During the first quarter of 2011, we realigned our business segments to reflect our evolving business model. As a result, we reassessed and changed our operating and reportable segments in the first quarter of 2011 to reflect management's new view of the business and to align our external financial reporting with our new operating and internal financial reporting model. Historical segment information has been retrospectively adjusted to reflect the effect of this change. Our new reportable segments and the basis for determining those segments are discussed below.

We currently manage our business with three reportable segments: Retail, Employer Group, and Health and Well-Being Services. In addition, we include businesses that are not individually reportable because they do not meet the quantitative thresholds in an Other Businesses category. These 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 to assess performance and allocate resources.

The Retail segment consists of Medicare and commercial fully-insured medical and specialty health insurance benefits, including dental, vision, and other supplemental health and financial protection products, marketed directly to individuals. The Employer Group segment consists of Medicare and commercial fully-insured medical and specialty health insurance benefits, including dental, vision, and other supplemental health and financial protection products, as well as administrative services only products marketed to employer groups. The Health and Well-Being Services segment includes services offered to our health plan members as well as to third parties that promote health and wellness, including primary care, pharmacy, integrated wellness, and home care services. The Other Businesses category consists of our Military services, primarily our TRICARE South region contract, Medicaid, and closed-block long-term care businesses as well as our contract with CMS to administer the Limited Income Newly Eligible Transition (LI-NET) program.

Our Health and Well-Being 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 RightSourceRx^®, 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. Service revenues related to the distribution of prescriptions by third party retail pharmacies in our networks are recognized when the claim is processed. 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, selecting and establishing prices charged by 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 Health and Well-Being 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.

We present our 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 $1.1 billion and $0.9 billion for the three months ended September 30, 2011 and 2010, respectively. For the nine months ended September 30, 2011 and 2010, these amounts were $3.1 billion and $2.6 billion, 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 2010 Form 10-K. Transactions between reportable segments consist of sales of services rendered by our Health and Well-Being Services segment, primarily pharmacy and behavioral health services, to our Retail and Employer Group customers. Intersegment sales and expenses are recorded at fair value and eliminated in consolidation. Members served by our segments often utilize 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 do not report total assets by segment since this is not a metric used to assess performance and allocate resources. We allocate most operating expenses to our segments. Certain corporate income and expenses are not allocated to the segments, including investment income not supporting segment operations, interest expense on corporate debt, and certain other corporate expenses. These items are managed at the corporate level. These corporate amounts are reported separately from our reportable segments and included with intersegment eliminations in the tables presenting segment results below.

Our segment results were as follows for the three and nine months ended September 30, 2011 and 2010, respectively:


	Retail		Employer Group		Health and Well-Being Services		Other Businesses		Eliminations/ Corporate			Consolidated
	(in thousands)
Three months ended September 30, 2011
Revenues - external customers
Premiums:
Medicare Advantage	$	4,566,087	$	802,957	$	0	$	0	$	0		$	5,369,044
Medicare stand-alone PDP		578,786		1,910		0		42,524		0			623,220

Total Medicare		5,144,873		804,867		0		42,524		0			5,992,264

Fully-insured		221,632		1,185,285		0		0		0			1,406,917
Specialty		33,149		235,050		0		0		0			268,199
Military services		0		0		0		943,984		0			943,984
Medicaid and other		0		0		0		241,172		0			241,172

Total premiums		5,399,654		2,225,202		0		1,227,680		0			8,852,536

Services revenue:
Provider		0		0		233,608		0		0			233,608
ASO and other		4,597		88,699		0		26,444		0			119,740
Pharmacy		0		0		2,864		0		0			2,864

Total services revenue		4,597		88,699		236,472		26,444		0			356,212

Total revenues - external customers		5,404,251		2,313,901		236,472		1,254,124		0			9,208,748

Intersegment revenues
Services		0		3,715		2,129,915		0		(2,133,630	)		0
Products		0		0		461,213		0		(461,213	)		0

Total intersegment revenues		0		3,715		2,591,128		0		(2,594,843	)		0

Investment income		19,023		11,879		0		14,324		46,669			91,895

Total revenues		5,423,274		2,329,495		2,827,600		1,268,448		(2,548,174	)		9,300,643

Operating expenses:
Benefits		4,249,209		1,856,934		0		1,116,702		(76,315	)		7,146,530
Operating costs		602,878		405,853		2,723,334		121,574		(2,491,982	)		1,361,657
Depreciation and amortization		29,738		20,851		20,701		2,450		(7,069	)		66,671

Total operating expenses		4,881,825		2,283,638		2,744,035		1,240,726		(2,575,366	)		8,574,858

Income from operations		541,449		45,857		83,565		27,722		27,192			725,785
Interest expense		0		0		0		0		27,065			27,065

Income before income taxes	$	541,449	$	45,857	$	83,565	$	27,722	$	127		$	698,720


	Retail		Employer Group		Health and Well-Being Services		Other Businesses		Eliminations/ Corporate			Consolidated
	(in thousands)
Three months ended September 30, 2010
Revenues - external customers
Premiums:
Medicare Advantage	$	4,075,532	$	723,378	$	0	$	0	$	0		$	4,798,910
Medicare stand-alone PDP		504,929		1,153		0		73,501		0			579,583

Total Medicare		4,580,461		724,531		0		73,501		0			5,378,493

Fully-insured		189,503		1,275,945		0		0		0			1,465,448
Specialty		21,663		216,814		0		0		0			238,477
Military services		0		0		0		873,588		0			873,588
Medicaid and other		0		0		0		178,639		0			178,639

Total premiums		4,791,627		2,217,290		0		1,125,728		0			8,134,645

Services revenue:
Provider		0		0		3,815		0		0			3,815
ASO and other		3,116		94,884		0		27,102		0			125,102
Pharmacy		0		0		0		0		0			0

Total services revenue		3,116		94,884		3,815		27,102		0			128,917

Total revenues - external customers		4,794,743		2,312,174		3,815		1,152,830		0			8,263,562

Intersegment revenues
Services		0		3,224		1,843,235		0		(1,846,459	)		0
Products		0		0		342,777		0		(342,777	)		0

Total intersegment revenues		0		3,224		2,186,012		0		(2,189,236	)		0

Investment income		21,265		11,165		0		11,482		43,338			87,250

Total revenues		4,816,008		2,326,563		2,189,827		1,164,312		(2,145,898	)		8,350,812

Operating expenses:
Benefits		3,879,424		1,818,752		0		1,021,082		(77,994	)		6,641,264
Operating costs		461,038		407,117		2,106,079		118,551		(2,090,387	)		1,002,398
Depreciation and amortization		27,625		21,704		8,211		2,664		(1,487	)		58,717

Total operating expenses		4,368,087		2,247,573		2,114,290		1,142,297		(2,169,868	)		7,702,379

Income from operations		447,921		78,990		75,537		22,015		23,970			648,433
Interest expense		0		0		0		0		26,143			26,143

Income (loss) before income taxes	$	447,921	$	78,990	$	75,537	$	22,015	$	(2,173	)	$	622,290


	Retail		Employer Group		Health and Well-Being Services		Other Businesses		Eliminations/ Corporate			Consolidated
	(in thousands)
Nine months ended September 30, 2011
Revenues - external customers
Premiums:
Medicare Advantage	$	13,645,876	$	2,364,306	$	0	$	0	$	0		$	16,010,182
Medicare stand-alone PDP		1,737,603		5,638		0		195,604		0			1,938,845

Total Medicare		15,383,479		2,369,944		0		195,604		0			17,949,027

Fully-insured		628,811		3,600,476		0		0		0			4,229,287
Specialty		88,504		697,934		0		0		0			786,438
Military services		0		0		0		2,801,999		0			2,801,999
Medicaid and other		0		0		0		701,452		0			701,452

Total premiums		16,100,794		6,668,354		0		3,699,055		0			26,468,203

Services revenue:
Provider		0		0		671,055		0		0			671,055
ASO and other		11,364		267,902		0		76,659		0			355,925
Pharmacy		0		0		7,683		0		0			7,683

Total services revenue		11,364		267,902		678,738		76,659		0			1,034,663

Total revenues - external customers		16,112,158		6,936,256		678,738		3,775,714		0			27,502,866

Intersegment revenues
Services		0		10,313		6,324,992		0		(6,335,305	)		0
Products		0		0		1,329,722		0		(1,329,722	)		0

Total intersegment revenues		0		10,313		7,654,714		0		(7,665,027	)		0

Investment income		56,968		35,287		0		39,999		140,372			272,626

Total revenues		16,169,126		6,981,856		8,333,452		3,815,713		(7,524,655	)		27,775,492

Operating expenses:
Benefits		13,193,598		5,408,049		0		3,375,461		(216,056	)		21,761,052
Operating costs		1,625,423		1,216,685		8,004,784		351,145		(7,388,132	)		3,809,905
Depreciation and amortization		88,598		64,101		60,927		6,802		(19,867	)		200,561

Total operating expenses		14,907,619		6,688,835		8,065,711		3,733,408		(7,624,055	)		25,771,518

Income from operations		1,261,507		293,021		267,741		82,305		99,400			2,003,974
Interest expense		0		0		0		0		81,956			81,956

Income before income taxes	$	1,261,507	$	293,021	$	267,741	$	82,305	$	17,444		$	1,922,018


	Retail		Employer Group		Health and Well-Being Services		Other Businesses		Eliminations/ Corporate			Consolidated
	(in thousands)
Nine months ended September 30, 2010
Revenues - external customers
Premiums:
Medicare Advantage	$	12,241,366	$	2,259,733	$	0	$	0	$	0		$	14,501,099
Medicare stand-alone PDP		1,512,738		3,443		0		342,649		0			1,858,830

Total Medicare		13,754,104		2,263,176		0		342,649		0			16,359,929

Fully-insured		551,581		3,904,705		0		0		0			4,456,286
Specialty		58,853		663,055		0		0		0			721,908
Military services		0		0		0		2,603,950		0			2,603,950
Medicaid and other		0		0		0		531,186		0			531,186

Total premiums		14,364,538		6,830,936		0		3,477,785		0			24,673,259

Services revenue:
Provider		0		0		9,869		0		0			9,869
ASO and other		8,457		294,241		0		82,072		0			384,770
Pharmacy		0		0		0		0		0			0

Total services revenue		8,457		294,241		9,869		82,072		0			394,639

Total revenues - external customers		14,372,995		7,125,177		9,869		3,559,857		0			25,067,898

Intersegment revenues
Services		0		9,892		5,674,965		0		(5,684,857	)		0
Products		0		0		936,673		0		(936,673	)		0

Total intersegment revenues		0		9,892		6,611,638		0		(6,621,530	)		0

Investment income		62,002		32,412		0		31,363		126,718			252,495

Total revenues		14,434,997		7,167,481		6,621,507		3,591,220		(6,494,812	)		25,320,393

Operating expenses:
Benefits		11,796,751		5,586,593		0		3,125,564		(181,166	)		20,327,742
Operating costs		1,512,779		1,250,446		6,427,167		348,611		(6,382,058	)		3,156,945
Depreciation and amortization		86,826		70,219		19,703		8,684		(3,475	)		181,957

Total operating expenses		13,396,356		6,907,258		6,446,870		3,482,859		(6,566,699	)		23,666,644

Income from operations		1,038,641		260,223		174,637		108,361		71,887			1,653,749
Interest expense		0		0		0		0		78,679			78,679

Income (loss) before income taxes	$	1,038,641	$	260,223	$	174,637	$	108,361	$	(6,792	)	$	1,575,070

Retail segment operating costs for the nine months ended September 30, 2010 include $147.5 million for the write-down of deferred acquisition costs associated with our individual commercial medical policies as discussed more fully in Note 18 to the consolidated financial statements included in our 2010 Form 10-K.