SEGMENT INFORMATION

6 Months Ended

Jun. 30, 2023

Segment Reporting [Abstract]

SEGMENT INFORMATION

SEGMENT INFORMATION

During December 2022, we realigned our 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 our payor-agnostic healthcare services offerings, including pharmacy dispensing services, provider services, and home services. In addition to the new segment classifications being utilized to assess performance and allocate resources, we believe this simpler structure will create greater collaboration across the Insurance and CenterWell businesses and will accelerate work that is underway to centralize and integrate operations within the organization. Prior period segment financial information has been recast to conform to the 2023 presentation.

Our 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 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 Insurance segment consists of Medicare benefits, marketed to individuals or directly via group Medicare accounts, as well as 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, dual eligible demonstration, and Long-Term Support Services benefits, which we refer to collectively as our state-based contracts. 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 other supplemental health benefits, as well as administrative services only, or ASO. In addition, our Insurance segment includes our Military business, primarily our T-2017 East Region contract, as well as the operations of our PBM business.

The CenterWell segment includes our pharmacy, provider services, and home solutions operations. The segment also includes our strategic partnerships with WCAS to develop and operate senior-focused, payor-agnostic, primary care centers, as well as our minority ownership interest in hospice operations. Services offered by this segment are designed to enhance the overall healthcare experience. These services may lead to lower utilization associated with improved member health and/or lower drug costs.

Our CenterWell intersegment revenues primarily relate to the operations of CenterWell Pharmacy (our mail- order pharmacy business), CenterWell Specialty Pharmacy, and retail pharmacies jointly located within CenterWell Senior Primary Care clinics.

In addition, our CenterWell intersegment revenues include revenues earned by certain owned providers derived from certain value-based arrangements with our health plans. Under these value-based arrangements, our owned providers enter into agreements with our health plans to stand ready to deliver, integrate, direct and control the administration and management of certain health care services for our members. In exchange, the owned provider receives a premium that is typically paid on a per-member per-month basis. These value-based arrangements represent a single performance obligation where revenues are recognized in the period in which we are obligated to provide integrated health care services to our members. Fee-for-service revenue is recognized at agreed upon rates, net of contractual allowances, as the performance obligation is completed on the date of service.

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 $5.0 billion and $4.8 billion for the three months ended June 30, 2023 and 2022, respectively. For the six months ended June 30, 2023 and 2022 these amounts were $9.0 billion and $8.8 billion, respectively. In addition, depreciation and amortization expense associated with certain businesses 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 $34 million and $29 million for the three months ended June 30, 2023 and 2022, respectively, and $67 million and $59 million for the six months ended June 30, 2023 and 2022, respectively.

Other than those described previously, the accounting policies of each segment are the same. For additional information regarding our accounting policies refer to Note 2 to the audited Consolidated Financial Statements included in Part II, Item 8, "Financial Statements and Supplementary Data" in our 2022 Form 10-K. Transactions between reportable segments primarily consist of sales of services rendered by our CenterWell segment, primarily pharmacy, provider, and home services, to our Insurance 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, 2023 and 2022:

	Insurance		CenterWell		Eliminations/ Corporate		Consolidated
Three months ended June 30, 2023	(in millions)
External revenues
Premiums:
Individual Medicare Advantage	$	19,749	$	—	$	—	$	19,749
Group Medicare Advantage	1,732		—		—		1,732
Medicare stand-alone PDP	568		—		—		568
Total Medicare	22,049		—		—		22,049
Commercial fully-insured	950		—		—		950
Specialty benefits	252		—		—		252
Medicare Supplement	182		—		—		182
Medicaid and other	2,062		—		—		2,062
Total premiums	25,495		—		—		25,495
Services revenue:
Home solutions	—		341		—		341
Provider services	—		190		—		190
Commercial ASO	64		—		—		64
Military and other	167		—		—		167
Pharmacy solutions	—		216		—		216
Total services revenue	231		747		—		978
Total external revenues	25,726		747		—		26,473
Intersegment revenues
Services	15		1,144		(1,159)		—
Products	—		2,639		(2,639)		—
Total intersegment revenues	15		3,783		(3,798)		—
Investment income	134		—		140		274
Total revenues	25,875		4,530		(3,658)		26,747
Operating expenses:
Benefits	22,127		—		(118)		22,009
Operating costs	2,545		4,193		(3,627)		3,111
Depreciation and amortization	172		50		(31)		191
Total operating expenses	24,844		4,243		(3,776)		25,311
Income from operations	1,031		287		118		1,436
Interest expense	—		1		119		120
Other expense, net	—		—		54		54
Income (loss) before income taxes and equity in net earnings	1,031		286		(55)		1,262
Equity in net earnings (losses)	1		(11)		—		(10)
Segment earnings (loss)	$	1,032	$	275	$	(55)	$	1,252
Net loss attributable to noncontrolling interests	3		—		—		3
Segment earnings (loss) attributable to Humana	$	1,035	$	275	$	(55)	$	1,255

	Insurance		CenterWell		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
Commercial fully-insured	1,109		—		—		1,109
Specialty benefits	261		—		—		261
Medicare Supplement	185		—		—		185
Medicaid and other	1,556		—		—		1,556
Total premiums	22,266		—		—		22,266
Services revenue:
Home solutions	—		752		—		752
Provider services	—		137		—		137
Commercial ASO	75		—		—		75
Military and other	131		—		—		131
Pharmacy solutions	—		254		—		254
Total services revenue	206		1,143		—		1,349
Total external revenues	22,472		1,143		—		23,615
Intersegment revenues
Services	14		894		(908)		—
Products	—		2,489		(2,489)		—
Total intersegment revenues	14		3,383		(3,397)		—
Investment income	46		1		—		47
Total revenues	22,532		4,527		(3,397)		23,662
Operating expenses:
Benefits	19,164		—		(65)		19,099
Operating costs	2,105		4,125		(3,057)		3,173
Depreciation and amortization	156		44		(25)		175
Total operating expenses	21,425		4,169		(3,147)		22,447
Income (loss) from operations	1,107		358		(250)		1,215
Interest expense	—		—		101		101
Other income, net	—		—		(8)		(8)
Income (loss) before income taxes and equity in net earnings	1,107		358		(343)		1,122
Equity in net earnings (losses)	8		(6)		—		2
Segment earnings (loss)	$	1,115	$	352	$	(343)	$	1,124
Net income attributable to noncontrolling interests	—		(1)		—		(1)
Segment earnings (loss) attributable to Humana	$	1,115	$	351	$	(343)	$	1,123

	Insurance		CenterWell		Eliminations/ Corporate		Consolidated
Six months ended June 30, 2023	(in millions)
External revenues
Premiums:
Individual Medicare Advantage	$	39,558	$	—	$	—	$	39,558
Group Medicare Advantage	3,497		—		—		3,497
Medicare stand-alone PDP	1,184		—		—		1,184
Total Medicare	44,239		—		—		44,239
Commercial fully-insured	1,968		—		—		1,968
Specialty benefits	506		—		—		506
Medicare Supplement	361		—		—		361
Medicaid and other	3,971		—		—		3,971
Total premiums	51,045		—		—		51,045
Services revenue:
Home solutions	—		655		—		655
Provider services	—		391		—		391
Commercial ASO	135		—		—		135
Military and other	338		—		—		338
Pharmacy solutions	—		458		—		458
Total services revenue	473		1,504		—		1,977
Total external revenues	51,518		1,504		—		53,022
Intersegment revenues
Services	29		2,277		(2,306)		—
Products	—		5,254		(5,254)		—
Total intersegment revenues	29		7,531		(7,560)		—
Investment income	231		—		236		467
Total revenues	51,778		9,035		(7,324)		53,489
Operating expenses:
Benefits	44,120		—		(253)		43,867
Operating costs	4,963		8,319		(7,192)		6,090
Depreciation and amortization	337		99		(59)		377
Total operating expenses	49,420		8,418		(7,504)		50,334
Income from operations	2,358		617		180		3,155
Interest expense	—		1		232		233
Other expense, net	—		—		46		46
Income (loss) before income taxes and equity in net losses	2,358		616		(98)		2,876
Equity in net losses	(2)		(25)		—		(27)
Segment earnings (loss)	$	2,356	$	591	$	(98)	$	2,849
Net loss attributable to noncontrolling interests	4		—		—		4
Segment earnings (loss) attributable to Humana	$	2,360	$	591	$	(98)	$	2,853

	Insurance		CenterWell		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
Commercial fully-insured	2,249		—		—		2,249
Specialty benefits	522		—		—		522
Medicare Supplement	367		—		—		367
Medicaid and other	3,110		—		—		3,110
Total premiums	44,969		—		—		44,969
Services revenue:
Home solutions	—		1,478		—		1,478
Provider services	—		250		—		250
Commercial ASO	152		—		—		152
Military and other	258		—		—		258
Pharmacy solutions	—		475		—		475
Total services revenue	410		2,203		—		2,613
Total external revenues	45,379		2,203		—		47,582
Intersegment revenues
Services	28		1,751		(1,779)		—
Products	—		4,935		(4,935)		—
Total intersegment revenues	28		6,686		(6,714)		—
Investment income (loss)	92		3		(45)		50
Total revenues	45,499		8,892		(6,759)		47,632
Operating expenses:
Benefits	38,898		—		(174)		38,724
Operating costs	4,192		8,073		(6,206)		6,059
Depreciation and amortization	306		91		(52)		345
Total operating expenses	43,396		8,164		(6,432)		45,128
Income (loss) from operations	2,103		728		(327)		2,504
Interest expense	—		—		191		191
Other income, net	—		—		(29)		(29)
Income (loss) before income taxes and equity in net losses	2,103		728		(489)		2,342
Equity in net earnings (losses)	8		(10)		—		(2)
Segment earnings (loss)	$	2,111	$	718	$	(489)	$	2,340
Net income attributable to noncontrolling interests	—		(1)		—		(1)
Segment earnings (loss) attributable to Humana	$	2,111	$	717	$	(489)	$	2,339