FAIR VALUE

Financial Assets

The following table summarizes our fair value measurements at March 31, 2015 and December 31, 2014, respectively, for financial assets measured at fair value on a recurring basis:



	Fair Value Measurements Using
	Fair Value		Quoted Prices in Active Markets (Level 1)		Other Observable Inputs (Level 2)		Unobservable Inputs (Level 3)
	(in millions)
March 31, 2015
Cash equivalents	$	1,779	$	1,779	$	—	$	—
Debt securities:
U.S. Treasury and other U.S. government corporations and agencies:
U.S. Treasury and agency obligations	366		—		366		—
Mortgage-backed securities	1,758		—		1,758		—
Tax-exempt municipal securities	2,756		—		2,750		6
Mortgage-backed securities:
Residential	16		—		16		—
Commercial	891		—		891		—
Asset-backed securities	139		—		138		1
Corporate debt securities	3,646		—		3,641		5
Total debt securities	9,572		—		9,560		12
Total invested assets	$	11,351	$	1,779	$	9,560	$	12

December 31, 2014
Cash equivalents	$	1,712	$	1,712	$	—	$	—
Debt securities:
U.S. Treasury and other U.S. government corporations and agencies:
U.S. Treasury and agency obligations	374		—		374		—
Mortgage-backed securities	1,498		—		1,498		—
Tax-exempt municipal securities	3,068		—		3,060		8
Mortgage-backed securities:
Residential	17		—		17		—
Commercial	843		—		843		—
Asset-backed securities	29		—		28		1
Corporate debt securities	3,718		—		3,695		23
Total debt securities	9,547		—		9,515		32
Total invested assets	$	11,259	$	1,712	$	9,515	$	32

There were no material transfers between Level 1 and Level 2 during the three months ended March 31, 2015 or March 31, 2014.

Our Level 3 assets had a fair value of $12 million at March 31, 2015, or 0.1% of our total invested assets. During the three months ended March 31, 2015 and 2014, the changes in the fair value of the assets measured using significant unobservable inputs (Level 3) were comprised of the following:



	For the three months ended March 31,
	2015									2014
	Private Placements			Auction Rate Securities			Total			Private Placements		Auction Rate Securities		Total
	(in millions)
Beginning balance at January 1	$	24		$	8		$	32		$	24	$	13	$	37
Total gains or losses:
Realized in earnings	—			—			—			—		—		—
Unrealized in other comprehensive income	—			—			—			—		—		—
Purchases	—			—			—			—		—		—
Sales	(18		)	(2		)	(20		)	—		—		—
Settlements	—			—			—			—		—		—
Balance at March 31	$	6		$	6		$	12		$	24	$	13	$	37

Financial Liabilities

Our long-term debt is recorded at carrying value in our consolidated balance sheets. The carrying value of our long-term debt outstanding was $3,824 million at March 31, 2015 and $3,825 million at December 31, 2014. The fair value of our long-term debt was $4,187 million at March 31, 2015 and $4,102 million at December 31, 2014. The fair value of our long-term debt is determined based on Level 2 inputs, including quoted market prices for the same or similar debt, or if no quoted market prices are available, on the current prices estimated to be available to us for debt with similar terms and remaining maturities.

Assets and Liabilities Measured at Fair Value on a Nonrecurring Basis

As disclosed in Note 3, we completed the acquisition of certain health and wellness related businesses during 2014. The values of net tangible assets acquired and the resulting goodwill and other intangible assets were recorded at fair value using Level 3 inputs. The majority of the tangible assets acquired and liabilities assumed were recorded at their carrying values as of the respective dates of acquisition, as their carrying values approximated their fair values due to their short-term nature. The fair values of goodwill and other intangible assets acquired in these acquisitions were internally estimated primarily based on the income approach. The income approach estimates fair value based on the present value of the cash flows that the assets are expected to generate in the future. We developed internal estimates for the expected cash flows and discount rates used in the present value calculations. Other than assets acquired and liabilities assumed in these acquisitions, there were no material assets or liabilities measured at fair value on a nonrecurring basis during the three months ended March 31, 2015 or 2014.