Humana 2014 Annual Report Download - page 76

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68
(3) Purchase obligations include agreements to purchase services, primarily information technology related
services, or to make improvements to real estate, in each case that are enforceable and legally binding on us
and that specify all significant terms, including: fixed or minimum levels of service to be purchased; fixed,
minimum or variable price provisions; and the appropriate timing of the transaction. Purchase obligations
exclude agreements that are cancelable without penalty.
(4) Includes future policy benefits payable ceded to third parties through 100% coinsurance agreements as more
fully described in Note 19 to the consolidated financial statements included in Item 8. – Financial Statements
and Supplementary Data. We expect the assuming reinsurance carriers to fund these obligations and reflected
these amounts as reinsurance recoverables included in other long-term assets on our consolidated balance sheet.
Amounts payable in less than one year are included in trade accounts payable and accrued expenses in the
consolidated balance sheet.
Off-Balance Sheet Arrangements
As of December 31, 2014, we were not involved in any special purpose entity, or SPE, transactions. For a detailed
discussion off-balance sheet arrangements, please refer to Note 16 to the consolidated financial statements included in
Item 8. – Financial Statements and Supplementary Data.
Guarantees and Indemnifications
For a detailed discussion our guarantees and indemnifications, please refer to Note 16 to the consolidated financial
statements included in Item 8. – Financial Statements and Supplementary Data.
Government Contracts
For a detailed discussion of our government contracts, including our Medicare, Military, and Medicaid contracts,
please refer to Note 16 to the consolidated financial statements included in Item 8. – Financial Statements and
Supplementary Data.
Critical Accounting Policies and Estimates
The discussion and analysis of our financial condition and results of operations is based upon our consolidated
financial statements and accompanying notes, which have been prepared in accordance with accounting principles
generally accepted in the United States of America. The preparation of these financial statements and accompanying
notes requires us to make estimates and assumptions that affect the amounts reported in the consolidated financial
statements and accompanying notes. We continuously evaluate our estimates and those critical accounting policies
related primarily to benefits expense and revenue recognition as well as accounting for impairments related to our
investment securities, goodwill, and long-lived assets. These estimates are based on knowledge of current events and
anticipated future events and, accordingly, actual results ultimately may differ from those estimates. We believe the
following critical accounting policies involve the most significant judgments and estimates used in the preparation of
our consolidated financial statements.