About Humana

Humana Inc. and its subsidiaries (Humana) provide medical and specialty insurance products. Through the company’s Humana insurance services, and the company’s CenterWell health care services, the company makes it easier for the millions of people the company serves to achieve their best health – delivering the care and service they need, when they need it. These efforts are leading to a better quality of life for people with Medicare, Medicaid, families, individuals, military service personnel, and communities at large. As of December 31, 2023, the company had approximately 17 million members in its medical benefit plans, as well as approximately 5 million members in the company’s specialty products. During 2023, 84% of the company’s total premiums and services revenue were derived from contracts with the federal government, including 14% derived from the company’s individual Medicare Advantage contracts in Florida with the Centers for Medicare and Medicaid Services, or CMS, under which the company provides health insurance coverage to approximately 851,300 members as of December 31, 2023. Business Segments During December 2022, the company realigned its businesses into two distinct segments: Insurance and CenterWell. The Insurance segment includes the businesses that were previously included in the Retail and Group and Specialty segments, as well as the Pharmacy Benefit Manager, or PBM, business, which was previously included in the Healthcare Services segment. The CenterWell segment (formerly Healthcare Services) represents the company’s payor-agnostic healthcare services offerings, including pharmacy solutions, primary care, and home solutions. The company’s two reportable segments, Insurance and CenterWell, are based on a combination of the type of health plan customer and adjacent businesses centered on well-being solutions for the company’s health plans and other customers. Products The company’s medical and specialty insurance products allow members to access health care services primarily through the company’s networks of health care providers with whom the company has contracted. These products may vary in the degree to which members have coverage. Health maintenance organizations, or HMOs, include comprehensive managed care benefits generally through a participating network of physicians, hospitals, and other providers. Preferred provider organizations, or PPOs, provide members the freedom to choose any health care provider. However, PPOs generally require the member to pay a greater portion of the provider’s fee in the event the member chooses not to use a provider participating in the PPO’s network. Point of Service, or POS, plans combine the advantages of HMO plans with the flexibility of PPO plans. In general, POS plans allow members to choose, at the time medical services are needed, to seek care from a provider within the plan’s network or outside the network. In addition, the company offers services to its health plan members, as well as to third parties that promote health and wellness, including pharmacy solutions, primary care, and home solutions, as well as services and capabilities to advance population health. At the core of the company’s strategy is its integrated care delivery model, which unites quality care, high member engagement, and sophisticated data analytics. Three core elements of the model are to improve the consumer experience by simplifying the interaction with the company, engaging members in clinical programs, and offering assistance to providers in transitioning from a fee-for-service, or FFS, to a value-based arrangement. The company’s approach to primary, physician-directed care for the company’s members aims to provide quality care that is consistent, integrated 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 the company’s members a simple, seamless healthcare experience. The discussion that follows describes the products offered by each of the company’s segments. Insurance Segment Products The Insurance segment is consisted of products serving Medicare and state-based contract beneficiaries sold on a retail basis to individuals, including medical and supplemental benefit plans. This segment also includes products consisting of employer group commercial fully-insured medical and specialty health insurance benefits marketed to individuals and employer groups, including dental, vision and life insurance benefits, as well as administrative services only, or ASO. In addition, the company’s Insurance segment includes its military services business, as well as the operations of the company’s PBM business. These products are described in the discussion that follows. Medicare The company has participated in the Medicare program for private health plans for over 30 years and have established a national presence, offering at least one type of Medicare plan in all 50 states. The company has a geographically diverse membership base that provides the company with greater ability to expand its network of PPO and HMO providers. The company employs strategies, including health assessments and clinical guidance programs, such as lifestyle and fitness programs for seniors to guide Medicare beneficiaries in making decisions with respect to their health care. 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 traditional fee-for-service Medicare are still required to pay out-of-pocket deductibles and coinsurance. This program is referred to as Medicare FFS. As an alternative to Medicare FFS, 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 Medicare FFS. The company’s Medicare Advantage, or MA, plans are discussed in the following sections. Prescription drug benefits are provided under Part D. Individual Medicare Advantage Products The company contracts with CMS under the Medicare Advantage program to provide a comprehensive array of health insurance benefits, including wellness programs, chronic care management, and care coordination, to Medicare eligible persons under HMO, PPO, Private Fee-For-Service, or PFFS, and Special Needs Plans, including Dual Eligible Special Needs, or D-SNP, plans in exchange for contractual payments received from CMS, usually a fixed payment per member per month. With each of these products, the beneficiary receives benefits in excess of Medicare FFS, typically including reduced cost sharing, enhanced prescription drug benefits, care coordination, data analysis techniques to help identify member needs, complex case management, tools to guide members in their health care decisions, care management programs, wellness and prevention programs and, in some instances, a reduced monthly Part B premium. Most Medicare Advantage plans offer the prescription drug benefit under Part D as part of the basic plan, subject to cost sharing and other limitations. Accordingly, all of the provisions of the Medicare Part D program described in connection with the company’s stand-alone prescription drug plans in the following section also are applicable to most of the company’s Medicare Advantage plans. Medicare Advantage plans may charge beneficiaries monthly premiums and other copayments for Medicare-covered services or for certain extra benefits. Generally, Medicare-eligible individuals enroll in one of the company’s plan choices between October 15 and December 7 for coverage that begins on the following January 1. The company’s Medicare HMO and PPO plans, which cover Medicare-eligible individuals residing in certain counties, may eliminate or reduce coinsurance or the level of deductibles on many other medical services while seeking care from participating in-network providers or in emergency situations. Except in emergency situations or as specified by the plan, most HMO plans provide no out-of-network benefits. PPO plans carry an out-of network benefit that is subject to higher member cost-sharing. In some cases, these beneficiaries are required to pay a monthly premium to the HMO or PPO plan in addition to the monthly Part B premium they are required to pay the Medicare program. Most of the company’s Medicare PFFS plans are network-based products with in and out of network benefits due to a requirement that Medicare Advantage organizations establish adequate provider networks, except in geographic areas that CMS determines have fewer than two network-based Medicare Advantage plans. In these areas, the company offers Medicare PFFS plans that have no preferred network. Individuals in these plans pay the company a monthly premium to receive typical Medicare Advantage benefits along with the freedom to choose any health care provider that accepts individuals at rates equivalent to Medicare FFS payment rates. The company generally relies on providers, including certain providers in its network who are the company’s employees, to code their claim submissions with appropriate diagnoses, which the company sends to CMS as the basis for its health status-adjusted payment received from CMS under the actuarial risk-adjustment model. The company also relies on these providers to document appropriately all medical data, including the diagnosis data submitted with claims. In addition, the company conducts medical record reviews as part of its data and payment accuracy compliance efforts, to more accurately reflect diagnosis conditions under the risk adjustment model. As of December 31, 2023, the company provided health insurance coverage under CMS contracts to approximately 5,408,900 individual Medicare Advantage members, including approximately 851,300 members in Florida. The company’s individual Medicare Advantage products covered under Medicare Advantage contracts with CMS are renewed generally for a calendar year term unless CMS notifies the company of its decision not to renew by May 1 of the calendar year in which the contract would end, or the company notifies CMS of its decision not to renew by the first Monday in June of the calendar year in which the contract would end. All material contracts between Humana and CMS relating to the company’s Medicare Advantage products have been renewed for 2024, and all of the company’s product offerings filed with CMS for 2024 have been approved. Individual Medicare Stand-Alone Prescription Drug Products The company offers stand-alone prescription drug plans, or PDPs, under Medicare Part D, including a PDP offering co-branded with Walmart Inc., or the Humana-Walmart plan. Generally, Medicare-eligible individuals enroll in one of the company’s plan choices between October 15 and December 7 for coverage that begins on the following January 1. The company’s stand-alone PDP offerings consist of plans offering basic coverage with benefits mandated by Congress, as well as plans providing enhanced coverage with varying degrees of out-of-pocket costs for premiums, deductibles, and co-insurance. The company’s revenues from CMS and the beneficiary are determined from its PDP bids submitted annually to CMS. The company’s stand-alone PDP contracts with CMS are renewed generally for a calendar year term unless CMS notifies the company of its decision not to renew by May 1 of the calendar year in which the contract would end, or the company notify CMS of the company’s decision not to renew by the first Monday in June of the calendar year in which the contract would end. All material contracts between Humana and CMS relating to the company’s Medicare stand-alone PDP products have been renewed for 2024, and all of the company’s product offerings filed with CMS for 2024 have been approved. The company has administered CMS’s Limited Income Newly Eligible Transition, or LI-NET, prescription drug plan program since 2010. This program allows individuals who receive Medicare’s low-income subsidy to also receive immediate prescription drug coverage at the point of sale if they are not already enrolled in a Medicare Part D plan. CMS temporarily enrolls newly identified individuals with both Medicare and Medicaid into the LI-NET prescription drug plan program, and subsequently transitions each member into a Medicare Part D plan that may or may not be a Humana Medicare plan. Group Medicare Advantage and Medicare Stand-Alone PDP The company offers products that enable employers that provide post-retirement health care benefits to replace Medicare wrap or Medicare supplement products with Medicare Advantage or stand-alone PDPs from Humana. These products are primarily offered as PPO plans on the same Medicare platform as individual Medicare Advantage plans. These plans offer the same types of benefits and services available to members in the company’s individual Medicare plans discussed previously, however, group Medicare Advantage plans typically have richer benefit offerings than individual Medicare Advantage plans, including prescription drug coverage in the gap, for instance, due to the desire of many customers to closely match their pre-retirement benefit structure. Medicare Supplement The company also offers Medicare supplement products that help pay the medical expenses that Medicare FFS does not cover, such as copayments, coinsurance and deductibles. State-based Contracts Through the company’s state-based contracts, the company serves members enrolled in Medicaid, a program funded by both the federal and state governments and administered by states to care for their most vulnerable populations. Within federal guidelines, states determine whom to cover, but general categories for traditional Medicaid programs include children and parents receiving assistance through Temporary Assistance to Needy Families (TANF); Aged, Blind, and Disabled (ABD) individuals; and Medicaid Expansion adults. Through Medicaid Managed Long-Term Support Services (MLTSS) programs, states offer programs to deliver support services to people who receive home and community or institution-based services for long-term care. The company has contracts in multiple states to serve Medicaid-eligible members, including Florida, Kentucky, Illinois, Louisiana, Ohio, South Carolina and Wisconsin. The company was awarded new Medicaid contracts in Oklahoma and Indiana, which the company expects to become effective April 1, 2024 and July 1, 2024, respectively. The company also serves members who qualify for both Medicaid and Medicare, referred to as ‘dual eligible’, through the company’s Medicaid, Medicare Advantage, and stand-alone prescription drug plans. As the dual eligible population represents a disproportionate share of costs, Humana is participating in varied integration models designed to improve health outcomes. These programs largely operate separately from traditional Medicaid programs. As part of the company’s individual Medicare Advantage products, the company also offers Dual-Eligible Special Needs Plans (D-SNP). In connection with offering a D-SNP in a particular state, the company is required to enter into a special coordinating contract with the applicable state Medicaid agency. To meet federal requirements that took effect in 2021, states have implemented new D-SNP requirements to strengthen Medicaid-Medicare integration requirements for D-SNPs. Some states are also moving to support the dual eligible population by linking D-SNP participation to enrollment in a plan that also participates in a state-based Medicaid program to coordinate and integrate both Medicare and Medicaid benefits. Group Commercial Coverage In February 2023, the company announced its planned exit from the Employer Group Commercial Medical Products business, which includes all fully insured, self-funded and Federal Employee Health Benefit medical plans, as well as associated wellness and rewards programs. The company sells specialty and ancillary insurance benefits consisting of dental, vision, life and disability to employer groups. In addition, the company sells dental and vision specialty insurance benefits to individuals. For in-force group commercial medical customers and members, the company’s commercial products include a broad spectrum of major medical benefits with multiple in-network coinsurance levels and annual deductible choices that employers of all sizes can offer to their employees on either a fully-insured, through HMO, PPO, or POS plans, or self-funded basis. The company’s plans integrate clinical programs, plan designs, communication tools, and spending accounts. The company’s ASO products are offered to small group and large group employers who self-insure their employee health plans. The company receives fees to provide administrative services which generally include the processing of claims, offering access to the company’s provider networks and clinical programs, and responding to customer service inquiries from members of self-funded employers. Military Services Under the company’s TRICARE contracts with the United States Department of Defense, or DoD, the company provides administrative services to arrange health care services for active-duty and retired military personnel and their dependents. The company has participated in the TRICARE program since 1996 under contracts with the DoD. Under the company’s contracts, the company provides administrative services while the federal government retains all of the risk of the cost of health benefits. Accordingly, the company accounts for revenues under the current contract net of estimated health care costs similar to an administrative services fee only agreement. On January 1, 2018, the company began to deliver services under the T2017 East Region contract. The T2017 East Region contract comprises 32 states and approximately 6 million TRICARE beneficiaries. The T2017 East Region contract, which was originally set to expire on December 31, 2022, was subsequently extended by the DoD and is scheduled to expire on December 31, 2024, unless further extended. In December 2022, the company was awarded the next generation of TRICARE Managed Care Support Contracts, or T-5, for the updated TRICARE East Region by the Defense Health Agency of the DoD. The T-5 East Region contract comprises 24 states, and Washington D.C., and covers approximately 4.6 million beneficiaries. The transition period for the T-5 contract began in January 2024 and will overlap the final year of the T2017 contract. The length of the contract is one transition year followed by eight annual option periods, which, if all options are exercised, would result in a total contract length of nine years. CenterWell Segment Products The products offered by the company’s CenterWell segment are key to the company’s integrated care delivery model. This segment includes the company’s pharmacy solutions, primary care, and home solutions operations. The CenterWell segment also includes the company’s strategic partnerships with Welsh, Carson, Anderson & Stowe, or WCAS, to develop and operate senior-focused, payor-agnostic, primary care centers, as well as the company’s minority ownership interest in hospice operations. Services offered by this segment are designed to enhance the overall healthcare experience. Pharmacy Solutions The company’s pharmacy solutions business includes the operations of CenterWell Pharmacy (the company’s mail-order pharmacy business), CenterWell Specialty Pharmacy, and other retail pharmacies located within CenterWell Primary Care clinics for brand, generic, specialty drugs, over the counter medications and supplies, as well as hospice pharmacy drugs. Primary Care The company operates full-service, value-based senior focused primary care centers in a number of states, including Georgia, Florida, Kansas, Louisiana, Missouri, Nevada, North Carolina, South Carolina, Texas, Arizona and Kentucky staffed by primary care providers and medical specialists with a primary focus on the senior population under the company’s Primary Care Organization, or PCO. PCO operates these clinics primarily under the Conviva Care Centers and CenterWell Senior Primary Care brands. The company’s primary care subsidiaries operate its medical center business through both employed physicians and care providers, and through third party management service organizations with whom the company contracts to arrange for and manage certain clinical services. PCO operates 296 primary care clinics and employs approximately 890 primary care providers. PCO serves approximately 294,200 patients, primarily under risk sharing arrangements with Humana Medicare Advantage health plans, third party Medicare Advantage health plans and CMS administered risk sharing arrangements for Medicare FFS. PCO also operates a Medical Services Organization, or MSO, through Conviva that coordinates medical care for Medicare Advantage beneficiaries in Florida and Texas. This MSO provides resources in care coordination, financial risk management, clinical integration and patient engagement that help physicians improve the patient experience, as well as care outcomes. Conviva’s MSO collaborates with physicians, medical groups and integrated delivery systems to successfully transition to value-based care by engaging, partnering and offering practical services and solutions. In 2020, the company’s Primary Care Organization entered into a strategic partnership with Welsh, Carson, Anderson & Stowe, or WCAS, to accelerate the expansion of the company’s primary care model. In May 2022, the company established a second strategic partnership with WCAS to develop additional centers between 2023 and 2025. As of December 31, 2023, there were 108 primary care clinics operating under the partnership and the company has capacity to open or acquire up to approximately 60 additional centers through the existing partnership agreements. Home Solutions CenterWell Home Health The company is actively involved in the care management of its customers with the greatest needs via in-home care. On August 17, 2021, the company fully acquired Kindred at Home, or KAH, the nation’s largest home health and hospice provider with locations in 40 states, providing extensive geographic coverage with approximately 65% overlap with the company’s individual Medicare Advantage membership. The company’s home solutions geographic scale and clinical breadth provides the opportunity to offer care beyond the company’s health plan members. The company has fully-integrated the home health operations, now branded CenterWell Home Health, allowing the company to accelerate clinical innovation and the development and roll out of a value-based operating model at scale, more closely aligning incentives to focus on improving patient outcomes and reducing the total cost of care. This is critical to deploying a value-based, advanced home health model at scale that makes it easier for patients and providers to benefit from the company’s full continuum of home-based capabilities, leveraging the best channel to deliver the right care needed at the right time. Onehome Onehome serves as the convener for the value-based model meeting the needs of health plans by serving their members through a full-risk model for integrated home-based services. Onehome manages a full range of post-acute patient needs, integrating and coordinating with physicians, hospitals and health plans for the provision of home health and infusion services, as well as the distribution of durable medical equipment, or DME, at patients’ homes. Onehome served 14% of the company’s MA members with its value-based model as of December 31, 2023. Hospice Hospice care is an important offering in the full continuum of care the company offers patients, and the company has been successful in delivering the desired patient experience and outcomes through partnership models, including through participation in the CMS hospice Value-Based Insurance Design, or VBID, model. As such, on August 11, 2022, the company completed the sale of a 60% interest in Gentiva (formerly Kindred) Hospice, to Clayton, Dubilier & Rice, or CD&R. Upon closing, Gentiva Hospice was restructured into a new stand-alone company. The company continues to own a 35% minority ownership in Gentiva Hospice operations. Provider Arrangements The company provides its members with access to health care services through its networks of health care providers whom the company employs or with whom the company has contracted, including hospitals and other independent facilities, such as outpatient surgery centers, primary care providers, specialist physicians, dentists, and providers of ancillary health care services and facilities. These ancillary services and facilities include laboratories, ambulance services, medical equipment services, home health agencies, mental health providers, rehabilitation facilities, nursing homes, optical services, and pharmacies. The company’s membership base and the ability to influence where the company’s members seek care generally enable the company to obtain contractual discounts with providers. The company uses a variety of techniques to provide access to the use of health care services for the company’s members. These techniques include the coordination of care for the company’s members, product and benefit designs, hospital inpatient management systems, the use of sophisticated analytics, and enrolling members into various care management programs. The focal point for health care services in many of the company’s HMO networks is the primary care provider who, under contract with the company, provides services to its members, and may control the utilization of appropriate services by directing or approving hospitalization and referrals to specialists and other providers. Some physicians may have arrangements under which they can earn bonuses when certain target goals relating to the provision of quality patient care are met. The company has available care management programs related to complex chronic conditions, such as congestive heart failure and coronary artery disease. The company also has programs for prenatal and premature infant care, asthma related illness, end stage renal disease, diabetes, cancer, and certain other conditions. The company typically contracts with hospitals on either a per diem rate, which is an all-inclusive rate per day; a case rate for diagnosis-related groups (DRG), which is an all-inclusive rate per admission; or a discounted charge for inpatient hospital services. The company’s contracts with physicians typically are renewed automatically each year, unless either party gives written notice, generally ranging from 90 to 120 days, to the other party of its intent to terminate the arrangement. Most of the physicians in the company’s PPO networks and some of its physicians in the company’s HMO networks are reimbursed based upon a fixed fee schedule, which typically provides for reimbursement based upon a percentage of the standard Medicare allowable fee schedule. The terms of the company’s contracts with hospitals and physicians may also vary between Medicare and commercial business. A significant portion of the company’s Medicare network contracts, including those with both hospitals and physicians, are tied to Medicare reimbursement levels and methodologies. Capitation The company offers providers a continuum of opportunities to increase the integration of care and offer assistance to providers in transitioning from a fee-for-service to a value-based arrangement. These include performance bonuses, shared savings and shared risk relationships. For some of the company’s medical membership, the company shares risk with providers under capitation contracts where physicians and hospitals accept varying levels of financial risk for a defined set of membership, primarily HMO membership. Under the typical capitation arrangement, the company prepays these providers a monthly fixed-fee per member, known as a capitation (per capita) payment, to cover all or a defined portion of the benefits provided to the capitated member. These value-based arrangements represent a key element of the company’s integrated care delivery model at the core of the company’s strategy. The company’s health plan subsidiaries may enter into these value-based arrangements with third party providers or the company’s owned provider subsidiaries. As of December 31, 2023, approximately 2,165,600 members, or 12.8% of the company’s medical membership, were covered under shared risk value-based arrangements, which provide all member benefits, including 1,917,300 individual Medicare Advantage members, or 35.4% of the company’s total individual Medicare Advantage membership. The company typically processes all claims and measures the financial performance of its capitated providers and require guarantees in certain instances. However, the company delegated claim processing functions under capitation arrangements covering approximately 289,000 HMO members, including 288,300 individual Medicare Advantage members, or 15.0% of the 1,917,300 individual Medicare Advantage members covered under value-based contracts as of December 31, 2023, with the provider assuming substantially all the risk of coordinating the members’ health care benefits. The company remains financially responsible for health care services to its members in the event the company’s providers fail to provide such services. Accreditation Assessment The company’s accreditation assessment program consists of several internal programs, including those that credential providers and those designed to meet the audit standards of federal and state agencies, as well as external accreditation standards. The company also offers quality and outcome measurement and improvement programs, such as the Health Care Effectiveness Data and Information Set, or HEDIS, which is used by employers, government purchasers and the National Committee for Quality Assurance (NCQA) to evaluate health plans based on various criteria, including effectiveness of care and member satisfaction. Providers participating in the company’s networks must satisfy specific criteria, including licensing, patient access, office standards, after-hours coverage, and other factors. Most participating hospitals also meet accreditation criteria established by CMS and/or The Joint Commission. Recredentialing of participating providers occurs every three years, unless otherwise required by state or federal regulations. Recredentialing of participating providers includes verification of their medical licenses, review of their malpractice liability claims histories, review of their board certifications, if applicable, and review of applicable quality information. A committee composed of a peer group of providers reviews the applications of providers being considered for credentialing and recredentialing. The company maintains accreditation for certain of its health plans and/or departments from NCQA, the Accreditation Association for Ambulatory Health Care (AAAHC), and/or URAC. Certain commercial businesses, such as those impacted by a third-party labor agreement or those where a request is made by the employer, may require or prefer accredited health plans. NCQA reviews the company’s compliance based on standards for quality improvement, population health management, credentialing, utilization management, network management, and member experience. The company has achieved and maintained NCQA accreditation in many of the company’s commercial, Medicare and Medicaid markets for HMO, POS, and PPO products, and the company’s wellness program, Go365. Humana’s pharmacy organization is accredited by URAC. Sales and Marketing The company uses various methods to market its products, including television, radio, the Internet, telemarketing, wholesale distributors (general agencies) and direct mailings. As of December 31, 2023, the company employed approximately 1,000 sales representatives, as well as approximately 2,500 telemarketing representatives who assisted in the marketing of Medicare products, including Medicare Advantage and PDP, and specialty products in the company’s Insurance segment, including making appointments for sales representatives with prospective members. The company has a marketing arrangement with Walmart Inc., or Walmart, for the company’s individual Medicare stand-alone PDP offering. The company also sells group Medicare Advantage products through large employers. In addition, the company markets its Medicare and individual specialty products through licensed independent brokers and agents. In the company’s Insurance segment, the company markets its specialty products to individuals through their employers or other groups, which typically offer employees or members a selection of specialty products, pay for all or part of the premiums, and make payroll deductions for any premiums payable by the employees. The company uses licensed independent brokers, independent agents, digital insurance agencies, and employees to sell the company’s specialty products. Certain Other Services Captive Insurance Company The company bears general business risks associated with operating the company, such as professional and general liability, employee workers’ compensation, cybersecurity, and officer and director errors and omissions risks. Professional and general liability risks may include, for example, medical malpractice claims and disputes with members regarding benefit coverage. The company retains certain of these risks through its wholly-owned, captive insurance subsidiary. The company reduces exposure to these risks by insuring levels of coverage for losses in excess of the company’s retained limits with a number of third-party insurance companies. The company remains liable in the event these insurance companies are unable to pay their portion of the losses. Centralized Intercompany Services The company provides centralized intercompany services to each of the company’s health plans and to the company’s business segments from the company’s headquarters and service centers. These services include management information systems, product development and administration, finance, human resources, accounting, law, public relations, marketing, insurance, purchasing, risk management, internal audit, actuarial, underwriting, claims processing, billing/enrollment, and customer service. Through intercompany service agreements approved, if required, by state regulatory authorities, Humana Inc., the company’s parent company, charges a services fee for reimbursement of certain centralized services provided to its subsidiaries to the extent that Humana Inc. is the service provider. History Humana Inc. was founded in 1961. The company was incorporated as a Delaware corporation in 1964.