Elevance Health (ELV) 10-K risk factor changes: FY2015 vs FY2014

The following [removed: factors, among others,] [added: is a description of significant factors that] could cause actual results to differ materially from those contained in forward-looking statements made in this Annual Report on Form 10-K and presented elsewhere by management from time to time.

Such [removed: factors, among others,] [added: factors] may have a material adverse effect on our business, financial condition, and results of operations and you should carefully consider them.

[removed: Consequently, you] should not consider any such list to be a complete statement of all our potential risks or uncertainties.

Federal Health Care [removed: Reform] [added: Reform,] together with the changes in federal and state regulations that have been, and continue to be, enacted to implement it, could adversely affect our business, cash flows, financial condition and results of operations.

The legislation and regulations are far-reaching and are intended to expand access to health insurance coverage over time by [added: mandating that most individuals obtain health insurance coverage,] increasing the eligibility thresholds for most state Medicaid programs and providing certain other individuals and small businesses with tax credits to subsidize a portion of the cost of health insurance coverage.

[removed: This health insurance fee] [added: The HIP Fee] is not deductible for income tax purposes and [removed: will be] [added: is] allocated pro rata among us and other industry participants based on net premiums written.

Health Care Reform also imposes industry-wide reinsurance assessments [removed: of $12.0 billion in 2014, and] [added: under a temporary three year program which were] $8.0 billion and [removed: $5.0] [added: $12.0] billion [removed: in] [added: for] 2015 and [removed: 2016, respectively.][added: 2014, respectively, and decrease to $5.0 billion for 2016.]

[removed: There is some uncertainty whether we will] [added: We may not] be able to include [added: or recoup] all or a portion of these fees, assessments and taxes in our premium [added: or public program] rates.

[removed: The] [added: In addition, the] legislation [removed: also] reduces the reimbursement levels for our health plans participating in the Medicare Advantage program over [removed: time.][added: time and limits the amount of executive compensation that is deductible for income tax purposes.]

The legislation also contains risk adjustment provisions applicable to the Individual and Small Group markets that [removed: took effect in 2014.][added: effectively transfer funds from health plans with relatively lower risk enrollees to plans with relatively higher risk enrollees to help protect against adverse selection.]

[removed: These changes] [added: Although the majority of Health Care Reform’s provisions have been implemented, as the remaining provisions are phased in, we] could [removed: impact us] [added: be impacted] through potential disruption to the employer-based market, potential cost shifting in the health care delivery system to insurance companies and limitations on the ability to increase premiums to meet costs.

We have [removed: dedicated, and will continue to dedicate,] [added: dedicated] material resources and [removed: incurred, and will continue to incur,] [added: incurred] material expenses to implement and comply with Health Care Reform at both the state and federal levels, [removed: including implementing] and [removed: complying] [added: we expect to dedicate material resources and incur material expenses going forward to implement and comply] with future regulations that provide guidance [removed: on] and clarification [removed: of] [added: on] significant portions of the legislation.

[removed: Changes] [added: We are subject to significant government regulation, and changes] in the regulation of our business by state and federal regulators may adversely affect our business, cash flows, financial condition and results of operations.

Our insurance, managed health care and HMO subsidiaries are subject to extensive regulation and supervision by [removed: the insurance, managed health care or HMO] regulatory authorities [removed: of] [added: in] each state in which they are licensed or authorized to do business, [removed: as well as] [added: in addition] to regulation by federal [removed: and local] agencies.

[removed: We cannot assure that future] [added: Future] regulatory action by state [removed: insurance] or [removed: HMO authorities or] federal [removed: regulatory] authorities [removed: will not] [added: could] have a material adverse effect on the profitability or marketability of our health benefits or managed care products or on our business, financial condition and results of operations.

In addition, because of our participation in government-sponsored programs such as Medicare and Medicaid, a number of our subsidiaries are also subject to regulation by CMS and state Medicaid agencies, and to changes in government regulations or policy with respect to, among other things, reimbursement levels, eligibility [added: requirements, benefit coverage] requirements and additional governmental participation which could also adversely affect our business, financial condition and results of operations.

In addition, [removed: we cannot ensure that application of the federal and/or state] [added: changes in] tax [removed: regulatory regime that currently applies to us will not,] [added: laws and regulations,] or [removed: future] [added: changes in the interpretation of] tax [removed: regulation] [added: laws and regulations] by [removed: either] federal and/or state [removed: governmental] authorities [removed: concerning us could not,] [added: may] have a material adverse effect on our business, operations or financial condition.

Most states are very focused on how to manage and reduce their budgets and are exploring ways to mitigate [removed: costs.][added: cost increases.]

[removed: These] [added: The existence of] multiple public [added: insurance] exchange options [removed: have] [added: has] led to increased uncertainties and made our planning for [removed: these] [added: the] public exchanges more [removed: difficult.][added: difficult as we are required to comply with the varying rules of multiple exchanges.]

[removed: A] [added: In addition, a] number of states in which we offer Medicaid products, including Florida, Georgia, Kansas, Louisiana, South Carolina, Tennessee, Texas, Virginia and Wisconsin, have indicated their current decision to opt out of Medicaid expansion, at least for the present time.

Additionally, from time to time, Congress has considered, [removed: or] [added: and] may consider in the future, various forms of managed care reform legislation which, if adopted, could fundamentally alter the treatment of coverage decisions under ERISA.

Our inability to contain health care costs, implement increases in premium rates on a timely basis, maintain adequate reserves for policy benefits or maintain [removed: our current] [added: cost effective] provider agreements may adversely affect our business and profitability.

Our profitability depends in large part on accurately predicting health care costs and on our ability to manage future health care costs through [removed: underwriting criteria,] medical management, product [removed: design and] [added: design,] negotiation of favorable provider [removed: contracts.][added: contracts and underwriting criteria.]

[removed: Changes in health care practices, demographic characteristics, inflation,] new technologies, the cost of prescription drugs, clusters of high cost cases, changes in the regulatory environment and numerous other factors affecting the cost of health care may adversely affect our ability to predict and manage health care costs, as well as our business, financial condition and results of operations.

[removed: Therefore, health] [added: Health] care benefit costs in excess of our cost projections reflected in our public exchange product pricing cannot be recovered in the current premium period through higher [removed: premiums; however, in certain circumstances, Federal risk adjustment mechanisms, including risk adjustment payments, risk corridors and reinsurance, could help offset health care benefit costs in excess of our projections.][added: premiums.]

[removed: If it is determined that] [added: Although federal risk adjustment mechanisms, including risk adjustment payments, risk corridors and reinsurance, could help offset health care benefit costs in excess of] our [added: projections if our] assumptions regarding cost trends, utilization, enrollment, adverse selection, acuity and other assumptions utilized in setting our premium rates are significantly different than actual results, [removed: even with these risk adjustment mechanisms,] our income statement and financial position could be adversely affected.

The failure to maintain or to secure cost-effective health care provider contracts [added: on competitive terms] may result in a loss of membership or higher medical costs, which could adversely affect our business.

[added: In addition, we do not have contracts with all providers that] render services to our members and, as a result, do not have a pre-established agreement about the amount of compensation those out-of-network providers will accept for the services they render, which can result in significant litigation or arbitration proceedings.

[removed: Factors that could contribute to a reduction in enrollment include: reductions in workforce by existing customers; general economic downturn that results in business failures and high unemployment rates; employers no longer offering certain health care coverage as an employee benefit or electing to offer this coverage on a] voluntary, employee-funded basis; [added: participation on public exchanges and related underwriting changes;] state and federal regulatory changes; failure to obtain new customers or retain existing customers; premium increases and benefit changes; our exit from a specific market; negative publicity and news coverage; [removed: participation on public exchanges] and [removed: related underwriting changes; and] failure to attain or maintain nationally recognized accreditations.

It is difficult to predict the future impact of Health Care Reform on our Government Business segment due to Health Care Reform’s complexity, gradual [removed: and delayed] implementation, and possible amendment.

Changes in Health Care Reform [added: to date] have required us to make investments in new products, services and technologies, which investments may not be realized [removed: due to possible delays and amendments that continue to occur.][added: if certain provisions are delayed or substantially modified.]

If the federal government or any state in which we operate were to decrease rates paid to us, [removed: or] pay us less than the amount necessary to keep pace with our cost [removed: trends,] [added: trends or seek an adjustment to previously negotiated rates,] it could have a material adverse effect on our business, financial condition and results of operations.

Continuing government efforts to contain health care related expenditures, including prescription drug cost, and other federal budgetary constraints that result in changes in the Medicare program, including changes with respect to funding, could lead to [added: reductions in the amount of reimbursement, or other changes that could have a material adverse effect on our business, cash flow, financial condition and results of operations.]

[removed: reductions in the amount] [added: As a result, termination] of [removed: reimbursement, or other changes that could] [added: the license agreements would] have a material adverse effect on our business, [removed: cash flow,] financial condition and results of operations.

[removed: There is also] the possibility that Medicare Advantage Special Needs plans will not be re-authorized by Congress.

[removed: Further,] CMS has been conducting audits of our Medicare Advantage health plans to validate the diagnostic data and patient claims that are submitted to [removed: CMS.][added: CMS and the Medicare Part D RAC has been conducting audits of our Medicare Part D plans.]

In addition, if we fail to report and correct errors discovered through our own auditing procedures or during a CMS [removed: audit] or [added: RAC audit, or] otherwise fail to comply with the applicable laws and regulations, we could be subject to fines, civil penalties or other sanctions which could have a material adverse effect on our ability to participate in these programs, and on our financial condition, cash flows and results of operations.

The Medicare Part D Recovery Audit Contractor, or RAC, has been auditing Medicare Part D claims [removed: and recouping overpayments] since [removed: 2012.][added: 2012, and a Medicare Part C RAC is expected to be named in 2016, which could increase the volume of audits and subsequent recoupments by the federal government.]

The ACA [removed: also] authorized state Medicaid programs to implement RAC programs similar to Medicare RAC programs and a number of states have done so.

[removed: This] [added: State RAC programs] could increase the amount of audits and [added: any] subsequent recoupment by the federal and state governments, which could adversely affect our financial condition and results of [added: our] operations.

Consequently, you

\-22\-

Health Care Reform imposes an annual industry-wide HIP Fee.

The total amount collected from allocations to health insurers in 2015 and 2014 was $11.3 billion and $8.0 billion, respectively and our portion of the HIP Fee for 2015 and 2014 was $1.2 billion and $0.9 billion, respectively.

The annual HIP Fee remains at $11.3 billion for 2016, has been suspended for 2017 and will resume and be increased to $14.3 billion for 2018, with annual adjustments thereafter.

The reinsurance assessments are based on an insurer’s total number of insured members.

Further, the Health Care Reform Premium Stabilization programs may not make payments timely, or as expected, due to lower than anticipated collections.

For example, in 2015, the risk corridor program fell short of expectations and, as a result, the payments from the program were approximately 12.6% of the amount that was requested by health insurance issuers.

Our business is subject to regulation at the state and federal level.

In addition to Health Care Reform, we face regulation associated with many aspects of our business, including, but not limited to, licensing, premiums, marketing activities, provider contracting, access and payment standards, and corporate governance and financial reporting matters.

Such issues are sometimes addressed directly by voters in ballot initiatives, such as the upcoming ballot initiative in Colorado that would replace health insurers in the state with a single government payer.

Changes in health care practices, demographic characteristics, inflation,

Factors that could contribute to a reduction in enrollment include: reductions in workforce by existing customers; general economic downturn that results in business failures and high unemployment rates; employers no longer offering certain health care coverage as an employee benefit or electing to offer this coverage on a

There is also

We may not complete the acquisition of Cigna within the time frame we anticipate or at all, which could have a negative effect on our business or our results of operations.

On July 23, 2015, we entered into an Agreement and Plan of Merger, or Merger Agreement, under which we will acquire all of the outstanding shares of Cigna.

The acquisition is subject to a number of closing conditions, such as antitrust and other regulatory approvals, which may not be received or may take longer than expected.

The acquisition is also subject to other risks and uncertainties, such as the possibility that Cigna could receive an unsolicited proposal from a third party or that either we or Cigna could exercise our respective termination rights.

If the acquisition is not consummated within the expected time frame, or at all, it could have a negative effect on our ability to execute on our growth strategy or on our financial performance.

Failure to complete the acquisition could negatively impact our share price and future business, as well as our financial results.

If the acquisition is not completed, our ongoing business may be adversely affected and, without realizing any of the benefits of having completed the acquisition, we could be subject to a number of risks, including the following: we may be required to pay Cigna a termination fee of $1.85 billion or an expense fee of up to $600 million if the Merger Agreement is terminated under certain circumstances (as more fully described in the Merger Agreement); and we could be subject to litigation related to any failure to complete the acquisition or related to any enforcement proceeding commenced against us to perform our obligations under the Merger Agreement.

If the acquisition is not completed, these risks may materialize and may adversely affect our business, cash flows and financial condition.

We may experience difficulties in integrating Cigna’s business and realizing the expected benefits of the proposed acquisition.

The success of the Cigna acquisition, if completed, will depend, in part, on our ability to realize the anticipated business opportunities and growth prospects from combining our businesses with those of Cigna.

We may never realize these business opportunities and growth prospects.

Integrating operations will be complex and will require significant efforts and expenditures on the part of both us and Cigna.

Our management might have its attention diverted while trying to integrate operations and corporate and administrative infrastructures.

We might experience increased competition that limits our ability to expand our business, and we might fail to capitalize on expected business opportunities, including retaining current customers.

The integration process could result in a disruption of each company’s ongoing businesses, tax costs or inefficiencies, or inconsistencies in standards, controls, information technology systems, procedures and policies, any of which could adversely affect our ability to maintain relationships with clients, employees or other third parties or our ability to achieve the anticipated benefits of the Cigna acquisition and could harm our financial performance.

If we are unable to successfully or timely integrate the operations of Cigna’s business into our business, we may be unable to realize the revenue growth, synergies and other anticipated benefits resulting from the proposed acquisition and our business and results of operations could be adversely affected.

Even if we complete the Cigna acquisition, the acquired business may underperform relative to our expectations.

our consumer-focused sales and marketing, customer interfaces and product offerings.

ability of our regulated subsidiaries to pay dividends.

Upon completion of the Cigna acquisition, we expect to have incurred acquisition-related indebtedness of approximately $26.5 billion and to have assumed approximately $5.1 billion of Cigna’s outstanding debt.

Our substantially increased indebtedness and debt-to-equity ratio on a recent historical basis will have the effect, among other things, of reducing our flexibility to respond to changing business and economic conditions and may increase our borrowing costs.

In addition, the amount of cash required to service our increased indebtedness levels and thus the demands on our cash resources may be greater than the percentages of cash flows required to service our indebtedness or the indebtedness of Cigna individually prior to the acquisition.

The increased levels of indebtedness could also reduce funds available for our investments in product development as well as capital expenditures, share repurchases, shareholder dividends, other desirable business opportunities and other activities and may create competitive disadvantages for us relative to other companies with lower debt levels.

Following the announcement of the Cigna acquisition, each of Standard & Poor’s, A.M. Best, Fitch and Moody’s placed certain of our debt, financial strength and other credit ratings under review for a possible downgrade.

Following an investigation, we may be subject to civil or criminal fines, penalties and other sanctions if we are determined to be in violation of applicable laws or regulations.

In light of significant uncertainty surrounding whether, and to what extent, there may be an increase in insurer or Co-op insolvencies, we are not currently able to estimate our potential financial obligations, losses, or the availability of potential offsets associated with potential increases in guaranty association assessments; however, any significant increase in guaranty association assessments could have a material adverse effect on our business, cash flows, financial condition and results of operations.

The legislation includes a requirement that most individuals obtain health insurance coverage beginning in 2014.

Health Care Reform imposes an annual industry-wide health insurer fee which was $8.0 billion beginning in 2014 and growing to $14.3 billion by 2018 and increasing annually thereafter.

There are also limitations on the amount of executive compensation that is deductible for income tax purposes.

These risk adjustment provisions effectively transfer funds from health plans with relatively lower risk enrollees to plans with relatively higher risk enrollees to help protect against adverse selection.

Some of the provisions of Health Care Reform became effective immediately upon enactment, while most of the other provisions became effective in January 2014, with the remaining provisions to be phased in over the next several years.

Difficulties and delays with regard to implementation of provisions of Health Care Reform in 2013 and 2014, including with regard to the functionality of the public exchanges and the lack of full cooperation and coordination between federal and state authorities as to implementation of Health Care Reform, have increased uncertainties and made our planning relating to Health Care Reform more difficult and unpredictable, which increases the risk that we will experience unanticipated adverse consequences arising out of Health Care Reform.

In addition, California has enacted legislation to establish minimum benefit expense ratio thresholds and continues to consider legislative proposals to require prior regulatory approval of premium rate increases.

The U.S. Supreme Court has determined that significant portions of the ACA, including the provisions regarding public exchanges, are constitutional.

As a result, some states have developed their own public exchanges, while other states are relying on HHS to operate the public exchange in their states or are implementing partnership exchanges with the federal government.

The Supreme Court decision also permitted states to opt out of the elements of Health Care Reform that require expansion of Medicaid coverage in January 2014 without losing their current federal Medicaid funding.

The U.S Supreme Court is now considering a case that challenges the premium tax subsidies and whether the subsidies are available for eligible residents in all states or only those residents in states which have established state-based public exchanges.

In January 2014, the D.C District Court upheld the subsidies for both state-based and federal public exchanges and in November 2014, the U.S. Supreme Court issued a writ of certiorari and is expected to decide the case during its current term, which ends in June 2015.

If the decision alters the availability of the subsidies, it may have a material adverse effect on our enrollment, cash flows and results of operations.

Last minute changes in the implementation of Health Care Reform at the end of 2013 and in the spring of 2014, in particular those relating to difficulties with the functionality of the public exchanges, may erode the Individual and Small Group pools so that our assumptions underlying the pricing and design of our public exchange products prove to be inaccurate in a way that materially adversely affects the expected profitability of those products.

In addition, we do not have contracts with all providers that

A Medicare Part C RAC has not yet been named but CMS expects to award a Medicare Part C RAC contract in the near future, which could increase the amount of audits and subsequent recoupments by the federal government.

Our regulated subsidiaries are currently in compliance with the risk-based capital or other similar requirements imposed by their respective states of domicile.

be treated as non-admitted assets for purposes of measuring statutory surplus and risk-based capital, and, in some instances, require the sale of those investments.

Indebtedness could also limit our ability to pursue desirable business opportunities, and may affect our ability to maintain an investment grade rating for our indebtedness.

acquisitions of businesses or assets.

Such investigations could result in the imposition of civil or criminal fines, penalties and other sanctions.

We currently have insurance coverage for some of these potential liabilities.

We believe that our health care service operations comply with applicable rules and regulations regarding the corporate practice of medicine, fee-splitting, anti-kickback, self-referral and similar issues.

Accordingly, termination of the license agreements would have a material adverse effect on our business, financial condition and results of operations.

One of our sources of liquidity is our $2,500.0 million commercial paper program.

Should commercial paper issuance be unavailable, we have the ability to use a combination of cash on hand and/or our $2,000.0 million senior revolving credit facility to redeem any outstanding commercial paper upon maturity.

Additionally, we believe the lenders participating in our senior credit facility would be willing and able to provide financing in accordance with their legal obligations.

We did not have any borrowings outstanding under our commercial paper program at December 31, 2014.

appropriately estimated the fair values of our investment securities.

We are in the process of determining the extent of this cyber attack; however, at this time we believe that personal information of many of our current and former members and employees was obtained in the cyber attack.

Although we are unable to quantify the ultimate magnitude of such expenses at this time, they may be significant.

In addition, we are currently responding to a number of governmental inquiries and are subject to purported class action lawsuits and other claims relating to the cyber attack, and in the future we may be subject to additional litigation and governmental investigations.

designed to protect our systems, computers, software, data and networks from attack, damage and unauthorized access, remain a priority for us.

We continue to implement initiatives for more effective and efficient information technology systems by modernizing interactions with customers, brokers, agents, providers, employees and other stakeholders through web-enabling technology and redesigning internal operations.

We cannot assure you that we will be able to fully implement all desired products or systems in a timely and effective manner.

The failure to implement and maintain the most advanced technological capabilities could result in competitive and cost disadvantages to us as compared to our competitors.

It is expected that those Amerigroup subsidiaries will complete their

transition to the Express Scripts agreement during 2015.

If this relationship was terminated for any reason, we may not be able to find alternative partners in a timely manner or on acceptable financial terms.

We [removed: currently] manage our operations through three reportable segments: Commercial and Specialty Business, Government Business and Other.

NGS acts as a Medicare contractor [added: for the federal government] in several regions across the nation.

Our benefit expense primarily includes costs of care for health services consumed by our [added: fully-insured] members, such as outpatient care, inpatient hospital care, professional services (primarily physician care) and pharmacy benefit costs.

Our managed care plans include: preferred provider organizations, [added: or PPOs; health maintenance organizations, or HMOs; point-of-service plans, or POS plans;]

[removed: or PPOs; health maintenance organizations, or HMOs; point-of-service plans, or POS plans;] traditional indemnity plans and other hybrid plans, including consumer-driven health plans, or CDHPs; and hospital only and limited benefit products.

The legislation and regulations are far-reaching and are intended to expand access to health insurance coverage over time by [added: mandating that most individuals obtain health insurance coverage,] increasing the eligibility thresholds for most state Medicaid programs and providing certain other individuals and small businesses with tax credits to subsidize a portion of the cost of health insurance coverage.

Health Care Reform [removed: provides] [added: presents us with new] growth [removed: opportunities for health insurers,] [added: opportunities,] but also introduces new [removed: risks] [added: risks, regulatory challenges] and uncertainties, and required changes in the way products are designed, underwritten, priced, distributed and administered.

Pricing in our Commercial and Specialty Business segment, including our Individual and Small Group lines of business, remains [removed: competitive, but rational,] [added: competitive] and we strive to price our health care benefit products consistent with anticipated underlying medical trends.

In the Individual and Small Group markets, we offer on-exchange products through state or federally facilitated marketplaces, referred to as public [removed: exchanges;] [added: exchanges,] and off-exchange products.

The public exchanges [removed: may increase] [added: have increased] the risk that our products will be selected by individuals who have a higher risk profile or utilization rate than the pool of participants we anticipated when we [added: established the pricing for these public exchange products.]

[removed: Although it is not yet clear whether our products sold on the public exchanges will be more or less profitable products, we] [added: We] believe that our pricing strategy, brand name and network quality will provide a strong foundation for commercial risk membership growth opportunities in the future.

In our Individual markets we offer bronze, silver and gold products, both on and off the public exchanges, in [removed: the states of] California, Colorado, Connecticut, Georgia, Indiana, Kentucky, Maine, Missouri, Nevada, New Hampshire, New York, Ohio, Virginia and Wisconsin.

Additionally, we offer platinum products, both on and off the public exchanges, in [removed: the states of] California and New York.

In our Small Group markets, we offer bronze, silver and gold products, [removed: both on and] off the public exchanges, in [removed: the states of] [added: California,] Colorado, Connecticut, Georgia, Indiana, Kentucky, Maine, Missouri, [added: Nevada,] New Hampshire, [removed: Ohio and] [added: Ohio,] Virginia and [removed: we offer bronze, silver and gold products, off the public exchanges, in the states of California, New York and] Wisconsin.

Additionally, we offer platinum products, off the public exchanges, in [removed: the states of] California, [removed: Colorado,] Connecticut, Georgia, [added: Kentucky,] Maine, [removed: New Hampshire, Missouri] [added: Nevada] and Virginia.

Private exchanges have [removed: recently] gained [removed: significant] visibility in the marketplace based on the promise of helping employers reduce costs, increase consumer engagement and manage the complexities created by the ACA and other market forces.

To date, adoption levels have been lower than analyst [removed: predictions, but expectations for significant longer term growth remain.][added: predictions.]

While the ultimate volume, pace of growth and winning business models remain highly uncertain, we believe private exchanges will provide opportunities for [removed: growth and will serve a significant role in our future strategy.][added: growth.]

[removed: The] [added: In addition, the] legislation [removed: also] reduces the reimbursement levels for our health plans participating in the Medicare Advantage program over [removed: time.][added: time and limits the amount of executive compensation that is deductible for income tax purposes.]

While considered benefit expense or a reduction of premium revenue by HHS, certain of these costs are classified as other types of expense, such as income tax expense or [removed: selling,] general and administrative expense, in our GAAP basis financial statements.

Health Care Reform also imposed a separate minimum MLR threshold of 85% for Medicare Advantage [added: and Medicare Part D] plans beginning in 2014.

Medicare Advantage [added: or Medicare Part D] plans that do not meet this threshold will have to pay a [removed: minimum] MLR rebate.

A Medicare Advantage [added: or Medicare Part D] plan contract will be terminated if the plan's MLR is below 85% for five consecutive years.

Beginning in 2014, Health Care Reform [removed: imposes] [added: imposed] an annual HIP Fee on health insurers that write certain types of health insurance on U.S. risks.

The total amount [removed: to be] collected from allocations to health insurers in [removed: 2014 was $8,000.0,] [added: 2015] and [removed: our portion of the HIP Fee for] 2014 was [removed: $893.3.][added: $11,300.0 and $8,000.0, respectively.]

The final calculation and payment of the [added: annual] HIP Fee [removed: occurred] [added: occurs] in the third quarter [added: each year and our portion] of [removed: 2014] [added: the HIP Fee for 2015] and [added: 2014] was [removed: recognized as a general] [added: $1,207.5] and [removed: administrative expense.][added: $893.3, respectively.]

For 2019 and beyond, the annual HIP Fee will [removed: increase from] [added: equal] the amount for the preceding year [added: increased] by the rate of premium growth for the preceding [added: year less the rate of growth in the consumer price index for the preceding calendar] year.

We will continue to evaluate the impact of Health Care Reform as key aspects go into [removed: effect and additional guidance is made available.]

We are also subject to regulations that may result in assessments under state insurance [removed: guarantee] [added: guaranty] association laws.

The attackers gained unauthorized access to certain of our information technology systems and obtained personal information related to many [removed: of our current and former members] [added: individuals] and employees.

We [removed: are in the process of determining the extent of] [added: have continued to implement security enhancements since] this [removed: cyber attack] [added: incident] and are supporting federal law enforcement efforts to identify the responsible parties.

For additional information about the cyber attack, see Note 13, “Commitments and Contingencies - [removed: Data Breach,”] [added: Cyber Attack Incident,”] to our audited consolidated financial statements included in Part II, Item 8 of this Annual Report on Form 10-K.

We are one of the largest health benefits companies in terms of medical membership in the United States, serving [removed: 37.5] [added: 38.6] medical members through our affiliated health plans as of December 31, [removed: 2014.][added: 2015.]

We serve our members as the Blue Cross licensee for California and as the Blue Cross and Blue Shield, or BCBS, licensee for Colorado, Connecticut, Georgia, Indiana, Kentucky, Maine, Missouri (excluding 30 counties in the Kansas City area), Nevada, New Hampshire, New York (as BCBS in 10 New York City metropolitan and surrounding counties, and as Blue Cross or BCBS in selected upstate [removed: counties only), Ohio, Virginia (excluding the Northern Virginia suburbs of Washington, D.C.) and Wisconsin.]

We conduct business through our AMERIGROUP Corporation, or Amerigroup, subsidiary, in Florida, Georgia, Kansas, Louisiana, Maryland, Nevada, New Jersey, New Mexico, New York, Tennessee, [removed: Texas] [added: Texas, Washington] and [removed: Washington.][added: effective January 1, 2016, in Iowa.]

We also serve customers throughout the country as HealthLink, UniCare (including a non-risk arrangement with [removed: the state of] Massachusetts), and in certain Arizona, California, [removed: Nevada, New York] [added: Nevada] and Virginia markets through our CareMore Health Group, Inc., or CareMore, subsidiary.

On February 17, 2015, we completed our acquisition of Simply [removed: Healthcare Holdings, Inc., or Simply] Healthcare, a leading managed care company for people enrolled in Medicaid and Medicare programs in [removed: the state of] Florida.

This [removed: acquisition, which was originally announced on December 22, 2014,] [added: acquisition] aligns with our strategy for continued growth in our Government Business segment.

As a result, we [removed: will,] [added: serve more than six hundred thousand members in Florida] through our affiliated [added: Amerigroup and Simply Healthcare] Medicaid and Medicare [removed: plans, serve more than half a million members in the state of Florida.][added: plans.]

For additional information regarding these transactions, see Note 3, “Business Acquisitions and [removed: Divestitures,"] [added: Divestiture,"] to our audited consolidated financial statements included in Part II, Item 8 of this Annual Report on Form 10-K.

On July 24, 2015, we and Cigna Corporation, or Cigna, announced that we entered into an Agreement and Plan of Merger, or Merger Agreement, dated as of July 23, 2015, by and among Anthem, Cigna and Anthem Merger Sub Corp., a Delaware corporation and our direct wholly-owned subsidiary, pursuant to which we will acquire all outstanding shares of Cigna, or the Acquisition.

The Acquisition will further our goal of creating a premier health benefits company with critical diversification and scale to lead the transformation of health care delivery for consumers.

Cigna is a global health services organization that delivers affordable and personalized products and services to customers through employer-based, government-sponsored and individual coverage arrangements.

All of Cigna's products and services are provided exclusively by or through its operating subsidiaries, including Connecticut General Life Insurance Company, Cigna Health and Life Insurance Company, Life Insurance Company of North America and Cigna Life Insurance Company of New York.

Such products and services include an integrated suite of health services, such as medical, dental, behavioral health, pharmacy, vision, supplemental benefits, and other related products including group life, accident and disability insurance.

Cigna maintains sales capability in 30 countries and jurisdictions.

Under the terms of the Merger Agreement, Cigna’s shareholders will receive $103.40 in cash and 0.5152 shares of our common stock for each Cigna common share outstanding.

The value of the transaction is estimated to be approximately $53,000.0 based on the closing price of our common stock on the New York Stock Exchange on July 23, 2015.

The final purchase price will be determined based on our closing stock price on the date of closing of the Acquisition.

The combined company will reflect a pro forma equity ownership comprised of approximately 67% Anthem shareholders and approximately 33% Cigna shareholders.

We expect to finance the cash portion of the Acquisition through available cash on hand and the issuance of new debt.

We entered into a bridge facility commitment letter and a joinder agreement with a group of lenders which will provide up to $22,500.0 under a 364\-day senior unsecured bridge term loan credit facility to finance the Acquisition in the event that we have not received proceeds from any combination of (i) senior unsecured term loans, (ii) common or preferred equity or equity-linked securities and/or (iii) senior unsecured notes in a public offering or private placement in an aggregate principal amount of at least $22,500.0 prior to the consummation of the Acquisition.

In addition, in August 2015, we entered into a term loan facility which will provide up to $4,000.0 to finance a portion of the Acquisition.

The commitment of the lenders to provide the bridge facility and the term loan facility is subject to several conditions,

including the completion of the Acquisition.

We expect that our pro forma debt-to-capital ratio will approximate 49% at the closing of the Acquisition and we are committed to deleveraging to the low 40% range approximately twenty-four months following the closing.

We also expect to maintain our common stock dividend and we will maintain flexibility with our share repurchase program.

For additional information, see "Risk Factors" included in Part I, Item 1A; and Note 3, “Business Acquisitions and Divestiture - Pending Acquisition of Cigna Corporation" included in Part II, Item 8 of this Annual Report on Form 10-K.

For additional information see Note 3, “Business Acquisitions and Divestiture - Acquisition of Simply Healthcare" included in Part II, Item 8 of this Annual Report on Form 10-K.

On January 31, 2014, we sold our 1-800 CONTACTS, Inc. business and our glasses.com related assets, or collectively, 1-800 CONTACTS.

Unless otherwise specified, all financial and membership information, other than cash flows, disclosed in this MD&A is from continuing operations.

In accordance with Financial Accounting Standards Board, or FASB, guidance, we have elected to not separately disclose net cash provided by or used in operating, investing, and financing activities and the net effect of those cash flows on cash and cash equivalents for discontinued operations during the periods presented.

For additional information regarding these transactions, see Note 3, "Business Acquisitions and Divestiture - Divestiture of 1-800 CONTACTS," included in Part II, Item 8 of this Annual Report on Form 10-K.

We offer bronze, silver and gold products, on the public exchanges, in Colorado, Connecticut, Georgia, Indiana, Kentucky, Maine, Missouri, New Hampshire, Ohio and Virginia.

Plans that do not meet the minimum thresholds will have to pay a MLR rebate.

We record our estimated liability for the HIP Fee in full at the beginning of the year with a corresponding deferred asset that is amortized on a straight-line basis to general and administrative expense.

The annual HIP Fee to be allocated to all health insurers remains at $11,300.0 for 2016, has been suspended for 2017, and will resume and be increased to $14,300.0 for 2018.

effect and additional guidance is made available.

The state court commenced a hearing in connection with the updated plan in July 2015, which has been adjourned.

The state court has begun scheduling settlement conferences to resolve outstanding issues with the plan.

In recent years, we have experienced membership growth due to the quality and pricing of our health benefits products and services, improved economic conditions, decreases in unemployment, acquisitions, entry into new markets and expansions in existing markets.

However, these membership trends could be negatively impacted by various factors that could have a material adverse effect on our future results of operations such as general economic downturns that result in business failures, failure to obtain new customers or retain existing customers, premium increases, benefit changes or our exit from a specific market.

counties only), Ohio, Virginia (excluding the Northern Virginia suburbs of Washington, D.C.) and Wisconsin.

We also conduct business through an arrangement with another BCBS licensee in South Carolina.

In addition, we conduct business through our recently acquired Simply Healthcare Holdings, Inc., or Simply Healthcare, subsidiary in Florida.

These results were previously reported in the Commercial and Specialty Business segment.

The decrease in net income was partially offset by an increase in the operating results of our Government Business segment and lower realized losses on the extinguishment of debt.

The increase in cash provided by operating activities was further attributable to the receipt of the reinsurance recoveries payment related to the 2014 Health Care Reform reinsurance premium stabilization program and payments made in 2014 that did not recur in 2015 for the adjudication of claims relating to the New York State contract conversion from our fully-insured Local Group business to a self-funded ASO contract.

| • | Pending acquisition of Cigna expected to close in the second half of 2016; |

and our ability to effectively service large complex accounts.

On November 5, 2014, the shareholders of the Company approved a proposal to amend our articles of incorporation to change our name to Anthem, Inc. from WellPoint, Inc. The name change was effective December 2, 2014.

While the ultimate level of public exchange enrollment cannot be predicted, we have experienced a greater number of policy applications for new members through the public exchanges than expected, including geographical regions with lower price competition.

established the pricing for these public exchange products.

However, the risk characteristics of new applicants in 2014 tracked closely to the risk levels utilized in the development of our pricing assumptions.

There are also limitations on the amount of executive compensation that is deductible for income tax purposes.

The annual HIP Fee to be allocated to all health insurers

increases to $11,300.0 for 2015 and 2016, $13,900.0 for 2017 and $14,300.0 for 2018.

An initial plan was filed on April 30, 2013.

The Insurance Commissioner filed an amended plan on August 8, 2014 and a second amended plan on October 8, 2014.

The state court set a schedule for a notice and comment period and ordered a hearing on the second amended plan, with public comments due by February 13, 2015.

The Insurance Commissioner has filed a Notice of Appeal asking the Pennsylvania Supreme Court to reverse the order denying the liquidation petition.

The Supreme Court held oral argument on the appeal in September 2014.

In recent history, we experienced membership declines due to unfavorable economic conditions driving increased unemployment.

These membership trends could have a material adverse effect on our future results of operations.

We also conduct business through arrangements with other BCBS licensees in the states of South Carolina and Texas.

Additionally, the assets and liabilities of 1-800-CONTACTS are reported as held for sale for the year ended December 31, 2013 in the consolidated balance sheets included in Part II, Item 8 of this Annual Report on Form 10-K.

In addition, net income for the year ended December 31, 2013 was impacted by a loss from discontinued operations recorded in relation to the sale of our 1-800 CONTACTS business.

The increase in net income for the year ended December 31, 2014 was further attributable to a decrease in realized losses on the early extinguishment of debt, a decrease in amortization of intangible assets and an increase in net earnings from investment activities.

These increases were partially offset by an increase in income tax expense primarily due to the non-tax deductible portion of new fees associated with Health Care Reform that became effective January 1, 2014.

Our diluted EPS from continuing operations for the year ended December 31, 2014 was $8.96, an increase of $0.29, or 3.3%, from the year ended December 31, 2013.

The increase in cash provided by operating activities was offset, in part, by payments for new fees associated with Health Care Reform, including the HIP Fee and assessments related to the Health Care Reform reinsurance premium stabilization program.

| | |

| --- | --- |

| | |

| --- | --- |

| • | Acquisition of Amerigroup and the related debt issuance (2012); and |

December 31, 2013 Compared to December 31, 2012

Fully-insured membership decreased 595, or 3.7%, primarily due to membership losses in certain Local Group and Individual markets, as well as membership losses in our Medicaid and Medicare business, described below.

Local Group membership increased 44, or 0.3%, primarily due to new sales in several markets, partially offset by insured membership losses from strategic product portfolio changes in certain states, competitive pressure in certain markets and, we believe, affordability challenges affecting healthcare consumers in general.

Individual membership decreased 100, or 5.4%, primarily due to a heightened competitive environment in certain markets.

National Accounts membership decreased 223, or 3.2%, primarily due to lapses in our self-funded business.

Medicare membership decreased 97, or 6.3%, primarily due to our product repositioning strategy toward HMO product offerings.

Medicaid membership decreased 142, or 3.1%, primarily due to membership losses in our California and New York plans and termination of the Ohio contract on June 30, 2013, partially offset by an increase in membership in various other states.

FEP membership increased 7, or 0.5%, primarily due to favorable in-group change.

Life and disability membership decreased 19, or 0.4%, primarily due to the overall declines in our Commercial and Specialty Business medical membership.

Life and disability products are generally offered as part of Commercial and Specialty Business medical membership sales.

Dental membership increased 32, or 0.7%, primarily due to growth from the launch of new product offerings, partially offset by declines in our Commercial and Specialty Business membership.

Medicare Advantage Part D membership decreased 106, or 14.4%, primarily due to our product repositioning strategy toward HMO product offerings.

We anticipate that medical cost trends will increase by approximately 50 basis points in 2015.

In recent years many large volume brand drugs have launched generic alternatives, which have helped to mitigate pharmacy cost trend, but in 2014 we experienced a return to more normal historical average trends.

As a result of our investing and borrowing activities, we are exposed to financial market risks, including those resulting from changes in interest rates and changes in [removed: equity] market valuations.

Potential impacts discussed below are based upon sensitivity analyses performed on our financial position as of December 31, [removed: 2014.][added: 2015.]

Our available-for-sale investment portfolio includes corporate securities which account for [removed: 41.9%] [added: 41.7%] of the total portfolio at December 31, [removed: 2014] [added: 2015] and are subject to credit/default risk.

As of December 31, [removed: 2014, 90.3%] [added: 2015, 92.2%] of our available-for-sale investments were fixed maturity securities.

A 100 basis point increase in interest rates would result in an approximate [removed: $777.5] [added: $655.2] decrease in fair value, whereas a 100 basis point decrease in interest rates would result in an approximate [removed: $607.8] [added: $655.2] increase in fair value.

As of December 31, [removed: 2014, 9.7%] [added: 2015, 7.8%] of our available-for-sale investments were equity securities.

An immediate 10% decrease in each equity investment’s value, arising from market movement, would result in a fair value decrease of [removed: $193.8.][added: $147.3.]

Alternatively, an immediate 10% increase in each equity investment’s value, attributable to the same factor, would result in a fair value increase of [removed: $193.8.][added: $147.3.]

Our total long-term debt at December 31, [removed: 2014 was $14,752.2 and includes] [added: 2015 consists of] senior unsecured notes, [added: remarketable subordinated notes,] convertible [removed: debentures] [added: debentures, commercial paper] and subordinated surplus notes by one of our insurance subsidiaries.

As of December 31, [removed: 2014,] [added: 2015,] we recorded a net liability of [removed: $5.2,] [added: $69.0,] the estimated fair value of the swaps at that date.

A 100 basis point increase in interest rates would result in an approximate [removed: $43.7] [added: $776.2] decrease in fair value, whereas a 100 basis point decrease in interest rates would result in an approximate [removed: $43.7] [added: $732.9] increase in fair value.

Accordingly, a decrease in the S&P 500 index of 10% would result in an approximate increase of [removed: $27.9] [added: $24.3] in the fair value of these derivatives.

An increase in the S&P 500 index of 10% would result in an approximate decrease of [removed: $17.4] [added: $23.7] in the fair value of these derivatives.

At December 31, 2015, the carrying value and estimated fair value of our long-term debt was $15,324.5 and $16,185.5, respectively.

The senior unsecured notes had combined carrying and estimated fair value of $13,752.9 and $14,764.6, respectively, at December 31, 2014.

The carrying value and estimated fair value of the convertible debentures were $974.4 and $2,581.9, respectively, at December 31, 2014.

The carrying value and estimated fair value of the surplus notes were $24.9 and $30.2, respectively, at December 31, 2014.

We are one of the largest health benefits companies in terms of medical membership in the United States, serving [removed: 37.5] [added: 38.6] million medical members through our affiliated health plans as of December 31, [removed: 2014.][added: 2015.]

We conduct business through our AMERIGROUP Corporation, or Amerigroup, subsidiary, in Florida, Georgia, Kansas, Louisiana, Maryland, Nevada, New Jersey, New Mexico, New York, Tennessee, [removed: Texas] [added: Texas, Washington] and [removed: Washington.][added: effective January 1, 2016, in Iowa.]

We also serve customers throughout the country as HealthLink, UniCare (including a non-risk arrangement with [removed: the state of] Massachusetts), and in certain Arizona, California, [removed: Nevada, New York] [added: Nevada] and Virginia markets through our CareMore Health Group, Inc., or CareMore, subsidiary.

The attackers gained unauthorized access to certain of our information technology systems and obtained personal information related to many [removed: of our current and former members] [added: individuals] and employees.

We [removed: are in the process of determining the extent of] [added: have continued to implement security enhancements since] this [removed: cyber attack] [added: incident] and are supporting federal law enforcement efforts to identify the responsible parties.

[removed: For additional information about the cyber attack, see Note] 13, “Commitments and Contingencies - [removed: Data Breach,”] [added: Cyber Attack Incident,”] to our audited consolidated financial statements included in Part II, Item 8 of this Annual Report on Form 10-K.

On February 17, 2015, we completed our acquisition of Simply [removed: Healthcare Holdings, Inc., or Simply] Healthcare, a leading managed care company for people enrolled in Medicaid and Medicare programs in [removed: the state of] Florida.

This [removed: acquisition, which was originally announced on December 22, 2014,] [added: acquisition] aligns with our strategy for continued growth in our Government Business segment.

As a result, we [removed: will,] [added: serve more than six hundred thousand members in Florida] through our affiliated [added: Amerigroup and Simply Healthcare] Medicaid and Medicare [removed: plans, serve more than half a million members in the state of Florida.][added: plans.]

We provide an array of specialty and other insurance products and services such as dental, vision, life [added: and disability insurance benefits, radiology benefit management and analytics-driven personal health care.]

An HMO plan may also require members to select one of the network primary care [removed: physicians] [added: physicians, or PCPs,] to coordinate their care and approve any specialist or other services.

Economic [removed: factors and] [added: factors,] greater consumer and employer [removed: sophistication] [added: sophistication,] and accountability have resulted in an increased demand for choice in both product/benefit designs and provider network configurations.

[removed: This array of network] and [removed: product configurations allows both the employer and the employee to design and] select the combination of benefit designs (e.g., traditional PPOs, high deductibles, HRAs, HSAs, [removed: gatekeeper] [added: PCP] based products, tiered copays) and networks (e.g., broad, narrow, tiered, closed and open) that optimize choice, quality and price at the consumer, employer and market level.

In addition, we charge a premium to provide administrative services to Large Group [added: and National Account] employers that maintain self-funded health plans and we underwrite stop loss insurance for self-funded plans.

Our medical membership includes seven different customer types: [added: Local Group, Individual, National Accounts, BlueCard®, Medicare, Medicaid and FEP.]

Non-BCBS-branded business refers to members in our non-BCBS-branded [removed: Amerigroup and] [added: Amerigroup,] CareMore [added: and Simply Healthcare] plans, as well as HealthLink and UniCare members.

In the Individual and Small Group markets, we offer on-exchange products through state or federally facilitated marketplaces, referred to as public [removed: exchanges;] [added: exchanges,] and off-exchange products.

[removed: Each] [added: Being a member] of the BCBS [removed: member] companies, of which there were [removed: 37] [added: 36] independent primary licensees as of December 31, [removed: 2014, works cooperatively in a number of ways that create] [added: 2015, creates] significant market advantages, especially when competing for very large multi-state employer groups.

[removed: As a result of this cooperation,] [added: For example,] each BCBS member company is able to take advantage of other BCBS licensees’ substantial provider networks and discounts when any BCBS member works or travels outside of the state in which their policy is written.

For additional information describing each of our customer types, detailed marketing efforts and changes in medical membership over the last three years, see [removed: Part II, Item 7] “Management’s Discussion and Analysis of Financial Condition and Results of Operations” included in [added: Part II, Item 7 of] this Annual Report on Form 10-K.

[removed: The] [added: Advances in medical technology, increases in specialty drug costs, the] aging of the population and other demographic characteristics [removed: and advances in medical technology] continue to contribute to rising health care costs.

[removed: Our significant market share and] high business retention rates enable us to realize the long-term benefits of investing in preventive and early detection programs.

The legislation and regulations are far-reaching and are intended to expand access to health insurance coverage over time by [added: mandating that most individuals obtain health insurance coverage,] increasing the eligibility thresholds for most state Medicaid programs and providing certain other individuals and small businesses with tax credits to subsidize a portion of the cost of health insurance coverage.

[added: Health Care Reform presents us with new growth opportunities, but also introduces new risks, regulatory challenges and] uncertainties, and required changes in the way products are designed, underwritten, priced, distributed and administered.

Private exchanges have [removed: recently] gained [removed: significant] visibility in the marketplace based on the promise of helping employers reduce costs, increase consumer engagement and manage the complexities created by the ACA and other market forces.

To date, adoption levels have been lower than analyst [removed: predictions, but expectations for significant longer term growth remain.][added: predictions.]

While the ultimate volume, pace of growth and winning business models remain highly uncertain, we believe private exchanges will provide opportunities for [removed: growth and will serve a significant role in our future strategy.][added: growth.]

Our approach to the private exchange market has been broad-based and we believe we are [removed: well positioned] [added: well-positioned] to adapt with the market as it evolves.

In 2011, we jointly acquired Bloom Health with Health Care Service Corporation and Blue Cross Blue Shield of Michigan, and today it offers [removed: this] [added: an] advanced consumer experience platform to employers as Anthem Health Marketplace.

[removed: We] have identified initiatives that we believe will deliver better health care while reducing costs.

| • | Use of Capital—Board of Directors declaration of dividends on common stock (2011 through [removed: 2014)] [added: February 2016)] and [removed: a 42.9%] [added: an] increase in the quarterly dividend to [removed: $0.6250] [added: $0.6500] per share [removed: (2015);] [added: (February 2016);] authorization for repurchases of our common stock [removed: (2014] [added: (2015] and prior); and debt repurchases and new debt issuance [removed: (2014] [added: (2015] and prior); |

For additional information regarding certain of these transactions, see Note 3, “Business Acquisitions and [removed: Divestitures,”] [added: Divestiture,”] Note 12, “Debt,” and Note 14, “Capital Stock,” to our audited consolidated financial statements included in Part II, Item 8 of this Annual Report on Form 10-K.

Competition continues to be intense due to aggressive [removed: marketing,] [added: marketing and pricing,] business consolidations, a proliferation of new products, the impact of Health Care Reform, and increased quality awareness and price sensitivity among customers.

[removed: Over the last few years,] [added: Also,] a health plan’s ability to interact with employers, members and other third parties (including health care professionals) via the Internet has become a more important competitive factor, and we have made significant investments in technology to enhance our electronic interaction with providers, employers, members and third parties.

Pricing in our Commercial and Specialty Business segment (defined below), including our Individual and Small Group lines of business, remains [removed: competitive, but rational,] [added: competitive] and we strive to price our health care benefit products consistent with anticipated underlying medical trends.

The public exchanges [removed: may increase] [added: have increased] the risk that our products will be selected by individuals who have a higher risk profile or utilization rate than the pool of participants we anticipated when we established the pricing for these public exchange products.

[removed: Although it is not yet clear whether our products sold on the public exchanges will be more or less profitable products, we] [added: We] believe that our pricing strategy, brand name and network quality will provide a strong foundation for commercial risk membership growth opportunities in the future.

We [removed: currently] manage our operations through three reportable segments: Commercial and Specialty Business, Government Business and Other.

NGS acts as a Medicare contractor [added: for the federal government] in several regions across the nation.

Through our participation in various federal government programs, we generated approximately [removed: 21.0%, 20.3%] [added: 18.8%, 21.0%] and [removed: 23.7%] [added: 20.3%] of our total consolidated revenues from agencies of the U.S. government for the years ended December 31, [removed: 2014, 2013][added: 2015, 2014 and 2013, respectively.]

We also conduct business through an arrangement with another BCBS licensee in South Carolina.

In addition, we conduct business through our recently acquired Simply Healthcare Holdings, Inc., or Simply Healthcare, subsidiary in Florida.

On July 24, 2015, we and Cigna Corporation, or Cigna, announced that we entered into an Agreement and Plan of Merger, or Merger Agreement, dated as of July 23, 2015, by and among Anthem, Cigna and Anthem Merger Sub Corp., a Delaware corporation and our direct wholly-owned subsidiary, pursuant to which we will acquire all outstanding shares of Cigna, or the Acquisition.

The Acquisition will further our goal of creating a premier health benefits company with critical diversification and scale to lead the transformation of health care delivery for consumers.

Cigna is a global health services organization that delivers affordable and personalized products and services to customers through employer-based, government-sponsored and individual coverage arrangements.

All of Cigna's products and services are provided exclusively by or through its operating subsidiaries, including Connecticut General Life Insurance Company, Cigna Health and Life Insurance Company, Life Insurance Company of North America and Cigna Life Insurance Company of New York.

Such products and services include an integrated suite of health services, such as medical, dental, behavioral health, pharmacy, vision, supplemental benefits, and other related products including group life, accident and disability insurance.

Cigna maintains sales capability in 30 countries and jurisdictions.

Under the terms of the Merger Agreement, Cigna’s shareholders will receive $103.40 in cash and 0.5152 shares of our common stock for each Cigna common share outstanding.

The value of the transaction is estimated to be approximately $53.0 billion based on the closing price of our common stock on the New York Stock Exchange on July 23, 2015.

The final purchase price will be determined based on our closing stock price on the date of closing of the Acquisition.

The combined company will reflect a pro forma equity ownership comprised of approximately 67% Anthem shareholders and approximately 33% Cigna shareholders.

On December 3, 2015, both our and Cigna's shareholders approved the proposals necessary to proceed with the Acquisition.

We expect to finance the cash portion of the Acquisition through available cash on hand and the issuance of new debt.

The Acquisition is expected to close in the second half of 2016 and is subject to certain state regulatory approvals, other standard closing conditions and customary approvals required under the Hart-Scott-Rodino Antitrust Improvements Act.

For additional information, see "Risk Factors" included in Part I, Item 1A; "Management's Discussion and Analysis of Financial Condition and Results of Operations - Overview" included in Part II, Item 7; and Note 3, “Business Acquisitions and Divestiture - Pending Acquisition of Cigna Corporation" included in Part II, Item 8 of this Annual Report on Form 10-K.

For additional information about the cyber attack, see Note

For additional information, see Note 3, “Business Acquisitions and Divestiture - Acquisition of Simply Healthcare" included in Part II, Item 8 of this Annual Report on Form 10-K.

This array of network and product configurations allows both the employer and the employee to design

Our significant market share and

In recent years, we have experienced membership growth due to the quality and pricing of our health benefits products and services, improved economic conditions, decreases in unemployment, acquisitions, entry into new markets and expansions in existing markets.

However, these membership trends could be negatively impacted by various factors that could have a material adverse effect on our future results of operations such as general economic downturns that result in business failures, failure to obtain new customers or retain existing customers, premium increases, benefit changes or our exit from a specific market.

We

| • | Pending acquisition of Cigna expected to close in the second half of 2016; |

We believe that participants in the managed care industry compete for customers based on quality of service, price, access to provider networks, access to care management and wellness programs (including health information), innovation, breadth and flexibility of products and benefits, reputation (including National Committee on Quality Assurance, or NCQA, accreditation status), brand recognition and financial stability.

Our ability to attract and retain customers is substantially tied to our ability to distinguish ourselves from our competitors in these areas.

We offer bronze, silver and gold products, on the public exchanges, in Colorado, Connecticut, Georgia, Indiana, Kentucky, Maine, Missouri, New Hampshire, Ohio and Virginia.

BlueCard®: BlueCard® is a national program that links participating health care providers and independent BCBS plans.

MMP is a demonstration program focused on serving members who are dually eligible for Medicaid and Medicare, which was established as a result of the passage of the ACA.

Since December 1, 2009, we have delegated certain functions and administrative services related to our integrated prescription drug

Increasingly, we are supplementing our broad based networks with smaller or more

Autism Spectrum Disorder is a specialized case management program staffed by a dedicated team of clinicians who have been trained on the unique challenges and needs of families with a member who has a diagnosis of autism spectrum disorder.

These clinicians provide education, information on community resources to help with care and support, guidance on the appropriate usage of benefits, and assistance in exploring effective treatments, such as medical services, that may help the member and their families.

As a notable contributor to the health outcomes

See Part I, Item 1A “Risk Factors” in this Annual

| • | regulate, limit, or suspend our ability to market products, including the exclusion of our plans from participating on public exchanges; |

| • | retroactively adjust premium rates for services; |

health insurance is rated, the assessment of new taxes and fees (including annual fees on health insurance companies), the creation of public exchanges for Individuals and Small Groups, the availability of premium subsidies for certain Individual products, and substantial expansions in eligibility for Medicaid.

In addition, CMS has issued transitional policies modifying or extending the deadlines for compliance with certain aspects of Health Care Reform.

| • | Proposed network adequacy standards; |

We also conduct business through arrangements with other BCBS licensees in the states of South Carolina and Texas.

and disability insurance benefits, radiology benefit management and analytics-driven personal health care.

We also sold contact lenses, eyeglasses and other ocular products through our 1-800 CONTACTS, Inc., or 1-800 CONTACTS, business which was divested on January 31, 2014.

- Local Group

- Individual

- National Accounts

- BlueCard®

- Medicare

- Medicaid

- FEP

Health Care Reform provides growth opportunities for health insurers, but also introduces new risks and

In recent history, we experienced membership declines due to unfavorable economic conditions driving increased unemployment.

These membership trends could have a material adverse effect on our future results of operations.

Although overall private exchange activity has been limited, we have experienced positive membership gains among early adopters, reinforcing the strength of our market position and the value we deliver to employers and consumers.

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| --- | --- |

| | |

| --- | --- |

| | |

| --- | --- |

Managed care industry participants compete for customers mainly on the following factors:

| | |

| --- | --- |

| • | quality of service; |

| | |

| --- | --- |

| • | price; |

| | |

| --- | --- |

| • | access to provider networks; |

| | |

| --- | --- |

| • | access to care management and wellness programs, including health information; |

| | |

| --- | --- |

| • | innovation, breadth and flexibility of products and benefits; |

| | |

| --- | --- |

| • | reputation (including National Committee on Quality Assurance, or NCQA, accreditation status); |

| | |

For information regarding our legal proceedings, see the “Litigation,” [removed: “Data Breach”] [added: “Cyber Attack Incident”] and “Other Contingencies” sections of Note 13, “Commitments and Contingencies” to our audited consolidated financial statements included in Part II, Item 8 of this Annual Report on Form 10-K.

10-K 1 [removed: antm-20141231x10k.htm] [added: antm-2015123110kforq4.htm] FORM 10-K

For the fiscal year ended December 31, [removed: 2014][added: 2015]

The aggregate market value of the voting and non-voting common equity held by non-affiliates of the registrant (assuming solely for the purposes of this calculation that all Directors and executive officers of the registrant are “affiliates”) as of June 30, [removed: 2014] [added: 2015] was approximately [removed: $29,462,836,859.][added: $42,815,533,599.]

As of February [removed: 5, 2015, 266,787,463] [added: 4, 2016, 261,351,781] shares of the Registrant’s Common Stock were outstanding.

Part III of this Annual Report on Form 10-K incorporates by reference information from the registrant’s Definitive Proxy Statement for the Annual Meeting of Shareholders to be held May [removed: 13, 2015.][added: 19, 2016.]

For the Year Ended December 31, [removed: 2014][added: 2015]

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| ITEM 1A. | [RISK [removed: FACTORS](#s7BAABB201BA8A4DB7B8ED2E8B1C19E82)] [added: FACTORS](#s13F7E94B440C5C658F68B0050278BCA7)] | [removed: [23](#s7BAABB201BA8A4DB7B8ED2E8B1C19E82)] [added: [22](#s13F7E94B440C5C658F68B0050278BCA7)] |

| ITEM 1B. | [UNRESOLVED SEC STAFF [removed: COMMENTS](#s50E2F7774AF90C8B8B7AD2E8B1E1D121)] [added: COMMENTS](#s7725911B0F6255068C344D6EBE710E04)] | [removed: [39](#s50E2F7774AF90C8B8B7AD2E8B1E1D121)] [added: [39](#s7725911B0F6255068C344D6EBE710E04)] |

| ITEM 2. | [removed: [PROPERTIES](#sD515D83F47C1658487C4D2E8B21F2505)] [added: [PROPERTIES](#s10EB3828F4C352CB9BD03A2E8826A9D4)] | [removed: [39](#sD515D83F47C1658487C4D2E8B21F2505)] [added: [39](#s10EB3828F4C352CB9BD03A2E8826A9D4)] |

| ITEM 3. | [LEGAL [removed: PROCEEDINGS](#s01A846459375C6D9BB96D2E8B23E7ADB)] [added: PROCEEDINGS](#s7CCCE2F26B4A58F1ACC22BA895F79174)] | [removed: [39](#s01A846459375C6D9BB96D2E8B23E7ADB)] [added: [39](#s7CCCE2F26B4A58F1ACC22BA895F79174)] |

| ITEM 4. | [MINE SAFETY [removed: DISCLOSURES](#s131CD5CEB69FFB86C638D2E8B26D15E8)] [added: DISCLOSURES](#sC59919D47BFC59EA8F57C3FEB4D00ABC)] | [removed: [39](#s131CD5CEB69FFB86C638D2E8B26D15E8)] [added: [39](#sC59919D47BFC59EA8F57C3FEB4D00ABC)] |

| ITEM 5. | [MARKET FOR REGISTRANT’S COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND ISSUER PURCHASES OF EQUITY [removed: SECURITIES](#s4E18929F56A4E642A473D2E883B0DD85)] [added: SECURITIES](#sF00F52C289E95B62BB519A7903CE9AAD)] | [removed: [40](#s4E18929F56A4E642A473D2E883B0DD85)] [added: [40](#sF00F52C289E95B62BB519A7903CE9AAD)] |

| ITEM 6. | [SELECTED FINANCIAL [removed: DATA](#s9EC8E13237960281E48ED2E888142B1D)] [added: DATA](#sBB567CAFE17D5636B7FF4EBAD86E69EF)] | [removed: [43](#s9EC8E13237960281E48ED2E888142B1D)] [added: [43](#sBB567CAFE17D5636B7FF4EBAD86E69EF)] |

| ITEM 7. | [MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF [removed: OPERATIONS](#sDC751218B13DA6EB4B05D2E8B31979CA)] [added: OPERATIONS](#s97750187D3785B68934484FC92D77891)] | [removed: [44](#sDC751218B13DA6EB4B05D2E8B31979CA)] [added: [44](#s97750187D3785B68934484FC92D77891)] |

| ITEM 7A. | [QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET [removed: RISK](#s21AEC460B32E5564DB92D2E8B4FC101A)] [added: RISK](#s767034D1A20F5510B8A2465EC9B6864F)] | [removed: [77](#s21AEC460B32E5564DB92D2E8B4FC101A)] [added: [77](#s767034D1A20F5510B8A2465EC9B6864F)] |

| ITEM 8. | [FINANCIAL STATEMENTS AND SUPPLEMENTARY [removed: DATA](#s496734C249FB02C3FAD4D2E8B52B62D8)] [added: DATA](#sEF557AB6272E51A78F312EC0F0D79B76)] | [removed: [79](#s496734C249FB02C3FAD4D2E8B52B62D8)] [added: [79](#sEF557AB6272E51A78F312EC0F0D79B76)] |

| ITEM 9. | [CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL [removed: DISCLOSURE](#s603D0FD13B2DF67109E2D2E8BB53C52D)] [added: DISCLOSURE](#s19F07B6682265B4881EE3D41BBEAD0CE)] | [removed: [142](#s603D0FD13B2DF67109E2D2E8BB53C52D)] [added: [145](#s19F07B6682265B4881EE3D41BBEAD0CE)] |

| ITEM 9A. | [CONTROLS AND [removed: PROCEDURES](#sCDA25F5B71AE4B27DB4CD2E8BB8162C6)] [added: PROCEDURES](#s36E7F8A36F975BF381C9CB4777A4E321)] | [removed: [142](#sCDA25F5B71AE4B27DB4CD2E8BB8162C6)] [added: [145](#s36E7F8A36F975BF381C9CB4777A4E321)] |

| ITEM 9B. | [OTHER [removed: INFORMATION](#s84104D1C7253A8C6D407D2E8BBB030E7)] [added: INFORMATION](#sD07F11BFB6825D6EBC0B4E522A7A01F8)] | [removed: [145](#s84104D1C7253A8C6D407D2E8BBB030E7)] [added: [148](#sD07F11BFB6825D6EBC0B4E522A7A01F8)] |

| [PART [removed: III](#sAC5C73ED9A537CFB7614D2E8BBDFED9F)] [added: III](#s74D2513401E450E79244FB8009E7DDA0)] | | |

| ITEM 10. | [DIRECTORS, EXECUTIVE OFFICERS AND CORPORATE [removed: GOVERNANCE](#s0A2ECF3B8B40B30AB47FD2E8BBFE105C)] [added: GOVERNANCE](#s6BF1051433D2523487332840AB03998C)] | [removed: [145](#s0A2ECF3B8B40B30AB47FD2E8BBFE105C)] [added: [148](#s6BF1051433D2523487332840AB03998C)] |

| ITEM 11. | [EXECUTIVE [removed: COMPENSATION](#s9EB97F23AD663C662C64D2E8BC2D5DF9)] [added: COMPENSATION](#s2F6DE4B9916B561E94A57C608DF32344)] | [removed: [145](#s9EB97F23AD663C662C64D2E8BC2D5DF9)] [added: [148](#s2F6DE4B9916B561E94A57C608DF32344)] |

| ITEM 12. | [SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND RELATED STOCKHOLDER [removed: MATTERS](#sF02AD1B8EEC1B5FDDFE2D2E8BC4C6DDC)] [added: MATTERS](#sD64FFCC48E88593FAF27FF81D0349644)] | [removed: [145](#sF02AD1B8EEC1B5FDDFE2D2E8BC4C6DDC)] [added: [148](#sD64FFCC48E88593FAF27FF81D0349644)] |

| ITEM 13. | [CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS, AND DIRECTOR [removed: INDEPENDENCE](#sC78407F5E4F444A35E6FD2E8BC8BF88C)] [added: INDEPENDENCE](#s649E84456D8250EFAE76577807B46309)] | [removed: [145](#sC78407F5E4F444A35E6FD2E8BC8BF88C)] [added: [148](#s649E84456D8250EFAE76577807B46309)] |

| ITEM 14. | [PRINCIPAL ACCOUNTANT FEES AND [removed: SERVICES](#s70AF1BED13B47D90295ED2E8BCAA82F4)] [added: SERVICES](#sAF216B71F245598EB9F3BB950EED3198)] | [removed: [145](#s70AF1BED13B47D90295ED2E8BCAA82F4)] [added: [148](#sAF216B71F245598EB9F3BB950EED3198)] |

| ITEM 15. | [EXHIBITS AND FINANCIAL STATEMENT [removed: SCHEDULES](#sDC2CE50F1155C8177C7CD2E8BCF845CE)] [added: SCHEDULES](#s06C95F1B13E75D36858800A66B3B0198)] | [removed: [146](#sDC2CE50F1155C8177C7CD2E8BCF845CE)] [added: [149](#s06C95F1B13E75D36858800A66B3B0198)] |

When used in this report, the words [removed: “may,”] [added: “expect,” “feel,” “believe,”] “will,” [added: “may,”] “should,” “anticipate,” [added: “intend,”] “estimate,” [removed: “expect,”] [added: “project” “forecast,”] “plan,” [removed: “believe,” “feel,” “predict,” “project,” “potential,” “intend”] and similar expressions are intended to identify forward-looking statements, which are generally not historical in nature.

| [PART I](#s726F397ED9C850F18395FE118862F04F) | | |

| [PART II](#s3C52BAD88F03570EA3DBE57F97686006) | | |

| [PART IV](#s49BAF29DB77C55D6A6C9A534463EFA29) | | |

| [SIGNATURES](#s50805EF21B3D596EA86C04127110B9B0) | | [156](#s50805EF21B3D596EA86C04127110B9B0) |

| [INDEX TO EXHIBITS](#s2B7687BBD01D53A9992BEEB2747FCBE4) | | [157](#s2B7687BBD01D53A9992BEEB2747FCBE4) |

| [PART I](#s34CA38683834250F5B58D2E8B17389A4) | | |

| [PART II](#sA16748878CBF04692DB6D2E8B28CD03A) | | |

| [PART IV](#s94D6CAB31966F273316CD2E8BCD99359) | | |

| [SIGNATURES](#sED1068700D36A0278A10D2E8871AAC9B) | | [153](#sED1068700D36A0278A10D2E8871AAC9B) |

| [INDEX TO EXHIBITS](#sCE4F9EF65AEB2EE92690D2E8BF968510) | | [154](#sCE4F9EF65AEB2EE92690D2E8BF968510) |

On November 5, 2014, the shareholders of the Company approved a proposal to amend our articles of incorporation to change our name to Anthem, Inc. from WellPoint, Inc. The name change was effective December 2, 2014.

In addition to this location, we have [removed: other principal] [added: significant] operating facilities located in each of the fourteen states where we operate as licensees of the BCBSA, in each of the [removed: nine] additional [added: ten] states where Amerigroup conducts business and in [removed: the additional state of] Arizona where CareMore maintains a branch office.

Our common stock, par value $0.01 per share, is listed on the NYSE under the symbol “ANTM.” On February [removed: 5, 2015,] [added: 4, 2016,] the closing price on the NYSE was [removed: $137.23.][added: $126.64.]

As of February [removed: 5, 2015,] [added: 4, 2016,] there were [removed: 74,717] [added: 71,430] shareholders of record of our common stock.

The quarterly cash dividend declared by our Board of Directors was [added: $0.6250,] $0.4375, [removed: $0.3750] and [removed: $0.2875] [added: $0.3750] per share in [removed: 2014, 2013] [added: 2015, 2014] and [removed: 2012,] [added: 2013,] respectively.

On [removed: January 27, 2015,] [added: February 18, 2016,] our Board of Directors declared a quarterly cash dividend to shareholders of [removed: $0.6250] [added: $0.6500] per share.

We regularly review the appropriate use of capital, including [added: acquisitions,] common stock [removed: repurchases, repurchases of] [added: and] debt [removed: securities] [added: security repurchases] and dividends to shareholders.

The declaration and payment of any dividends or repurchases of our common stock or debt [removed: securities] is at the discretion of our Board of Directors and depends upon our financial condition, results of operations, future liquidity needs, regulatory and capital requirements and other factors deemed relevant by our Board of Directors.

| 1 | Total number of shares purchased [removed: includes 62,260] [added: represents] shares delivered to or withheld by us in connection with employee payroll tax withholding upon exercise or vesting of stock awards. Stock grants to employees and directors and stock issued for stock option plans and stock purchase plans in the consolidated statements of shareholders’ equity are shown net of these shares purchased. |

| 2 | Represents the number of shares repurchased through the common stock repurchase program authorized by our Board of Directors, which the Board evaluates periodically. During the year ended December 31, [removed: 2014,] [added: 2015,] we repurchased [removed: 30,439,237] [added: 10,417,248] shares at a cost of [removed: $2,998.8] [added: $1,515.8] under the program, including the cost of options to purchase shares. The Board of Directors has authorized our common stock repurchase program since 2003. The Board's most recent authorized increase to the program was $5,000.0 on October 2, 2014. [removed: Between January 1, 2015 and February 5, 2015, we repurchased 1.8 shares at a cost of $229.9, bringing our current availability to $5,461.8 at February 5, 2015.] No duration has been placed on our common stock repurchase program and we reserve the right to discontinue the program at any time. |

The following Performance Graph and related information compares the cumulative total return to shareholders of our common stock for the period from December 31, [removed: 2009] [added: 2010] through December 31, [removed: 2014,] [added: 2015,] with the cumulative total return over such period of (i) the Standard & Poor’s 500 Stock Index (the “S&P 500 Index”) and (ii) the Standard & Poor’s Managed Health Care Index (the “S&P Managed Health Care Index”).

The graph assumes an investment of $100 on December 31, [removed: 2009] [added: 2010] in each of our common stock, the S&P 500 Index and the S&P Managed Health Care Index (and the reinvestment of all dividends).

The following graph and related information shall not be deemed “soliciting materials” or to be “filed” with the SEC, nor shall such information be incorporated by reference into any future filing under the [removed: Securities Act of 1933, as amended, or the] Exchange Act, except to the extent that we specifically incorporate it by reference into such filing.

[removed: ][added: ]

| | | [removed: 2009 | | | |] 2010 | | | | 2011 | | | | 2012 | | | | 2013 | | | | 2014 | | | [added: | 2015 | | |]

Based upon an initial investment of $100 on December 31, [removed: 2009] [added: 2010] with dividends reinvested.

| 2015 | | | | | | | |

| First Quarter | $ | 160.64 | | | $ | 122.86 | |

| Second Quarter | 173.59 | | | | 148.29 | | |

| Third Quarter | 165.93 | | | | 134.62 | | |

| Fourth Quarter | 149.87 | | | | 126.25 | | |

Under the terms of the Merger Agreement with Cigna, during the period before completion of the merger, we will not declare, set aside, make or pay any dividend with respect to our capital stock, other than (1) regular quarterly cash dividends not exceeding, with respect to any quarter, $0.6250 per share, (as such amount may be increased in the ordinary course of business), with declaration, record and payment dates consistent with past practice and in accordance with our dividend policy as of the date of the Merger Agreement and (2) dividends payable by a directly or indirectly wholly owned subsidiary to Anthem or to another directly or indirectly wholly owned subsidiary of Anthem.

The cash dividend declared by our Board of Directors on February 18, 2016 was in accordance with the terms of the Merger Agreement.

| October 1, 2015 to October 31, 2015 | | | 7,561 | | | $ | 139.03 | | | — | | | $ | 4,175.9 | |

| November 1, 2015 to November 30, 2015 | | | 893 | | | 138.66 | | | | — | | | 4,175.9 | | |

| December 1, 2015 to December 31, 2015 | | | 9,096 | | | 135.08 | | | | — | | | 4,175.9 | | |

| | | | 17,550 | | | | | | | — | | | | | |

| Anthem, Inc. | | $ | 100 | | | $ | 118 | | | $ | 111 | | | $ | 171 | | | $ | 236 | | | $ | 267 | |

| S&P 500 Index | | 100 | | | | 102 | | | | 118 | | | | 157 | | | | 178 | | | | 181 | | |

| S&P Managed Health Care Index | | 100 | | | | 134 | | | | 142 | | | | 211 | | | | 281 | | | | 343 | | |

| 2013 | | | | | | | |

| First Quarter | $ | 66.62 | | | $ | 58.75 | |

| Second Quarter | 82.33 | | | | 65.82 | | |

| Third Quarter | 90.00 | | | | 80.75 | | |

| Fourth Quarter | 94.36 | | | | 83.13 | | |

| October 1, 2014 to October 31, 2014 | | | 1,514,534 | | | $ | 117.30 | | | 1,506,731 | | | $ | 5,858.1 | |

| November 1, 2014 to November 30, 2014 | | | 507,812 | | | 125.99 | | | | 507,196 | | | 5,794.2 | | |

| December 1, 2014 to December 31, 2014 | | | 871,233 | | | 125.43 | | | | 817,392 | | | 5,691.7 | | |

| | | | 2,893,579 | | | | | | | 2,831,319 | | | | | |

| Anthem, Inc. | | $ | 100 | | | $ | 98 | | | $ | 115 | | | $ | 108 | | | $ | 167 | | | $ | 230 | |

| S&P 500 Index | | 100 | | | | 115 | | | | 117 | | | | 136 | | | | 180 | | | | 205 | | |

| S&P Managed Health Care Index | | 100 | | | | 109 | | | | 146 | | | | 155 | | | | 229 | | | | 306 | | |

The information has been derived from our consolidated financial statements for each of the years in the five year period ended December 31, [removed: 2014.][added: 2015.]

You should read this selected consolidated financial data in conjunction with the audited consolidated financial statements and notes as of and for the year ended December 31, [removed: 2014] [added: 2015] included in Part II, Item 8 “Financial Statements and Supplementary Data”, and Part II, Item 7 “Management’s Discussion and Analysis of Financial Condition and Results of Operations” included in this Annual Report on Form 10-K.

| | | [removed: 2014] [added: 2015] 1 | | | | [removed: 2013 1] [added: 2014 2] | | | | [removed: 2012 1,2] [added: 2013 2] | | | | [removed: 2011] [added: 2012 1,] 2 | | | | [removed: 2010] [added: 2011 1] | | |

| Total operating revenue3 | | $ | [removed: 73,021.7] [added: 78,404.8] | | | $ | [removed: 70,191.4] [added: 73,021.7] | | | $ | [removed: 60,514.0] [added: 70,191.4] | | | $ | [removed: 59,865.2] [added: 60,514.0] | | | $ | [removed: 57,740.5] [added: 59,865.2] | |

| Total revenues | | [removed: 73,874.1] [added: 79,156.5] | | | | [removed: 71,023.5] [added: 73,874.1] | | | | [removed: 61,497.2] [added: 71,023.5] | | | | [removed: 60,710.7] [added: 61,497.2] | | | | [removed: 58,698.5] [added: 60,710.7] | | |

| Income from continuing operations | | [removed: 2,560.1] [added: 2,560.0] | | | | [removed: 2,634.3] [added: 2,560.1] | | | | [removed: 2,651.0] [added: 2,634.3] | | | | [removed: 2,646.7] [added: 2,651.0] | | | | [removed: 2,887.1] [added: 2,646.7] | | |

| Net income | | [removed: 2,569.7] [added: 2,560.0] | | | | [removed: 2,489.7] [added: 2,569.7] | | | | [removed: 2,655.5] [added: 2,489.7] | | | | [removed: 2,646.7] [added: 2,655.5] | | | | [removed: 2,887.1] [added: 2,646.7] | | |

| Basic net income per share - continuing operations | | $ | [removed: 9.28] [added: 9.73] | | | $ | [removed: 8.83] [added: 9.28] | | | $ | [removed: 8.25] [added: 8.83] | | | $ | [removed: 7.35] [added: 8.25] | | | $ | [removed: 7.03] [added: 7.35] | |

| Diluted net income per share - continuing operations | | [removed: 8.96] [added: 9.38] | | | | [removed: 8.67] [added: 8.96] | | | | [removed: 8.17] [added: 8.67] | | | | [removed: 7.25] [added: 8.17] | | | | [removed: 6.94] [added: 7.25] | | |

| Dividends per share | | [removed: 1.75] [added: 2.50] | | | | [removed: 1.50] [added: 1.75] | | | | [removed: 1.15] [added: 1.50] | | | | [removed: 1.00] [added: 1.15] | | | | [removed: —] [added: 1.00] | | |

| Benefit expense ratio4 | | [removed: 83.1] [added: 83.3] | | % | | [removed: 85.1] [added: 83.1] | | % | | [removed: 85.3] [added: 85.1] | | % | | [removed: 85.1] [added: 85.3] | | % | | [removed: 83.2] [added: 85.1] | | % |

| Selling, general and administrative expense ratio5 | | [removed: 16.1] [added: 16.0] | | % | | [removed: 14.2] [added: 16.1] | | % | | [removed: 14.3] [added: 14.2] | | % | | [removed: 14.1] [added: 14.3] | | % | | [removed: 15.1] [added: 14.1] | | % |

| Income from continuing operations before income taxes as a percentage of total revenues | | 5.9 | | % | | [removed: 5.4] [added: 5.9] | | % | | [removed: 6.3] [added: 5.4] | | % | | [removed: 6.5] [added: 6.3] | | % | | [removed: 7.4] [added: 6.5] | | % |

| Net income as a percentage of total revenues | | [removed: 3.5] [added: 3.2] | | % | | 3.5 | | % | | [removed: 4.3] [added: 3.5] | | % | | [removed: 4.4] [added: 4.3] | | % | | [removed: 4.9] [added: 4.4] | | % |

| Medical membership (in thousands) | | [removed: 37,499] [added: 38,599] | | | | [removed: 35,653] [added: 37,499] | | | | [removed: 36,130] [added: 35,653] | | | | [removed: 34,251] [added: 36,130] | | | | [removed: 33,323] [added: 34,251] | | |

| Cash and investments | | $ | [removed: 23,777.7] [added: 23,124.7] | | | $ | [removed: 22,395.9] [added: 23,777.7] | | | $ | [removed: 22,464.6] [added: 22,395.9] | | | $ | [removed: 20,696.5] [added: 22,464.6] | | | $ | [removed: 20,311.8] [added: 20,696.5] | |

| Total shareholders’ equity | | [removed: 24,251.3] [added: 23,044.1] | | | | [removed: 24,765.2] [added: 24,251.3] | | | | [removed: 23,802.7] [added: 24,765.2] | | | | [removed: 23,288.2] [added: 23,802.7] | | | | [removed: 23,812.6] [added: 23,288.2] | | |

| [removed: 1] [added: 2] | The operating results of 1-800 CONTACTS, Inc. are reported as discontinued operations at December 31, 2014, 2013 and 2012 as a result of the divestiture completed on January 31, 2014. Included in net income for the year ended December 31, 2014 is income from discontinued operations, net of tax, of $9.6. Included in net income for the year ended December 31, 2013 is a loss from discontinued operations, net of tax, of $144.6. Included in net income for the year ended December 31, 2012 is income from discontinued operations, net of tax, of $4.5. |

| [removed: 2] [added: 1] | The net assets of and results of operations for [added: Simply Healthcare Holdings, Inc.,] AMERIGROUP Corporation [removed: are included from its acquisition date of December 24, 2012. The net assets of] and [removed: results of operations for] CareMore Health Group, Inc. are included from [removed: its] [added: their respective] acquisition [removed: date] [added: dates] of [added: February 17, 2015, December 24, 2012 and] August 22, 2011. |

| Total assets6, 7 | | 61,717.8 | | | | 61,676.3 | | | | 59,095.3 | | | | 58,610.7 | | | | 51,693.6 | | |

| Long-term debt, less current portion6 | | 15,324.5 | | | | 14,019.6 | | | | 13,477.4 | | | | 14,069.3 | | | | 8,420.9 | | |

| Total liabilities6, 7 | | 38,673.7 | | | | 37,425.0 | | | | 34,330.1 | | | | 34,808.0 | | | | 28,405.4 | | |

| | |

| --- | --- |

| 6 | Amounts as of December 31, 2014, 2013, 2012 and 2011 have been retroactively restated to reflect the reclassification of unamortized debt issuance costs from an asset to a contra-liability as a result of the adoption of Accounting Standards Update No. 2015-03, Interest—Imputation of Interest (Subtopic 835-30): Simplifying the Presentation of Debt Issuance Costs, during the year ended December 31, 2015. |

| | |

| --- | --- |

| 7 | Amounts as of December 31, 2014, 2013, 2012 and 2011 have been retroactively restated to reflect the reclassification of current deferred tax assets from an asset to a contra-liability as a result of the adoption of Accounting Standards Update No. 2015-07, Balance Sheet Classification of Deferred Taxes, during the year ended December 31, 2015. |

| Total assets | | 62,065.0 | | | | 59,574.5 | | | | 58,955.4 | | | | 52,163.2 | | | | 50,242.5 | | |

| Long-term debt, less current portion | | 14,127.2 | | | | 13,573.6 | | | | 14,170.8 | | | | 8,465.7 | | | | 8,147.8 | | |

| Total liabilities | | 37,813.7 | | | | 34,809.3 | | | | 35,152.7 | | | | 28,875.0 | | | | 26,429.9 | | |

Years ended December 31, [removed: 2014, 2013] [added: 2015, 2014] and [removed: 2012][added: 2013]

| Report of Independent Registered Public Accounting Firm | [removed: [80](#s634698DACC83AAE645C3D2E8B55AA4A4)] [added: [80](#s7F70D43D0167528DAA0F39044ED6F902)] |

| Consolidated Balance Sheets | [removed: [81](#s711D559342B67E3938F3D2E870112A1E)] [added: [81](#s7D4DD6E42D0F5C7180A342615B62AA08)] |

| Consolidated Statements of Income | [removed: [82](#s69535A0A0F184546CD67D2E86DFF4D03)] [added: [82](#s78C880E752E7581FB3CB6B9717CFA92C)] |

| Consolidated Statements of Comprehensive Income | [removed: [83](#s6EBB2B2432E6E14BA6C1D2E86E4DD547)] [added: [83](#s96441C34C6BB57F38C50D4708AC89E79)] |

| Consolidated Statements of Cash Flows | [removed: [84](#s682F9C38526BD057E8B6D2E86E8B3F7A)] [added: [84](#s5B91749A84AB573B953D9607A6D26AC6)] |

| Consolidated Statements of Shareholders’ Equity | [removed: [85](#s34FFD3294E5411C80C48D2E86ECA1401)] [added: [85](#s4CCF27FABA4E5A6A8FC922976FB152AF)] |

| Notes to Consolidated Financial Statements | [removed: [86](#sB4096A23AC31BDDE3EF0D2E8B6730ED9)] [added: [86](#s1D2457CD151356A795034579EFC47472)] |

We have audited the accompanying consolidated balance sheets of Anthem, Inc. (the “Company”) as of December 31, [removed: 2014] [added: 2015] and [removed: 2013,] [added: 2014,] and the related consolidated statements of income, comprehensive income, shareholders’ equity, and cash flows for each of the three years in the period ended December 31, [removed: 2014.][added: 2015.]

In our opinion, the financial statements referred to above present fairly, in all material respects, the consolidated financial position of Anthem, Inc. at December 31, [removed: 2014] [added: 2015] and [removed: 2013,] [added: 2014,] and the consolidated results of its operations and its cash flows for each of the three years in the period ended December 31, [removed: 2014,] [added: 2015,] in conformity with U.S. generally accepted accounting principles.

We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States), Anthem, Inc.’s internal control over financial reporting as of December 31, [removed: 2014,] [added: 2015,] based on criteria established in Internal Control—Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission (2013 framework) and our report dated February [removed: 24, 2015] [added: 19, 2016] expressed an unqualified opinion thereon.

| | December 31, [removed: 2014] [added: 2015] | | | | December 31, [removed: 2013] [added: 2014] | | |

| Cash and cash equivalents | $ | [removed: 2,151.7] [added: 2,113.5] | | | $ | [removed: 1,582.1] [added: 2,151.7] | |

| Fixed maturity securities (amortized cost of [removed: $17,120.4] [added: $16,950.0] and [removed: $16,826.7)] [added: $17,120.4)] | [removed: 17,467.4] [added: 16,920.0] | | | | [removed: 17,038.2] [added: 17,467.4] | | |

| Equity securities (cost of [removed: $1,303.7] [added: $1,055.8] and [removed: $1,168.5)] [added: $1,303.7)] | [removed: 1,906.6] [added: 1,441.8] | | | | [removed: 1,735.5] [added: 1,906.6] | | |

| Other invested assets, current | [removed: 20.2] [added: 19.1] | | | | [removed: 16.3] [added: 20.2] | | |

| Accrued investment income | [removed: 161.4] [added: 170.8] | | | | [removed: 168.8] [added: 161.4] | | |

| Premium and self-funded receivables | [removed: 4,825.5] [added: 4,602.8] | | | | [removed: 3,968.7] [added: 4,825.5] | | |

| Other receivables | [removed: 2,117.0] [added: 2,421.4] | | | | [removed: 1,063.3] [added: 2,117.0] | | |

| Income taxes receivable | [removed: 308.9] [added: 316.6] | | | | [removed: 235.7] [added: 308.9] | | |

| Securities lending collateral | [removed: 1,515.2] [added: 1,300.4] | | | | [removed: 969.8] [added: 1,515.2] | | |

| Other current assets | [removed: 1,474.6] [added: 1,555.7] | | | | [removed: 1,677.5] [added: 1,473.9] | | |

| Total current assets | [removed: 32,228.9] [added: 30,862.1] | | | | [removed: 29,745.8] [added: 31,947.8] | | |

| Fixed maturity securities (amortized cost of [removed: $500.7] [added: $550.4] and [removed: $455.9)] [added: $500.7)] | [removed: 504.4] [added: 558.2] | | | | [removed: 449.9] [added: 504.4] | | |

| Equity securities (cost of [removed: $27.0] [added: $27.3] and [removed: $27.4)] [added: $27.0)] | [removed: 31.5] [added: 31.0] | | | | [removed: 31.3] [added: 31.5] | | |

| Other invested assets, long-term | [removed: 1,695.9] [added: 2,041.1] | | | | [removed: 1,542.6] [added: 1,695.9] | | |

| Property and equipment, net | [removed: 1,944.3] [added: 2,019.8] | | | | [removed: 1,801.5] [added: 1,944.3] | | |

| Goodwill | [removed: 17,082.0] [added: 17,562.2] | | | | [removed: 16,917.2] [added: 17,082.0] | | |

| Other intangible assets | [removed: 7,958.1] [added: 8,158.0] | | | | [removed: 8,441.0] [added: 7,958.1] | | |

| Other noncurrent assets | [removed: 619.9] [added: 485.4] | | | | [removed: 645.2] [added: 512.3] | | |

| Medical claims payable | $ | [removed: 6,861.2] [added: 7,569.8] | | | $ | [removed: 6,127.2] [added: 6,861.2] | |

| Reserves for future policy benefits | [removed: 68.1] [added: 71.9] | | | | [removed: 63.1] [added: 68.1] | | |

| Other policyholder liabilities | [removed: 2,626.5] [added: 2,256.5] | | | | [removed: 2,073.2] [added: 2,626.5] | | |

| Total policy liabilities | [removed: 9,555.8] [added: 9,898.2] | | | | [removed: 8,263.5] [added: 9,555.8] | | |

| Unearned income | [removed: 1,078.1] [added: 1,145.5] | | | | [removed: 822.7] [added: 1,078.1] | | |

| Accounts payable and accrued expenses | [removed: 3,651.8] [added: 3,318.8] | | | | [removed: 3,426.3] [added: 3,651.8] | | |

| Security trades pending payable | [removed: 66.2] [added: 73.1] | | | | [removed: 95.2] [added: 66.2] | | |

| Securities lending payable | [removed: 1,515.3] [added: 1,300.9] | | | | [removed: 969.7] [added: 1,515.3] | | |

| Short-term borrowings | [removed: 400.0] [added: 540.0] | | | | 400.0 | | |

| Current portion of long-term debt | [removed: 625.0] [added: —] | | | | [removed: 518.0] [added: 624.3] | | |

February 19, 2016

| Proceeds from sale of put options | 16.6 | | | | — | | | | — | | |

| Other comprehensive loss | — | | | — | | | | — | | | | — | | | | (464.5 | | ) | | (464.5 | | ) |

| Premiums for and settlement of equity options | — | | | — | | | | (14.0 | | ) | | — | | | | — | | | | (14.0 | | ) |

| Repurchase and retirement of common stock | (10.4 | ) | | (0.1 | | ) | | (382.2 | | ) | | (1,133.5 | | ) | | — | | | | (1,515.8 | | ) |

| Convertible debenture repurchases and conversions | — | | | — | | | | (1,287.8 | | ) | | — | | | | — | | | | (1,287.8 | | ) |

| Equity Units contract payments and issuance costs | — | | | — | | | | (130.9 | | ) | | — | | | | — | | | | (130.9 | | ) |

| December 31, 2015 | 261.2 | | | $ | 2.6 | | | $ | 8,555.6 | | | $ | 14,778.5 | | | $ | (292.6 | ) | | $ | 23,044.1 | |

December 31, 2015

We also conduct business through an arrangement with another BCBS licensee in South Carolina.

In addition, we conduct business through our recently acquired Simply Healthcare Holdings, Inc., or Simply Healthcare, subsidiary in Florida.

We control a number of bank accounts that are used exclusively to hold customer funds for the administration of customer benefits.

At December 31, 2015 we held $122.6 of customer cash with an offsetting liability in other current liabilities.

The market value of loaned securities and that of the collateral pledged can fluctuate in non-synchronized fashions.

To the extent the loaned securities' value appreciates faster or depreciates slower than the value of the collateral pledged, we are exposed to the risk of the shortfall.

As a primary mitigating mechanism, the loaned securities and collateral pledged are marked to market on a daily basis and the shortfall, if any, is collected accordingly.

Secondarily, the collateral level is set at 102% of the value of the loaned securities, which provides a cushion before any shortfall arises.

The investment of the cash collateral is subject to market risk, which is managed by limiting the investments to higher quality and shorter duration instruments.

Premium payments from contracted government agencies are based on eligibility lists produced by the government agencies.

Additionally, delays in annual premium rate changes from contracted government agencies require that we defer the recognition of any increases to the period in which the premium rates become final.

The value of the impact can be significant in the period in which it is recognized dependent on the magnitude of the premium rate increase, the membership to which it applies and the length of the delay between the effective date of the rate increase and the final contract date.

Premium rate decreases are recognized in the period the change in premium rate becomes effective and the change in the rate is known, which may be prior to the period when the contract amendment affecting the rate is finalized.

We charge these self-funded groups an

The final calculation and payment of the annual HIP Fee occurs in the third quarter each year and our portion of the HIP Fee for 2015 and 2014 was $1,207.5 and $893.3, respectively.

The annual HIP Fee to be allocated to all health insurers remains at $11,300.0 for 2016, has been suspended for 2017 and will resume and be increased to $14,300.0 for 2018.

For 2019 and beyond, the annual HIP Fee will equal the amount for the preceding year increased by the rate of premium growth for the preceding year less the rate of growth in the consumer price index for the preceding calendar year.

This amendment requires that all deferred tax assets and liabilities, along with any related valuation allowance, be classified as noncurrent on the balance sheet.

Prior to the

issuance of ASU 2015-17, deferred taxes were required to be presented as a net current asset or liability and a net noncurrent asset or liability.

We adopted the provisions of ASU 2015-17 upon issuance and prior period amounts have been reclassified to conform to the current period presentation.

As of December 31, 2014, the previously reported balance of our net current deferred tax assets of $280.4 was reclassified in the consolidated balance sheet and netted against the net long-term deferred tax liabilities.

The adoption of ASU 2015-17 did not impact our consolidated financial position, results of operations or cash flows.

In September 2015, the FASB issued Accounting Standards Update No. 2015-16, Business Combinations (Topic 805): Simplifying the Accounting for Measurement-Period Adjustments, or ASU 2015-16.

This amendment requires the acquirer in a business combination to recognize in the reporting period in which adjustment amounts are determined, any adjustments to provisional amounts that are identified during the measurement period, calculated as if the accounting had been completed at the acquisition date.

Prior to the issuance of ASU 2015-16, an acquirer was required to restate prior period financial statements as of the acquisition date for adjustments to provisional amounts.

The amendments in ASU 2015-16 are to be applied prospectively upon adoption.

In April 2015, the FASB issued Accounting Standards Update No. 2015-03, Interest - Imputation of Interest (Subtopic 835-30): Simplifying the Presentation of Debt Issuance Costs, or ASU 2015-03.

ASU 2015-03 amends current presentation guidance by requiring that debt issuance costs related to a recognized debt liability be presented in the balance sheet as a direct deduction from the carrying amount of that debt liability, consistent with debt discounts.

Prior to the issuance of ASU 2015-03, debt issuance costs were required to be presented as an asset in the balance sheet.

We adopted the provisions of ASU 2015-03 upon issuance and prior period amounts have been reclassified to conform to the current period presentation.

February 24, 2015

| | | | | | | | |

| Deferred tax assets, net | 280.4 | | | | 383.0 | | |

| Assets held for sale | — | | | | 906.9 | | |

| Total assets | $ | 62,065.0 | | | $ | 59,574.5 | |

| Liabilities held for sale | — | | | | 181.4 | | |

| | | | | | | | | | | | |

| --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- |

| | | | | | | | | | | | |

| January 1, 2012 | 339.4 | | | $ | 3.4 | | | $ | 11,679.2 | | | $ | 11,490.7 | | | $ | 114.9 | | | $ | 23,288.2 | |

| Other comprehensive income | — | | | — | | | | — | | | | — | | | | 184.2 | | | | 184.2 | | |

| Repurchase and retirement of common stock | (39.7 | ) | | (0.4 | | ) | | (1,368.5 | | ) | | (1,127.9 | | ) | | — | | | | (2,496.8 | | ) |

| Issuance of convertible debentures | — | | | — | | | | 331.5 | | | | — | | | | — | | | | 331.5 | | |

| Conversion of stock awards in connection with AMERIGROUP Corporation acquisition | — | | | — | | | | 19.7 | | | | — | | | | — | | | | 19.7 | | |

December 31, 2014

On November 5, 2014, the shareholders of the Company approved a proposal to amend our articles of incorporation to change our name to Anthem, Inc. from WellPoint, Inc. The name change was effective December 2, 2014.

We also conduct business through arrangements with other BCBS licensees in the states of South Carolina and Texas.

In addition, certain other immaterial reclassifications have been made in the current year.

Accordingly, the market value of the securities on loan to each borrower is monitored daily and the borrower is required to deliver additional collateral if the market value of the securities on loan exceeds the market value of collateral delivered.

Stock options are granted for a fixed number of

Federal premium subsidies are available only for certain public exchange products.

This ASU provides an acquired entity, or any subsidiaries of the acquired entity, with the option to apply pushdown accounting in its separate financial statements upon occurrence of an event in which an acquirer obtains control of the acquired entity.

The election to apply pushdown accounting can be made either in the period in which the change-in-control event occurs, or in a subsequent period.

An election to apply pushdown accounting in a reporting period after the reporting period in which the change-in-control event occurred would be considered a change in accounting principle.

If pushdown accounting is applied to an individual change-in-control event, that election is irrevocable.

Effective January 1, 2014, we adopted the provisions of ASU No. 2011-06, Other Expenses (Topic 720): Fees Paid to the Federal Government by Health Insurers (a consensus of the FASB Emerging Issues Task Force), or ASU 2011-06.

The final calculation and payment of the HIP Fee occurred in the third quarter of 2014.

ASU 2011-06 addresses how the HIP Fee should be recognized and classified in the financial statements of health insurers.

In April 2014, the FASB issued ASU No. 2014-08, Presentation of Financial Statements (Topic 205) and Property, Plant and Equipment (Topic 360): Reporting Discontinued Operations and Disclosures of Disposals of Components of an Entity, or ASU 2014-08.

ASU 2014-08 changes the criteria for determining which disposals can be presented as discontinued operations and modifies related disclosure requirements.

Under the new guidance, a discontinued operation is defined as a disposal of a component of an entity or a group of components of an entity that is disposed of or is classified as held for sale and represents a strategic shift that has (or will have) a major effect on an entity’s operations and financial results.

ASU 2014-08 is effective prospectively to new disposals and new classifications of disposal groups as held for sale in interim and annual periods beginning on or after December 15, 2014, with early adoption permitted.

Amerigroup

In December 2012, we completed our acquisition of Amerigroup, one of the nation’s leading managed care companies focused on meeting the health care needs of financially vulnerable Americans.

This acquisition furthers our goal of creating better health care quality at more affordable prices for our customers.

Amerigroup also advances our capabilities in effectively and efficiently serving the growing Medicaid population, including the expanding dual eligible population, seniors, persons with disabilities and long-term services and support markets.

We paid $92.00 per share in cash to acquire all of the outstanding shares of Amerigroup for total cash consideration of $4,755.8.

In addition, 0.5 shares of Amerigroup restricted stock converted to 0.7 shares of Anthem restricted stock, valued at $17.1, and 0.1 shares underlying Amerigroup stock options converted to 0.2 shares underlying Anthem stock options, valued at $2.6.

We also incurred $24.0 of transaction costs, which were recorded to general and administrative expense during the year ended December 31, 2012.

In 2013, we finalized our purchase accounting and made a measurement period adjustment to the fair value of certain assets acquired and liabilities assumed at the date of acquisition.

We carried out an evaluation as of December 31, [removed: 2014,] [added: 2015,] under the supervision and with the participation of our management, including our Chief Executive Officer and Chief Financial Officer, of the effectiveness of the design and operation of our disclosure controls and procedures as defined in Rule 13a-15(e) of the [removed: Securities] Exchange [removed: Act of 1934, as amended, or the Exchange] Act.

Based upon that evaluation, the Chief Executive Officer and Chief Financial Officer concluded that our disclosure controls and procedures are effective in timely alerting them to material information relating to [added: us (including our consolidated subsidiaries) required to be disclosed in our reports under the Exchange Act.]

Management, under the supervision and with the participation of the principal executive officer and principal financial officer, assessed the effectiveness of the Company’s Internal Control as of December 31, [removed: 2014.][added: 2015.]

Based on management’s assessment, [added: which excluded an assessment of Internal Control of the acquired operations of Simply Healthcare Holdings, Inc.,] management has concluded that the Company’s Internal Control was effective as of December 31, [removed: 2014] [added: 2015] to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external reporting purposes in accordance with GAAP.

Ernst & Young LLP, the Company’s independent registered public accounting firm, has audited the consolidated financial statements of the Company for the year ended December 31, [removed: 2014,] [added: 2015,] and has also issued an audit report dated February [removed: 24, 2015,] [added: 19, 2016,] on the effectiveness of the Company’s internal control over financial reporting as of December 31, [removed: 2014,] [added: 2015,] which is included in this Annual Report on Form 10-K.

| [added: Chairman,] President and Chief Executive Officer | | Executive Vice President and Chief Financial Officer |

There have been no changes in our internal control over financial reporting that occurred during the three months ended December 31, [removed: 2014] [added: 2015] that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

We have audited Anthem, Inc.’s internal control over financial reporting as of December 31, [removed: 2014,] [added: 2015,] based on criteria established in Internal Control–Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission (2013 framework) (the COSO criteria).

In our opinion, Anthem, Inc. maintained, in all material respects, effective internal control over financial reporting as of December 31, [removed: 2014,] [added: 2015,] based on the COSO criteria.

We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States), the consolidated balance sheets of Anthem, Inc. as of December 31, [removed: 2014] [added: 2015] and [removed: 2013,] [added: 2014,] and the related consolidated statements of income, comprehensive income, shareholders’ equity, and cash flows for each of the three years in the period ended December 31, [removed: 2014] [added: 2015] of Anthem, Inc. and our report dated February [removed: 24, 2015] [added: 19, 2016] expressed an unqualified opinion thereon.

\-145\-

The Company completed its acquisition of Simply Healthcare Holdings, Inc. on February 17, 2015.

As permitted by the U.S. Securities and Exchange Commission, management's assessment as of December 31, 2015 did not include the Internal Control of the former Simply Healthcare Holdings, Inc., whose balance sheet is included in the Company's consolidated financial statements as of December 31, 2015.

Such operations of Simply Healthcare Holdings, Inc. constituted $249.6 million and $87.2 million of the Company's total assets and net assets, respectively, as of December 31, 2015, and $1,090.6 million and $18.7 million of the Company's operating revenue and net income, respectively, for the year then ended.

\-146\-

As indicated in the accompanying Management's Report on Internal Control Over Financial Reporting, management's assessment of and conclusion on the effectiveness of internal control over financial reporting did not include the internal controls of the former Simply Healthcare Holdings, Inc., which is included in the 2015 consolidated financial statements of Anthem, Inc. and constituted $249.6 million and $87.2 million of total and net assets, respectively, as of December 31, 2015 and $1,090.6 million and $18.7 million of operating revenues and net income, respectively, for the year then ended.

Our audit of internal controls over financial reporting of Anthem, Inc. also did not include an evaluation of the internal controls over financial reporting of Simply Healthcare Holdings, Inc.

February 19, 2016

\-147\-

\-142\-

us (including our consolidated subsidiaries) required to be disclosed in our reports under the Exchange Act.

| | | |

\-143\-

February 24, 2015

\-144\-

The information required by this Item concerning our Executive Officers, Directors and nominees for Director, Audit Committee members and financial expert(s) and concerning disclosure of delinquent filers under Section 16(a) of the Exchange Act and our Standards of Business Conduct is incorporated herein by reference from our definitive Proxy Statement for our [removed: 2015] [added: 2016] Annual Meeting of Shareholders, which will be filed with the SEC pursuant to Regulation 14A within 120 days after the end of our last fiscal year.

The information required by this Item concerning remuneration of our Executive Officers and Directors, material transactions involving such Executive Officers and Directors and Compensation Committee interlocks, as well as the Compensation Committee Report, are incorporated herein by reference from our definitive Proxy Statement for our [removed: 2015] [added: 2016] Annual Meeting of Shareholders, which will be filed with the SEC pursuant to Regulation 14A within 120 days after the end of our last fiscal year.

The information required by this Item concerning the stock ownership of management and five percent beneficial owners and securities authorized for issuance under equity compensation plans is incorporated herein by reference from our definitive Proxy Statement for our [removed: 2015] [added: 2016] Annual Meeting of Shareholders, which will be filed with the SEC pursuant to Regulation 14A within 120 days after the end of our last fiscal year.

The information required by this Item concerning certain relationships and related person transactions and director independence is incorporated herein by reference from our definitive Proxy Statement for our [removed: 2015] [added: 2016] Annual Meeting of Shareholders, which will be filed with the SEC pursuant to Regulation 14A within 120 days after the end of our last fiscal year.

The information required by this Item concerning principal accounting fees and services is incorporated herein by reference from our definitive Proxy Statement for our [removed: 2015] [added: 2016] Annual Meeting of Shareholders, which will be filed with the SEC pursuant to Regulation 14A within 120 days after the end of our last fiscal year.

\-148\-

\-145\-

Consolidated Balance Sheets as of December 31, [removed: 2014] [added: 2015] and [removed: 2013][added: 2014]

Consolidated Statements of Income for the years ended December 31, [added: 2015,] 2014, [removed: 2013,] and [removed: 2012][added: 2013]

Consolidated Statements of Comprehensive Income for the years ended December 31, [added: 2015,] 2014, [removed: 2013,] and [removed: 2012][added: 2013]

Consolidated Statements of Shareholders’ Equity for the years ended December 31, [removed: 2014, 2013] [added: 2015, 2014] and [removed: 2012][added: 2013]

Consolidated Statements of Cash Flows for the years ended December 31, [removed: 2014, 2013] [added: 2015, 2014] and [removed: 2012][added: 2013]

| (In millions, except share data) | December 31, [removed: 2014] [added: 2015] | | | | December 31, [removed: 2013] [added: 2014] | | |

| Cash and cash equivalents | $ | [removed: 739.8] [added: 492.3] | | | $ | [removed: 1,174.5] [added: 739.8] | |

| Fixed maturity securities (amortized cost of [removed: $1,798.8] [added: $889.6] and [removed: $897.4)] [added: $1,798.8)] | [removed: 1,753.4] [added: 794.0] | | | | [removed: 900.4] [added: 1,753.4] | | |

| Equity securities (cost of [removed: $148.7] [added: $53.0] and [removed: $52.6)] [added: $148.7)] | [removed: 206.7] [added: 82.0] | | | | [removed: 89.6] [added: 206.7] | | |

| Other invested assets, current | [removed: 5.7] [added: 5.9] | | | | [removed: 1.9] [added: 5.7] | | |

| Other receivables | [removed: 44.6] [added: 77.0] | | | | [removed: 35.6] [added: 44.6] | | |

| Income taxes receivable | [removed: 227.9] [added: 236.5] | | | | [removed: 154.4] [added: 227.9] | | |

| Net due from subsidiaries | [removed: 327.3] [added: —] | | | | [removed: 893.4] [added: 327.3] | | |

| Securities lending collateral | [removed: 224.8] [added: 130.6] | | | | [removed: 46.2] [added: 224.8] | | |

| Deferred tax assets, net | [removed: 22.0] [added: 146.6] | | | | [removed: 11.8] [added: —] | | |

| Other current assets | [removed: 233.2] [added: 394.0] | | | | [removed: 183.1] [added: 232.5] | | |

| Total current assets | [removed: 3,785.4] [added: 2,212.3] | | | | [removed: 3,490.9] [added: 3,762.7] | | |

| Equity securities (cost of [removed: $6.6] [added: $6.5] and [removed: $6.7)] [added: $6.6)] | [removed: 6.6] [added: 6.5] | | | | [removed: 6.7] [added: 6.6] | | |

| Other invested assets, long-term | [removed: 654.5] [added: 630.1] | | | | [removed: 615.7] [added: 654.5] | | |

| Property and equipment, net | [removed: 134.0] [added: 116.8] | | | | [removed: 148.3] [added: 134.0] | | |

| Deferred tax [removed: assets,] [added: liabilities,] net | — | | | | [removed: 2.9] [added: 15.2] | | |

| Investments in subsidiaries | [removed: 35,647.2] [added: 36,524.4] | | | | [removed: 35,516.2] [added: 35,647.2] | | |

| Other noncurrent assets | [removed: 220.6] [added: 129.8] | | | | [removed: 152.3] [added: 113.0] | | |

| Accounts payable and accrued expenses | $ | [removed: 599.9] [added: 615.5] | | | $ | [removed: 592.1] [added: 599.9] | |

| Security trades pending payable | [removed: 14.0] [added: 13.4] | | | | [removed: 28.9] [added: 14.0] | | |

| Securities lending payable | [removed: 224.8] [added: 130.6] | | | | [removed: 46.2] [added: 224.8] | | |

| Current portion of long-term debt | [removed: 625.0] [added: —] | | | | [removed: 518.0] [added: 624.3] | | |

| Other current liabilities | [removed: 280.1] [added: 278.1] | | | | [removed: 213.4] [added: 280.1] | | |

| Total current liabilities | [removed: 1,743.8] [added: 1,130.8] | | | | [removed: 1,398.6] [added: 1,743.1] | | |

| Long-term debt, less current portion | [removed: 14,102.3] [added: 15,299.6] | | | | [removed: 13,548.6] [added: 13,994.7] | | |

| Other noncurrent liabilities | [removed: 313.7] [added: 292.0] | | | | [removed: 220.6] [added: 313.7] | | |

| Common stock, par value $0.01, shares authorized - 900,000,000; shares issued and outstanding - [removed: 268,109,932] [added: 261,238,188] and [removed: 293,273,830] [added: 268,109,932] | [removed: 2.7] [added: 2.6] | | | | [removed: 2.9] [added: 2.7] | | |

| Additional paid-in capital | [removed: 10,062.3] [added: 8,555.6] | | | | [removed: 10,765.2] [added: 10,062.3] | | |

| Retained earnings | [removed: 14,014.4] [added: 14,778.5] | | | | [removed: 13,813.9] [added: 14,014.4] | | |

| Accumulated other comprehensive [added: (loss)] income | [removed: 171.9] [added: (292.6] | | [added: )] | | [removed: 183.2] [added: 171.9] | | |

| Total shareholders’ equity | [removed: 24,251.3] [added: 23,044.1] | | | | [removed: 24,765.2] [added: 24,251.3] | | |

| Total liabilities and shareholders’ equity | $ | [removed: 40,448.3] [added: 39,766.5] | | | $ | [removed: 39,933.0] [added: 40,318.0] | |

| (In millions) | [removed: 2014] [added: 2015] | | | | [removed: 2013] [added: 2014] | | | | [removed: 2012] [added: 2013] | | |

| Net investment income | $ | [removed: 87.4] [added: 99.7] | | | $ | [removed: 61.2] [added: 87.4] | | | $ | [removed: 95.3] [added: 61.2] | |

| Net realized losses on investments | [removed: (27.1] [added: (3.8] | | ) | | [removed: (83.2] [added: (27.1] | | ) | | [removed: (28.5] [added: (83.2] | | ) |

| Total assets | $ | 39,766.5 | | | $ | 40,318.0 | |

| Net due to subsidiaries | 93.2 | | | | — | | |

| Total liabilities | 16,722.4 | | | | 16,066.7 | | |

| Other, net | (10.2 | | ) | | — | | | | — | | |

| Proceeds from sale of put options | 16.6 | | | | — | | | | — | | |

December 31, 2015

| Ronald W. Penczek | | | |

| 4.4 | | | Subordinated Indenture, dated as of May 12, 2015, between the Company and The Bank of New York Mellon Trust Company, N.A., as trustee, incorporated by reference to Exhibit 4.1 to the Company’s Current Report on Form 8-K filed on May 12, 2015. | |

| | | | (a) | First Supplemental Indenture to the Subordinated Indenture, dated as of May 12, 2015, between the Company and The Bank of New York Mellon Trust Company, N.A., as trustee, including the Form of 1.90% Remarketable Subordinated Notes due 2028, incorporated by reference to Exhibit 4.2 to the Company’s Current Report on Form 8-K filed on May 12, 2015. |

| 4.5 | | | Purchase Contract and Pledge Agreement, dated as of May 12, 2015, between the Company and The Bank of New York Mellon Trust Company, N.A., as Purchase Contract Agent, Collateral Agent, Custodial Agent and Securities Intermediary, including the Form of Remarketing Agreement, Form of Corporate Units Certificate and Form of Treasury Units Certificate, incorporated by reference to Exhibit 4.4 to the Company’s Current Report on Form 8-K filed on May 12, 2015. | |

\-159\-

| 10.15 | | | Commitment letter, dated as of July 23, 2015, by and among Anthem, Inc., Bank of America, N.A., Merrill Lynch, Pierce, Fenner & Smith Incorporated, Credit Suisse Securities (USA) LLC, Credit Suisse AG, UBS AG and UBS Securities LLC, incorporated by reference to Exhibit 10.1 to the Company's Current Report on Form 8-K filed on July 27, 2015. | |

| | | | (a) | Bridge Facility Joinder Agreement, dated as of August 25, 2015, among Anthem, Inc. and the other parties thereto, incorporated by reference to Exhibit 10.2 to the Company's Registration Statement on Form S-4 filed on September 30, 2015 (Registration No. 333-207218). |

\-160\-

\-146\-

| Total assets | $ | 40,448.3 | | | $ | 39,933.0 | |

| Deferred tax liabilities, net | 37.2 | | | | — | | |

| Total liabilities | 16,197.0 | | | | 15,167.8 | | |

\-147\-

\-148\-

December 31, 2014

| John E. Gallina | | | |

| /s/ JOHN H. SHORT | | Director | February 24, 2015 |

| John H. Short | | | |

| | | | | |

| --- | --- | --- | --- | --- |

| | | | | |

| Exhibit Number | | | | Exhibit |

| | | | | |

| | | | | |

| | | | | |

| | | | (a) | Amendment No. 1 to Agreement and Plan of Merger, dated as of October 2, 2012, by and among WellPoint, Inc. (now known as "Anthem, Inc."), WellPoint Merger Sub, Inc. and AMERIGROUP Corporation, incorporated by reference to Exhibit 2.1(a) to the Company’s Quarterly Report on Form 10-Q for the quarter ended September 30, 2012. |

| | | | | |

| | | | | |

| | | | | |

| 4.1 | | | Amended and Restated Articles of Incorporation of the Company, as amended effective December 2, 2014 (included in Exhibit 3.1). | |

| | | | | |

| 4.2 | | | By-laws of the Company, as amended effective December 2, 2014 (Included in Exhibit 3.2). | |

| | | | | |

| | | | (a) | Form of the Company’s 5.950% Notes due 2034 (included in Exhibit 4.3). |

| | | | (t) | Form of 4.850% Notes due 2054, incorporated by reference to Exhibit 4.5 to the Company’s Current Report on Form 8-K filed on August 12, 2014. |

| | | | (a) | Form of the 2.750% Senior Convertible Debentures due 2042 (included in Exhibit 4.5). |

| 10.5 | | * | WellPoint, Inc. Executive Salary Continuation Plan effective January 1, 2006, incorporated by reference to Exhibit 10.59 to the Company’s Quarterly Report on Form 10-Q for the quarter ended June 30, 2006, SEC File No. 001-016751. | |

| 10.10 | | * | Employment Agreement between Anthem Insurance Companies, Inc. and Samuel R. Nussbaum, M.D., dated as of January 2, 2001 (with respect to Section 5(b) only), incorporated by reference to Exhibit 10.5 to the Company’s Registration Statement on Form S-1 (Registration No. 333-67714). | |

| | | | (a) | Amendment dated September 30, 2011 to Employment Agreement between Anthem Insurance Companies, Inc. and Samuel R. Nussbaum, M.D., dated as of January 2, 2001, incorporated by reference to Exhibit 10.12 to the Company’s Quarterly Report on Form 10-Q for the quarter ended September 30, 2011. |

| 10.12 | | * | Employment Agreement between the Company and Richard C. Zoretic dated as of July 9, 2012 and effective December 24, 2012, incorporated by reference to Exhibit 10.16 to the Company’s Annual Report on Form 10-K for the year ended December 31, 2012, filed on February 22, 2013. | |

| | | | (a) | First Amendment to Employment Agreement between the Company and Richard C. Zoretic dated as of October 26, 2012 and effective December 24, 2012, incorporated by reference to Exhibit 10.16(a) to the Company’s Annual Report on Form 10-K for the year ended December 31, 2012, filed on February 22, 2013. |

| 10.16 | | * | Offer Letter, by and between WellPoint, Inc. and Joseph R. Swedish, dated as of February 6, 2013, incorporated by reference to Exhibit 10.1 to the Company's Current Report on Form 8-K filed on February 12, 2013. | |