using the federal statutory rate for the
years ended December 31, 2014, 2013 and 2012 due to the following:
2014 2013 2012
(in millions)
Income tax provision at federal statutory rate $ 759 $ 672 $ 669
States, net of federal benefit, and Puerto Rico 48 32 27
Tax exempt investment income (27)(26)(26)
Health insurer fee 204 — —
Nondeductible executive compensation 22 6 14
Other, net 17 6 5
Provision for income taxes $ 1,023 $ 690 $ 689
The provision for income taxes for 2014, 2013, and 2012 reflects a $22 million, $6 million, and $14 million,
respectively, estimated impact from limitations on the deductibility of annual compensation in excess of $500,000 per
employee as mandated by the Health Care Reform Law.