Humana 2014 Annual Report Download - page 23

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In our Employer Group segment, individuals may become members of our commercial HMOs and PPOs through
their employers or other groups, which typically offer employees or members a selection of health insurance products,
pay for all or part of the premiums, and make payroll deductions for any premiums payable by the employees. We
attempt to become an employer’s or group’s exclusive source of health insurance benefits by offering a variety of HMO,
PPO, and specialty products that provide cost-effective quality health care coverage consistent with the needs and
expectations of their employees or members. In addition, we have begun to offer plans to employer groups through
private exchanges. Employers can give their employees a set amount of money and then direct them to a private
exchange. There, employees can shop for a health plan and other benefits based on what the employer has selected as
options. We also sell group Medicare Advantage products through large employers. We use licensed independent brokers,
independent agents, and employees to sell our group products. Many of our larger employer group customers are
represented by insurance brokers and consultants who assist these groups in the design and purchase of health care
products. We pay brokers and agents using the same commission structure described above for our individual commercial
health insurance and specialty products.
Underwriting
Beginning in 2014, the Health Care Reform Law requires all individual and group health plans to guarantee issuance
and renew coverage without pre-existing condition exclusions or health-status rating adjustments. Accordingly, newly
issued individual and group health plans are not subject to underwriting in 2014 and beyond. Further, underwriting
techniques are not employed in connection with our Medicare, military services, or Medicaid products because
government regulations require us to accept all eligible applicants regardless of their health or prior medical history.
Prior to 2014, through the use of internally developed underwriting criteria, we determined the risk we were willing
to assume and the amount of premium to charge for our commercial products. In most instances, employer and other
groups had to meet our underwriting standards in order to qualify to contract with us for coverage.
Competition
The health benefits industry is highly competitive. Our competitors vary by local market and include other managed
care companies, national insurance companies, and other HMOs and PPOs. Many of our competitors have larger
memberships and/or greater financial resources than our health plans in the markets in which we compete. Our ability
to sell our products and to retain customers may be influenced by such factors as those described in Item 1A. – Risk
Factors in this 2014 Form 10-K.
Government Regulation
Diverse legislative and regulatory initiatives at both the federal and state levels continue to affect aspects of the
nation’s health care system.
Our management works proactively to ensure compliance with all governmental laws and regulations affecting
our business. We are unable to predict how existing federal or state laws and regulations may be changed or interpreted,
what additional laws or regulations affecting our businesses may be enacted or proposed, when and which of the
proposed laws will be adopted or what effect any such new laws and regulations will have on our results of operations,
financial position, or cash flows.
For a description of certain material current activities in the federal and state legislative areas, see Item 1A. – Risk
Factors in this 2014 Form 10-K.