SEGMENT INFORMATION

6 Months Ended

Jun. 30, 2022

Segment Reporting [Abstract]

SEGMENT INFORMATION

SEGMENT INFORMATION

We manage our business with three reportable segments: Retail, Group and Specialty, and Healthcare Services. The reportable segments are based on a combination of the type of health plan customer and adjacent businesses centered on well-being solutions for our health plans and other customers, as described below. These segment groupings are consistent with information used by our Chief Executive Officer, the Chief Operating Decision Maker, to assess performance and allocate resources.

The Retail segment consists of Medicare benefits, marketed to individuals or directly via group Medicare accounts. In addition, the Retail segment also includes our contract with CMS to administer the Limited Income Newly Eligible Transition, or LI-NET, prescription drug plan program and contracts with various states to provide Medicaid, including Temporary Assistance for Needy Families, or TANF, dual eligible demonstration, and Long-Term Support Services benefits, which we refer to collectively as our state-based contracts. The Group and Specialty segment consists of employer group commercial fully-insured medical and specialty health insurance benefits marketed to individuals and employer groups, including dental, vision, and other supplemental health benefits, as well as administrative services only, or ASO products. In addition, our Group and Specialty segment includes our military services business, primarily our TRICARE T2017 East Region contract. The Healthcare Services segment includes pharmacy, provider, and home services, along with other services and capabilities to promote wellness and advance population health. The operations of the recently acquired full ownership of Kindred at Home, as well as the company's strategic partnerships with WCAS to develop and operate senior-focused, payor-agnostic, primary care centers are also included in the Healthcare Services segment.

Our Healthcare Services intersegment revenues primarily relate to managing prescription drug coverage for members of our other segments through Humana Pharmacy Solutions®, or HPS, and includes the operations of Humana Pharmacy, Inc., our mail order pharmacy business. These revenues consist of the prescription price (ingredient cost plus dispensing fee), including the portion to be settled with the member (co-share) or with the government (subsidies), plus any associated administrative fees. Services revenues related to the distribution of prescriptions by third party retail pharmacies in our networks are recognized when the claim is processed and product revenues from dispensing prescriptions from our mail order pharmacies are recorded when the prescription or product is shipped. Our pharmacy operations, which are responsible for designing pharmacy benefits, including defining member co-share responsibilities, determining formulary listings, contracting with retail pharmacies, confirming member eligibility, reviewing drug utilization, and processing claims, act as a principal in the arrangement on behalf of members in our other segments. As principal, our Healthcare Services segment reports revenues on a gross basis, including co-share amounts from members collected by third party retail pharmacies at the point of service.

In addition, our Healthcare Services intersegment revenues include revenues earned by certain owned providers derived from risk-based and non-risk-based managed care agreements with our health plans. Under risk based agreements, the provider receives a monthly capitated fee that varies depending on the demographics and health status of the member, for each member assigned to these owned providers by our health plans. The owned provider assumes the economic risk of funding the assigned members’ healthcare services. Under non risk-based agreements, our health plans retain the economic risk of funding the assigned members' healthcare services. Our Healthcare Services segment reports provider services revenues associated with risk-based agreements on a gross basis, whereby capitation fee revenue is recognized in the period in which the assigned members are entitled to receive healthcare services. Provider services revenues associated with non-risk-based agreements are presented net of associated healthcare costs.

We present our condensed consolidated results of operations from the perspective of the health plans. As a result, the cost of providing benefits to our members, whether provided via a third party provider or internally through a stand-alone subsidiary, is classified as benefits expense and excludes the portion of the cost for which the health plans do not bear responsibility, including member co-share amounts and government subsidies of $4.8 billion and $4.4 billion for the three months ended June 30, 2022 and 2021, respectively. For the six months ended June 30, 2022 and 2021 these amounts were $8.8 billion and $8.0 billion, respectively. In addition, depreciation and amortization expense associated with certain businesses in our Healthcare Services segment delivering benefits to our members, primarily associated with our provider services and pharmacy operations, are included with benefits expense. The amount of this expense was $29 million and $26 million for the three months ended June 30, 2022 and 2021, respectively. For the six months ended June 30, 2022 and 2021, the amount of this expense was $59 million and $52 million, respectively.

Other than those described previously, the accounting policies of each segment are the same and are described in Note 2 to the consolidated financial statements included in our 2021 Form 10-K. Transactions between reportable segments primarily consist of sales of services rendered by our Healthcare Services segment, primarily pharmacy, provider, and home solutions services, to our Retail and Group and Specialty segment customers. Intersegment sales and expenses are recorded at fair value and eliminated in consolidation. Members served by our segments often use the same provider networks, enabling us in some instances to obtain more favorable contract terms with providers. Our segments also share indirect costs and assets. As a result, the profitability of each segment is interdependent. We allocate most operating expenses to our segments. Assets and certain corporate income and expenses are not allocated to the segments, including the portion of investment income not supporting segment operations, interest expense on corporate debt, and certain other corporate expenses. These items are managed at a corporate level. These corporate amounts are reported separately from our reportable segments and are included with intersegment eliminations in the tables presenting segment results below.

Our segment results were as follows for the three and six months ended June 30, 2022 and 2021:

	Retail		Group and Specialty		Healthcare Services		Eliminations/ Corporate		Consolidated
Three months ended June 30, 2022	(in millions)
External revenues
Premiums:
Individual Medicare Advantage	$	16,692	$	—	$	—	$	—	$	16,692
Group Medicare Advantage	1,857		—		—		—		1,857
Medicare stand-alone PDP	606		—		—		—		606
Total Medicare	19,155		—		—		—		19,155
Fully-insured	185		943		—		—		1,128
Specialty	—		427		—		—		427
Medicaid and other	1,556		—		—		—		1,556
Total premiums	20,896		1,370		—		—		22,266
Services revenue:
Home solutions	—		—		752		—		752
Provider	—		—		137		—		137
ASO and other	8		196		—		—		204
Pharmacy	—		—		256		—		256
Total services revenue	8		196		1,145		—		1,349
Total external revenues	20,904		1,566		1,145		—		23,615
Intersegment revenues
Services	—		14		5,327		(5,341)		—
Products	—		—		2,489		(2,489)		—
Total intersegment revenues	—		14		7,816		(7,830)		—
Investment income	42		4		1		—		47
Total revenues	20,946		1,584		8,962		(7,830)		23,662
Operating expenses:
Benefits	18,182		1,045		—		(128)		19,099
Operating costs	1,712		415		8,469		(7,423)		3,173
Depreciation and amortization	131		23		50		(29)		175
Total operating expenses	20,025		1,483		8,519		(7,580)		22,447
Income (loss) from operations	921		101		443		(250)		1,215
Interest expense	—		—		—		101		101
Other income, net	—		—		—		(8)		(8)
Income (loss) before income taxes and equity in net earnings	921		101		443		(343)		1,122
Equity in net earnings (losses)	8		—		(6)		—		2
Segment earnings (loss)	$	929	$	101	$	437	$	(343)	$	1,124
Less: noncontrolling interests	—		—		(1)		—		(1)
Segment earnings (loss) attributable to Humana	$	929	$	101	$	436	$	(343)	$	1,123

	Retail		Group and Specialty		Healthcare Services		Eliminations/ Corporate		Consolidated
Three months ended June 30, 2021	(in millions)
External revenues
Premiums:
Individual Medicare Advantage	$	14,585	$	—	$	—	$	—	$	14,585
Group Medicare Advantage	1,775		—		—		—		1,775
Medicare stand-alone PDP	662		—		—		—		662
Total Medicare	17,022		—		—		—		17,022
Fully-insured	182		1,078		—		—		1,260
Specialty	—		432		—		—		432
Medicaid and other	1,264		—		—		—		1,264
Total premiums	18,468		1,510		—		—		19,978
Services revenue:
Home solutions	—		—		25		—		25
Provider	—		—		97		—		97
ASO and other	12		194		—		—		206
Pharmacy	—		—		163		—		163
Total services revenue	12		194		285		—		491
Total external revenues	18,480		1,704		285		—		20,469
Intersegment revenues
Services	—		10		4,977		(4,987)		—
Products	—		—		2,261		(2,261)		—
Total intersegment revenues	—		10		7,238		(7,248)		—
Investment income	65		4		1		106		176
Total revenues	18,545		1,718		7,524		(7,142)		20,645
Operating expenses:
Benefits	16,068		1,247		—		(166)		17,149
Operating costs	1,533		409		7,205		(7,031)		2,116
Depreciation and amortization	108		22		41		(27)		144
Total operating expenses	17,709		1,678		7,246		(7,224)		19,409
Income from operations	836		40		278		82		1,236
Interest expense	—		—		—		79		79
Other expense, net	—		—		—		419		419
Income (loss) before income taxes and equity in net earnings	836		40		278		(416)		738
Equity in net earnings	—		—		33		—		33
Segment earnings (loss)	$	836	$	40	$	311	$	(416)	$	771

	Retail		Group and Specialty		Healthcare Services		Eliminations/ Corporate		Consolidated
Six months ended June 30, 2022	(in millions)
External revenues
Premiums:
Individual Medicare Advantage	$	33,744	$	—	$	—	$	—	$	33,744
Group Medicare Advantage	3,732		—		—		—		3,732
Medicare stand-alone PDP	1,245		—		—		—		1,245
Total Medicare	38,721		—		—		—		38,721
Fully-insured	367		1,915		—		—		2,282
Specialty	—		856		—		—		856
Medicaid and other	3,110		—		—		—		3,110
Total premiums	42,198		2,771		—		—		44,969
Services revenue:
Home solutions	—		—		1,478		—		1,478
Provider services	—		—		250		—		250
ASO and other	14		391		—		—		405
Pharmacy solutions	—		—		480		—		480
Total services revenue	14		391		2,208		—		2,613
Total external revenues	42,212		3,162		2,208		—		47,582
Intersegment revenues
Services	—		28		10,504		(10,532)		—
Products	—		—		4,935		(4,935)		—
Total intersegment revenues	—		28		15,439		(15,467)		—
Investment income	85		7		3		(45)		50
Total revenues	42,297		3,197		17,650		(15,512)		47,632
Operating expenses:
Benefits	36,932		2,091		—		(299)		38,724
Operating costs	3,406		828		16,654		(14,829)		6,059
Depreciation and amortization	254		45		103		(57)		345
Total operating expenses	40,592		2,964		16,757		(15,185)		45,128
Income (loss) from operations	1,705		233		893		(327)		2,504
Interest expense	—		—		—		191		191
Other income, net	—		—		—		(29)		(29)
Income (loss) before income taxes and equity in net earnings	1,705		233		893		(489)		2,342
Equity in net earnings (losses)	8		—		(10)		—		(2)
Segment earnings (loss)	$	1,713	$	233	$	883	$	(489)	$	2,340
Less: noncontrolling interests	—		—		(1)		—		(1)
Segment earnings (loss) attributable to Humana	$	1,713	$	233	$	882	$	(489)	$	2,339

	Retail		Group and Specialty		Healthcare Services		Eliminations/ Corporate		Consolidated
Six months ended June 30, 2021	(in millions)
External Revenues
Premiums:
Individual Medicare Advantage	$	29,400	$	—	$	—	$	—	$	29,400
Group Medicare Advantage	3,530		—		—		—		3,530
Medicare stand-alone PDP	1,326		—		—		—		1,326
Total Medicare	34,256		—		—		—		34,256
Fully-insured	360		2,177		—		—		2,537
Specialty	—		866		—		—		866
Medicaid and other	2,443		—		—		—		2,443
Total premiums	37,059		3,043		—		—		40,102
Services revenue:
Home solutions	—		—		49		—		49
Provider services	—		—		188		—		188
ASO and other	17		384		—		—		401
Pharmacy solutions	—		—		319		—		319
Total services revenue	17		384		556		—		957
Total external revenues	37,076		3,427		556		—		41,059
Intersegment revenues
Services	—		20		9,751		(9,771)		—
Products	—		—		4,413		(4,413)		—
Total intersegment revenues	—		20		14,164		(14,184)		—
Investment income	117		8		2		127		254
Total revenues	37,193		3,455		14,722		(14,057)		41,313
Operating expenses:
Benefits	32,367		2,392		—		(314)		34,445
Operating costs	2,984		806		14,115		(13,782)		4,123
Depreciation and amortization	212		43		81		(50)		286
Total operating expenses	35,563		3,241		14,196		(14,146)		38,854
Income from operations	1,630		214		526		89		2,459
Interest expense	—		—		—		147		147
Other expense, net	—		—		—		534		534
Income (loss) before income taxes and equity in net earnings	1,630		214		526		(592)		1,778
Equity in net earnings	—		—		54		—		54
Segment earnings (loss)	$	1,630	$	214	$	580	$	(592)	$	1,832