As of December 31, 2008, we maintained allowances for retroactive billing adjustments of approximately $35.0 million compared with approximately $29.7 million at December 31, 2007. We also maintained allowances for doubtful accounts of approximately $11.0 million and $3.4 million as of December 31, 2008 and 2007, respectively. The calculation for these allowances is based on a percentage of the gross accounts receivable with the allowance percentage increasing for older receivables.
The following table presents the components of the change in medical claims liabilities for the years ended December 31, 2008, 2007 and 2006, respectively (in thousands).
The Medicare Part D related subsidy liabilities identified in the table above represent subsidy amounts received from CMS for reinsurance and for cost sharing related to low income individuals. These subsidies are recorded in medical liabilities and we do not recognize premium revenue or claims expense for these subsidies.
During the year ended December 31, 2008, the Company recognized a charge of $36.2 million that consisted of $33.5 million for the other-than-temporary impairment of investment securities and $2.7 million in realized losses on the sale of securities. The other-than-temporary impairment charge related to its investments in Lehman Brothers Holdings, Inc. (“Lehman”), certain corporate financial holdings, auction rate securities and mortgage backed and asset-backed securities. We recognized impairments related to 31 securities during the year ended December 31, 2008. Our investments in Lehman included fixed maturity securities with a cost basis of $8.7 million. On September 15, 2008, Lehman filed for bankruptcy protection under Chapter 11 of the United States Bankruptcy Code. Accordingly, any recovery of our investments in Lehman is deemed remote and therefore an other-than-temporary impairment of $8.7 million was recognized. Additionally, other-than-temporary impairments recognized during the year ended 2008 included charges for certain fixed maturity securities, auction rate securities and mortgage and asset-backed securities for which, due to credit downgrades and/or the extent and duration of their decline in fair value in light of the current market conditions, we determined that the impairment was deemed other-than-temporary.
Our credit facilities require compliance with a leverage ratio. All of our senior notes and credit facility contain certain covenants and restrictions regarding additional debt, dividends or other restricted payments, transactions with affiliates, disposing of assets and in some cases provide for debt repayment upon consolidations or mergers. As of December 31, 2008, we were in compliance with applicable covenants under the senior notes and credit facility.
A reconciliation of the final risk sharing, low-income subsidy, and reinsurance subsidy amounts is performed following the end of contract year. For both contract years of 2007 and 2008, as of December 31, 2008, the CMS risk sharing payable was $21.4 million and is included in accounts payable and other accrued liabilities and the CMS risk sharing receivable was $7.0 million and is included in other receivables. For both contract years of 2006 and 2007, as of December 31, 2007, the CMS risk sharing payable was $52.5 million and is included in accounts payable and other accrued liabilities and the CMS risk sharing receivable was $4.0 million and is included in other receivables. As of December 31, 2008, the subsidy amounts payable totaled $55.8 million and is included in medical liabilities and the subsidy amounts receivable totaled $12.8 million and is included in other receivables. As of December 31, 2007, the subsidy amounts payable totaled $62.0 million and is included in medical liabilities and the subsidy amounts receivable totaled $29.4 million and is included in other receivables.
In December 2007, the FASB issued SFAS No. 141 (R), “Business Combinations.” SFAS No. 141 (R) requires an acquirer to measure the identifiable assets acquired, the liabilities assumed and any noncontrolling interest in the acquiree at their fair values on the acquisition date, with goodwill being the excess value over the net identifiable assets acquired. SFAS No. 141 (R) is effective for financial statements issued for fiscal years beginning after December 15, 2008. Early adoption is prohibited. The potential impact of adopting SFAS No. 141 (R) on the Company’s future consolidated financial statements will depend on the magnitude and frequency of the Company’s future acquisitions.
The following table presents the fair value hierarchy for the Company’s financial assets measured at fair value on a recurring basis at December 31, 2008 (in thousands):
The total amount of unrecognized tax benefits, as of December 31, 2008 and 2007, that if recognized would affect the effective tax rate was $32.4 million and $17.1 million, respectively. Further, the Company is unaware of any positions for which it is reasonably possible that the total amounts of unrecognized tax benefits will significantly increase or decrease within the next twelve months.
The Company’s outstanding debt was as follows at December 31, 2008 and 2007 (in thousands):
Excluding funds held by entities subject to regulation and excluding our equity method investments, we had cash and investments of approximately $549.9 million and $436.2 million at December 31, 2008 and 2007, respectively. The increase was primarily due to dividends received from our regulated subsidiaries and additional borrowings on our credit facility. These were partially offset by payments for MHNet and GDS acquisitions, capital infusions into our subsidiaries, and payments made for share repurchases.