Company: HUM
Filing Date: 2025-02-20
Form Type: 10-K
Source: 0000049071-25-000007
Chunk: 175

Company: HUMANA INC
Filing Date: 2025-02-20
Form: 10-K
Item: Item 7
Chunk 175
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 information about incurred and paid claims development as of December 31, 2024 as well as cumulative claim frequency and the total of IBNR included within the net incurred claims amounts.

202420232022 (in millions)Balances at January 1$10,241 $9,264 $8,289 Acquisitions— 62 — Incurred related to:Current year101,365 89,266 76,105 Prior years(701)(872)(415)Total incurred100,664 88,394 75,690 Paid related to:Current year(91,281)(79,545)(67,287)Prior years(9,184)(7,934)(7,428)Total paid(100,465)(87,479)(74,715)Balances at December 31$10,440 $10,241 $9,264 

The following table summarizes the changes in estimate for incurred claims related to prior years attributable to our key assumptions. As previously described, our key assumptions consist of trend and completion factors estimated using an assumption of moderately adverse conditions. The amounts below represent the difference between our original estimates and the actual benefits expense ultimately incurred as determined from subsequent claim payments.

 Favorable Development by Changes in Key Assumptions 202420232022 AmountFactorChange (a)AmountFactorChange (a)AmountFactorChange (a) (dollars in millions)Trend factors$(473)(2.6)%$(586)(3.5)%$(387)(2.8)%Completion factors(228)(0.3)%(286)(0.4)%(28)— %Total$(701)$(872)$(415)

(a)The factor change indicated represents the percentage point change.

As previously discussed, our reserving practice is to consistently recognize the actuarial best estimate of our ultimate liability for claims. Actuarial standards require the use of assumptions based on moderately adverse experience, which generally results in favorable reserve development, or reserves that are considered redundant. We experienced favorable medical claims reserve development related to prior fiscal years of $701 million in 2024, $872 million in 2023, and $415 million in 2022. 

The favorable medical claims reserve development for 2024, 2023, and 2022 primarily reflects the consistent application of trend and completion factors estimated using an assumption of moderately adverse conditions. 

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 Our favorable development for each of the years presented above is discussed further in