HEALTH CARE REFORM

The Patient Protection and Affordable Care Act and the Health Care and Education Reconciliation Act of 2010 (which we collectively refer to as the Health Care Reform Law) established risk spreading premium stabilization programs including a permanent risk adjustment program and temporary risk corridor and reinsurance programs, which we collectively refer to as the 3Rs, effective January 1, 2014. The 3Rs are applicable to certain of our commercial medical insurance products as further discussed in Note 2 to our 2014 Form 10-K. On June 30, 2015 we received notification from CMS of risk adjustment and reinsurance settlement amounts for 2014. We were also notified that settlement of receivables and payables under the risk adjustment and risk corridor programs will be aggregated by legal entity as opposed to by state and legal entity. We revised our 2014 estimates to reflect actual amounts and also made a corresponding adjustment to our risk corridor estimate based on these results. As expected, the change in estimate for risk adjustment was substantially offset by the corresponding change in estimate for risk corridor, both of which are reflected as changes in premiums revenue in our condensed consolidated statements of income. The change in estimate related to the 3Rs for the 2014 coverage year was a decline in the estimated net receivable of approximately $29 million for the three months ended June 30, 2015 and $40 million for the six months ended June 30, 2015, primarily reflecting impact of the June 30, 2015 notification. In addition, we revised our 3Rs estimates for the 2015 coverage year based on the data from CMS for 2014. The accompanying condensed consolidated balance sheets include the following amounts associated with the 3Rs at June 30, 2015 and December 31, 2014. Amounts related to the 2015 coverage year are classified as long-term because settlement will exceed 12 months at June 30, 2015.



	June 30, 2015							December 31, 2014
	Risk Adjustment Settlement			Reinsurance Recoverables		Risk Corridor Settlement		Risk Adjustment Settlement			Reinsurance Recoverables		Risk Corridor Settlement
	(in millions)
Premiums receivable	$	44		$	—	$	—	$	131		$	—	$	—
Other current assets	—			521		243		—			586		55
Trade accounts payable and accrued expenses	(169		)	—		—		(89		)	—		(4		)
Net current (liability) asset	(125		)	521		243		42			586		51
Other long-term assets	65			168		133		—			—		—
Other long-term liabilities	(106		)	—		—		—			—		—
Net long-term (liability) asset	(41		)	168		133		—			—		—
Total net asset	$	(166	)	$	689	$	376	$	42		$	586	$	51

In September 2015, we expect to pay the federal government approximately $866 million for the annual non-deductible health insurance industry fee attributed to calendar year 2015 in accordance with the Health Care Reform Law. We have recorded a liability for this fee in other current liabilities with a corresponding deferred cost in other current assets in our condensed consolidated financial statements. Amortization of the deferred cost resulted in operating cost expense of approximately $213 million for the three months ended June 30, 2015 and $433 million for the six months ended June 30, 2015. For the three and six months ended June 30, 2014 there was approximately $143 million and $280 million, respectively, of operating cost expense resulting from the amortization of the 2014 annual health insurance fee. The remaining deferred cost asset balance was approximately $433 million at June 30, 2015.