AET 11-K 2012


UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC 20549
FORM 11-K
(Mark One):
 
[X]    ANNUAL REPORT PURSUANT TO SECTION 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934.
For the fiscal year ended December 31, 2012
 
OR
 
[ ]    TRANSITION REPORT PURSUANT TO SECTION 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934.
For the transition period from ___________ to ____________
 
Commission file number 1-16095


A. Full title of the plan and the address of the plan, if different from that of the issuer named below:

Aetna 401(k) Plan
 
B.   Name of issuer of the securities held pursuant to the plan and the address of its principal executive office:

Aetna Inc.
151 Farmington Avenue
Hartford, Connecticut 06156
 
REQUIRED INFORMATION

1)
Financial Statements and Schedules (and Notes thereto)
2)
Consent of Independent Registered Public Accounting Firm to Incorporation By Reference (attached)

SIGNATURES
 
Aetna 401(k) Plan. Pursuant to the requirements of the Securities Exchange Act of 1934, the Plan Administrators have duly caused this Annual Report to be signed on its behalf by the undersigned hereunto duly authorized.
 
Aetna 401(k) Plan

Date: June 27, 2013
By:
/s/ Deanna Fidler
 
 
Name: Deanna Fidler
 
 
Tittle: Senior Vice President, Human Resources






AETNA 401(k) PLAN
Financial Statements and Supplemental Schedule
December 31, 2012 and 2011

Table of Contents

 
Page

Report of Independent Registered Public Accounting Firm
1

 
 
Statements of Net Assets Available for Benefits as of December 31, 2012 and 2011
2

 
 
Statement of Changes in Net Assets Available for Benefits for the Year Ended
 
    December 31, 2012
3

 
 
Notes to Financial Statements
4-15

 
 
Schedule I - Schedule H, line 4i - Schedule of Assets (Held at End of Year)
16

 
 


Note:
The following schedules are required by Section 103 of the Employee Retirement Income Security Act of 1974, but have not been included as they are not applicable:
Schedule of Investment Assets (Both Acquired and Disposed of Within the Plan Year)
Schedule of Reportable Transactions
Nonexempt Transactions
Schedule of Loans or Fixed Income Obligations in Default or Classified as Uncollectible
Schedule of Leases in Default or Classified as Uncollectible










Report of Independent Registered Public Accounting Firm


The Plan Administrator
Aetna 401(k) Plan:

We have audited the accompanying statements of net assets available for benefits of Aetna 401(k) Plan (the Plan) as of December 31, 2012 and 2011, and the related statement of changes in net assets available for benefits for the year ended December 31, 2012. These financial statements are the responsibility of the Plan's management. Our responsibility is to express an opinion on these financial statements based on our audits.

We conducted our audits in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion.

In our opinion, the financial statements referred to above present fairly, in all material respects, the net assets available for benefits of the Plan as of December 31, 2012 and 2011, and the changes in net assets available for benefits for the year ended December 31, 2012, in conformity with accounting principles generally accepted in the United States of America.

Our audits were performed for the purpose of forming an opinion on the basic financial statements taken as a whole. The supplemental Schedule of Assets (Held at End of Year) is presented for the purpose of additional analysis and is not a required part of the basic financial statements but is supplementary information required by the Department of Labor's Rules and Regulations for Reporting and Disclosure under the Employee Retirement Income Security Act of 1974. This supplemental schedule is the responsibility of the Plan's management. The supplemental schedule has been subjected to the auditing procedures applied in the audits of the basic financial statements and, in our opinion, is fairly stated in all material respects in relation to the basic financial statements taken as a whole.

/s/ KPMG LLP


Hartford, Connecticut
June 27, 2013



1




AETNA 401(k) PLAN
Statements of Net Assets Available for Benefits
December 31, 2012 and 2011
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
2012
 
2011
Assets:
 
 
 
 
 
 
 
 
 
Investments at fair value:
 
 
 
 
 
 
Common/collective trusts
$
2,048,496,978

$
1,688,589,188

 
 
Stable value option
 
1,815,430,281

 
1,804,301,023

 
 
Aetna common stock
 
378,780,300

 
373,026,851

 
 
Money market funds and self-directed accounts
 
22,725,573

 
21,122,525

 
 
 
 
 
Total investments
 
4,265,433,132

 
3,887,039,587

 
Participant loans
 
92,775,559

 
86,414,573

 
Receivables:
 
 
 
 
 
 
 
Employer contributions
 
7,543,610

 
6,774,830

 
 
Employee contributions
 
4,762,920

 
3,703,113

 
 
Investment income
 
594

 
219,030

 
 
Other receivables
 
911,147

 
242,454

 
 
 
 
 
Total receivables
 
13,218,271

 
10,939,427

 
 
 
 
 
Total assets
 
4,371,426,962

 
3,984,393,587

Liabilities:
 
 
 
 
 
 
 
Accrued expenses
 
1,476,451

 
450,466

 
Unsettled trades and other liabilities
 
—    

 
337,864

 
 
 
 
 
Total liabilities
 
1,476,451

 
788,330

 
 
 
 
 
Net assets reflecting all investments at fair value
 
4,369,950,511

 
3,983,605,257

 
Adjustment from fair value to contract value for fully
 
 
 
 
 
 
benefit-responsive investment contracts
 
(99,495,316
)
 
(87,794,883
)
 
 
 
 
 
Net assets available for benefits
$
4,270,455,195

$
3,895,810,374


See accompanying notes to the financial statements.


2



AETNA 401(k) PLAN
Statement of Changes in Net Assets Available for Benefits
Year ended December 31, 2012
 
 
 
Additions to assets attributed to
 
 
 
Investment income:
 
 
 
 
Net appreciation in fair value of investments:
 
 
 
 
 
Common/collective trusts
$
263,380,798

 
 
 
Aetna common stock
 
35,116,475

 
 
 
Self-directed accounts
 
1,680,508

 
 
 
 
 
Total appreciation
 
300,177,781

 
 
Interest
 
 
46,896,846

 
 
Dividends
 
 
6,038,312

 
 
Interest income on notes receivable from participants
 
3,878,988

 
 
 
 
 
Total investment income
 
356,991,927

 
Contributions:
 
 
 
 
Participant
 
182,805,265

 
 
Employer
 
 
118,238,818

 
 
 
 
 
Total contributions
 
301,044,083

 
 
 
 
 
Total additions
 
658,036,010

Deductions:
 
 
 
 
 
Benefits paid to participants
 
281,380,116

 
Administrative expenses
 
6,752,624

 
 
 
 
 
Total deductions
 
288,132,740

 
 
 
 
 
Net increase
 
369,903,270

Transfer from other plans (Note 11)
 
4,741,551

Net assets available for benefits:
 
 
 
Beginning of year
 
3,895,810,374

 
End of year
 
$
4,270,455,195


See accompanying notes to the financial statements.


3

AETNA 401(k) PLAN
Notes to Financial Statements
December 31, 2012 and 2011

(1)
Description of Plan
The following description of the Aetna 401(k) Plan (the Plan or 401(k)) provides only general information. Participants should refer to the Plan document for a more complete description of the Plan's provisions.

(a)
General
The Plan, a defined contribution plan, is subject to the provisions of the Employee Retirement Income Security Act of 1974 (ERISA). The Plan is a voluntary savings plan that provides retirement income to eligible employees. Effective January 1, 2002, employees of Aetna Inc. (the Company) are immediately eligible for Plan participation upon the employee's employment commencement date.

(b)
Administration
The Plan has multiple investment options for eligible employees. The Plan's recordkeeper is ING Institutional Plan Services, LLC (ING IPS). The trustee of the Plan is State Street Bank (State Street).

(c)
Contributions

Qualified Automatic Contribution Arrangement
Effective December 22, 2010, the Company instituted a qualified automatic contribution arrangement in the Plan. The Company automatically enrolled into the Plan all eligible employees who were not currently in the Plan and who have not made an election not to enroll in the Plan. In addition, effective January 1, 2011, new and rehired employees will be automatically enrolled within ten days of their hire date. All employees will be automatically enrolled in the Plan at a 3% pre‑tax contribution rate unless the employee chooses a different rate or opts out of participation. Auto‑enrolled participants will have the automatic rate escalator feature enabled, which will automatically increase the pretax contribution rate by 1% each year to a maximum of 6% of eligible pay. To the extent that no investment election is made, contributions will be invested in the Target Retirement Fund that most closely matches the participant's Social Security full retirement age. Participants may choose to change their contribution rate or reallocate their contributions among other investment funds available in the Plan.

Effective December 2010, participants may elect to make a Roth in‑plan conversion.

Participant Contributions
Nonhighly compensated employees may elect to contribute 1% to 40% of their eligible pay on a pre‑tax basis and/or on an after-tax basis as a Roth 401(k) contribution. Participants may also contribute 1% to 5% of their eligible pay on an after‑tax basis as a traditional (non Roth account) after‑tax contribution.


4

AETNA 401(k) PLAN
Notes to Financial Statements
December 31, 2012 and 2011




Highly compensated employees1 may elect to contribute 1% to 20% of their eligible pay on a pre‑tax basis and/or on an after‑tax basis as a Roth 401(k) contribution, but are not allowed to make traditional after‑tax contributions.

Eligible participants may contribute both pretax and Roth 401(k) contributions up to a maximum of $17,000 in 2012 and $16,500 in 2011 in accordance with the Internal Revenue Code (IRC) qualified retirement plan limits.

Employees age 50 and older are allowed to make an additional pretax contribution or Roth 401(k) contribution, or both, to the Plan over and above the IRS plan limits. The maximum amount allowed for catch‑up contributions was $5,500 for both tax years ended December 31, 2012 and 2011.

Lastly, participants may contribute amounts representing eligible rollover distributions from eligible retirement plans. These rollover amounts are considered to be participant contributions.

Employer Contributions
Participants are immediately eligible to receive a 100% employer company match contribution on the first 6% of eligible pay contributed to the Plan on a pretax and/or Roth 401(k) basis. The matching contributions are made in cash and invested according to each participant's investment elections.

Participant pre‑tax contributions and employer contributions, and earnings thereon, are not taxed until withdrawal. Contributions are funded after each bi‑weekly payroll cycle.

(d)
Participant Investment Elections
Participants may direct their investment contributions and employer contributions among twenty investment options offered by the Plan. The twenty investment options currently offered include seven investment funds, ten target retirement funds, Stable Value Option (SVO), Aetna Common Stock Fund, and a self‑directed account. Participants are allowed to change their investment options subject to certain restrictions. For example, certain investment funds are subject to a 30‑day transfer restriction, which prevents a participant from transferring assets back into the same fund that assets were recently sold from for a period of 30 days. In addition, participant elections to invest in the Aetna Common Stock Fund are limited to no more than 20% of the participant's account balance.

(e)
Participant Accounts
On a bi‑weekly basis, each contributing participant's account is credited with the participant's contribution and the Company match. Earnings on investments are allocated based on account balances and are credited daily. Investment fund earnings are net of expenses.

________________________

1 Employees whose prior-year eligible compensation exceeded $110,000 for both Plan year 2012 and 2011.

5

AETNA 401(k) PLAN
Notes to Financial Statements
December 31, 2012 and 2011




(f)
Vesting
Participants are vested in their deferral contributions plus actual earnings thereon. Participants are also immediately vested in the Company's matching contributions and earnings on those contributions.

(g)
Participant Loans
Participants may borrow from their Plan account the lesser of $50,000 or 50% of the current value of their vested account balances. Loans bear interest at prime plus 1% at the time granted. A $50 per loan origination fee is charged to participants upon withdrawal. The amounts held for loans receivable are stated at amortized cost. As of both December 31, 2012 and 2011, interest rates on loans outstanding range from 4.25% to 10.50%.

(h)
Payment of Benefits
On termination of service, a participant with a vested account greater than $5,000 may elect to take a lump sum distribution or roll over their account balance to another qualified plan or Individual Retirement Account (IRA), or may defer payment to a later date. Participants with a vested interest of $5,000 or less may elect to take a lump sum distribution or roll over their account balance to another qualified plan or IRA. Participants who do not make an election with balances ranging from $1,000 to $5,000 will automatically have their balances rolled over to a traditional/Roth IRA.

(i)
Participant Forfeitures
Forfeitures that occur may vary from year to year depending upon various Plan activities such as forfeited accounts transferred to the Plan from acquired companies, and vesting rules regarding former performance‑based match programs. If a participant terminates employment without being fully vested, any unvested Company contributions (and earnings thereon) will be forfeited in accordance with the Plan's terms. For the years ended December 31, 2012 and 2011, forfeited nonvested accounts totaled approximately $189,898 and $173,757, respectively. These forfeitures were or will be used to reduce future employer contributions or to offset plan expenses. In 2012 and 2011, forfeited nonvested accounts offset employer contributions by $18,227 and $281,976, respectively. Forfeitures are invested in the SVO fund (for additional information refer to Note 4).

(j)
Employee Stock Ownership Plan
Effective August 31, 2011, the portion of the Plan invested in the Aetna Common Stock fund was designated as an employee stock ownership plan (ESOP). Under the ESOP, a participant can elect to receive, in cash, dividends that are paid on stock in the Aetna Common Stock Fund.

(2)
Summary of Accounting Policies
(a)
Basis of Presentation
The accompanying financial statements of the Plan have been prepared on the accrual basis of accounting in accordance with U.S. generally accepted accounting principles (GAAP). The Company has evaluated subsequent events from the balance sheet date through the date the financial statements were issued and determined there were no other items to disclose.




6

AETNA 401(k) PLAN
Notes to Financial Statements
December 31, 2012 and 2011




(b)
Use of Estimates
The preparation of financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the amounts reported in these financial statements and accompanying notes. Accordingly, actual results may differ from reported results using those estimates.

(c)
Investment Valuation and Income Recognition
The Plan's investments are stated at fair value on the Statements of Net Assets Available for Benefits with an adjustment from fair value to contract value for fully benefit‑responsive investment contracts. Changes in the carrying value for fully benefit‑responsive investment contracts and changes in fair value for all other investments are included in net appreciation of fair value of investments on the Statement of Changes in Net Assets Available for Benefits.

Purchases and sales of securities are recorded on a trade‑date basis. Interest income is recorded on the accrual basis. Dividends are recorded on the ex‑dividend date.

(d)
Plan Expenses
Investment management and advisory fees are deducted from fund earnings. Administrative expenses relating to plan administration, trustee, accounting and legal fees are charged based on a percentage of the Plan's assets and allocated to each of the investment options.

(e)
Payment of Benefits
Benefits are recorded when paid. Benefit amounts due to participants are not reflected as liabilities but as a component of net assets available for benefits.

(f)
New Accounting Standards

Fair Value Measurements
Effective January 1, 2012, the Plan adopted new guidance relating to fair value measurements. This new guidance amended and clarified certain existing fair value measurement principles and required additional disclosures for all Level 3 assets, including a qualitative discussion about the sensitivity of Level 3 fair value measurements. The new requirements did not have an impact on the Plan's net assets available for benefits or changes therein.


7

AETNA 401(k) PLAN
Notes to Financial Statements
December 31, 2012 and 2011




(3)
Investments

The following table presents investments, at fair value, which represent 5% or more of the Plan's net assets:

 
 
 
 
 
 
 
 
As of December 31
 
 
 
 
 
 
 
 
2012
 
2011
Stable Value Option (Note 4)
$
1,815,430,281

 
1,804,301,023

SSgA S&P 500 Index SL Series Fund
 
686,500,635

 
602,537,243

Aetna Inc. Common Stock
 
378,780,300

 
373,026,851

SSgA International Index SL Series Fund
 
257,398,057

 
211,134,807

SSgA S&P MidCap Index NL Series Fund
 
226,910,020

 
—    


Fair Value Measurements
Certain of the plan's financial assets are measured at fair value in the Statements of Net Assets Available for Benefits. The fair values of these assets are based on valuations that include inputs that can be classified within one of three levels of a hierarchy established by GAAP. The following are the levels of the hierarchy and a brief description of the type of valuation information (inputs) that qualifies a financial asset or liability for each level:
Level 1 - Unadjusted quoted prices for identical assets in active markets.
Level 2 - Inputs other than Level 1 that are based on observable market data. These include: quoted prices for similar assets in active markets, quoted prices for identical assets in inactive markets, inputs that are observable that are not prices (such as interest rates, and credit risks) and inputs that are derived from or corroborated by observable markets.
Level 3 - Developed from unobservable data, reflecting management's own assumptions.

When quoted prices in active markets for identical assets are available, management uses these quoted market prices to determine the fair value of financial assets and classifies these assets as Level 1. In other cases where a quoted market price for identical assets in an active market is either not available or not observable, management estimates fair values using valuation methodologies based on available and observable market information. These financial assets would then be classified as Level 2. If quoted market prices are not available, management determines fair value using an analysis of each investment's financial performance. In these instances, financial assets may be classified in Level 3 even though there may be some significant inputs that may be observable.

The following is a description of the valuation methodologies used for the Plan's financial assets measured at fair value:

Common/Collective Trusts - Common/collective trusts invest in other collective investment funds otherwise known as the underlying funds. The Plan's interest in the common/collective trust funds are based on the fair values of the underlying investments of the underlying funds. The underlying assets consist of U.S. Treasury, agency, corporate, mortgage‑backed, commercial mortgage‑backed and


8

AETNA 401(k) PLAN
Notes to Financial Statements
December 31, 2012 and 2011




asset‑backed securities, U.S. and international stocks, bonds and cash and cash equivalents. Investments in collective trust funds are valued at their respective net asset value per share/unit on the valuation date.

Stable Value Option - Investments in insurance contracts are valued based on the fair value of the underlying assets plus the total wrap rebid value. Refer to note 4 for additional information related to the insurance contracts.

Money Market Funds - Investments in money market funds are stated at fair value, which approximates amortized cost because the underlying investments are comprised of short‑term, highly liquid investments.

Employer Common Stock and Participant Self‑Directed Accounts - Units in the Aetna Common Stock Fund are presented at fair value plus value of cash. Quoted market prices are used to value investments in Aetna common stock and investments in the participant self‑directed accounts.

The Plan's financial assets with changes in fair value that are measured on a recurring basis at December 31, 2012 and 2011 were as follows:

 
 
 
 
 
 
 
 
2012
 
 
 
 
 
 
 
 
Level 1
 
Level 2
 
Level 3
 
Total
Assets:
 
 
 
 
 
 
 
 
 
 
 
 
Common/collective trusts
$
—  

 
2,048,496,978

 
—  
 
2,048,496,978

 
Stable value option
 
—  

 
1,815,430,281

 
—  
 
1,815,430,281

 
Money market funds
 
—  

 
1,996,616

 
—  
 
1,996,616

 
Self directed accounts
 
20,728,957

 
—  

 
—  
 
20,728,957

 
Employer common stock
 
378,780,300

 
—  

 
—  
 
378,780,300

 
 
 
 
 
Total
$
399,509,257

 
3,865,923,875

 
—  
 
4,265,433,132

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 

 
 
 
 
 
 
 
 
2011
 
 
 
 
 
 
 
 
Level 1
 
Level 2
 
Level 3
 
Total
Assets:
 
 
 
 
 
 
 
 
 
 
 
 
Common/collective trusts
$
—  

 
1,688,589,188

 
—  
 
1,688,589,188

 
Stable value option
 
—  

 
1,804,301,023

 
—  
 
1,804,301,023

 
Money market funds
 
—  

 
2,447,320

 
—  
 
2,447,320

 
Self directed accounts
 
18,675,205

 

 
—  
 
18,675,205

 
Employer common stock
 
373,026,851

 

 
—  
 
373,026,851

 
 
 
 
 
Total
$
391,702,056

 
3,495,337,531

 
—  
 
3,887,039,587

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 

At both December 31, 2012 and 2011, the Plan did not carry any Level 3 financial assets. There were no transfers between levels 1 and 2 during the years ended December 31, 2012 and 2011. Additionally, there were no transfers into or out of level 3 during the years ended December 31, 2012 and 2011.


9

AETNA 401(k) PLAN
Notes to Financial Statements
December 31, 2012 and 2011




Fair Value of Investments in Entities that Use NAV
Investments in all common collective trust funds and the SVO can be redeemed at the current net asset value based on the fair value of the underlying assets. There are no withdrawal limits, redemption frequency limits or redemption notice periods. There were no unfunded commitments for these investments as of December 31, 2012 or 2011.

(4)
Stable Value Option (SVO)
The Plan's SVO holds investments in fully benefit‑responsive investment contracts. The SVO is comprised of eight synthetic guaranteed investment contracts (Synthetic GICs) that provide stable value guarantees and a cash and cash equivalent account, which collectively are managed by Invesco Advisers, Inc. (INVESCO). The Synthetic GICs are supported by investment portfolios holding a diversified mix of high quality, publicly traded, fixed income securities. As of December 31, 2012 and 2011, the investment sub‑advisors responsible for managing these investments with INVESCO were Blackrock Financial Management, Inc., ING Investment Management, Jennison Associates, PIMCO, Goldman Sachs and New York Life. The interest rates generated by these Synthetic GICs and the cash and cash equivalent account were blended together to determine the SVO rate credited to participant accounts. Effective July 1, 2012, the crediting rate moved from a semi-annual reset to a quarterly reset as shown below:

 
 
 
 
 
 
 
 
SVO credited interest rates
 
 
 
 
 
 
 
 
2012
 
2011
January – June
 
 
2.60
%
 
3.90
%
July – September
 
2.55
%
 
—    

October - December
 
2.50
%
 
—    

July – December
 
—    

 
3.65
%
 
 
 
 
 
 
 
 
 
 
 

 
 
 
 
 
 
 
 
SVO average yields
 
 
 
 
 
 
 
 
2012
 
2011
Based on actual earnings
 
1.02
%
 
1.52
%
Based on interest rate credited to participants
 
2.54
%
 
3.59
%

The SVO is presented at fair value on the Statements of Net Assets Available for Benefits (with an adjustment from fair value to contract value) and on Schedule I. The fair value of the Synthetic GICs equals the total of the fair value of the underlying assets plus the total wrap rebid value. The fair value of the cash and cash equivalent account equals the contract value.

The SVO contract value represents the participant's principal balance plus accrued interest. Participants may ordinarily direct the withdrawal or transfer of all or a portion of their investment at contract value. There are currently no reserves against contract values for credit risk of the contract issuers or otherwise.

Certain events limit the ability of the Plan to transact at contract value with the investment advisors. Such events include the following: (i) amendments to the plan documents (including complete or partial plan

10

AETNA 401(k) PLAN
Notes to Financial Statements
December 31, 2012 and 2011




termination or merger with another plan); (ii) changes to plan's prohibition on competing investment options or deletion of equity wash provisions; (iii) bankruptcy of the plan sponsor or other plan sponsor events (e.g. divestitures or spin‑offs of a subsidiary) which cause a significant withdrawal from the plan or (iv) the failure of the trust to qualify for exemption from federal income taxes or any required prohibited transaction exemption under ERISA. The Plan administrator does not believe that the occurrence of any such event, which would limit the Plan's ability to transact at contract value with participants, is probable.

The Synthetic GICs do not permit the investment advisors to terminate the agreement prior to the scheduled maturity date.

The following tables present the fair value, adjustment to contract value and issuer rating for all Synthetic GICs held at December 31, 2012 and 2011:
    
2012
 
 
 
 
 
 
 
 
 
 
Investments
 
Wrapper
 
Adjustment
 
 
 
 
 
 
 
 
Issuer
 
at fair
 
contracts at
 
to contract
Contract issuer and contract number
 
rating
 
value
 
fair value
 
value
ING Life & Annuity Contract 60363-A
 
A-/A3
$
92,338,050

 

 
(7,184,442
)
ING Life & Annuity Contract 60363-B
 
A-/A3
 
12,489,472

 

 
(811,903
)
ING Life & Annuity Contract 60363-C
 
A-/A3
 
267,574,453

 

 
(22,533,514
)
ING Life & Annuity Contract 60363-D
 
A-/A3
 
225,127,846

 

 
(7,481,721
)
Monumental Life Insurance Contract
 
AA-/A1
 
 
 
 
 
 
 
MDA-00728TR
 
 
 
352,229,469

 
293,224

 
(13,320,524
)
New York Life Contract GA-29016
 
AA+/Aaa
 
259,972,260

 

 
(7,846,984
)
Prudential Insurance Company
 
 
 
 
 
 
 
 
 
Contract GA-62273
 
AA-/A2
 
291,036,454

 

 
(19,452,463
)
Pacific Life Insurance G-27330.01.001
 
A+/A1
 
282,867,625

 

 
(20,863,765
)
SSGA Prime Fund
 
NR/NR
 
31,501,428

 

 

 
 
 
 
 
Total
 
 
$
1,815,137,057

 
293,224

 
(99,495,316
)
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 


11

AETNA 401(k) PLAN
Notes to Financial Statements
December 31, 2012 and 2011




2011
 
 
 
 
 
 
 
 
 
 
Investments
 
Wrapper
 
Adjustment
 
 
 
 
 
 
 
 
Issuer
 
at fair
 
contracts at
 
to contract
Contract issuer and contract number
 
rating
 
value
 
fair value
 
value
ING Life & Annuity Contract 60103
 
A-/A3
$
93,201,772

 

 
(6,955,090
)
ING Life & Annuity Contract 60104
 
A-/A3
 
11,903,614

 

 
(601,686
)
ING Life & Annuity Contract 60106
 
A-/A3
 
284,352,310

 

 
(15,727,446
)
ING Life & Annuity Contract 60269
 
A-/A3
 
200,217,012

 

 
(8,347,969
)
Monumental Life Insurance Contract
 
 
 
 
 
 
 
 
 
MDA-00728TR
 
AA-/A1
 
324,490,202

 
143,649

 
(13,526,886
)
New York Life Contract GA-29016
 
AA+/Aaa
 
255,584,547

 

 
(7,300,998
)
Prudential Insurance Company
 
 
 
 
 
 
 
 
 
Contract GA-62273
 
AA-/A2
 
279,578,236

 

 
(16,346,358
)
Pacific Life Insurance G-27330.01.001
 
A+/A1
 
272,246,053

 

 
(18,988,450
)
SSB Yield Enhanced STIF
 
NR/NR
 
82,583,628

 

 

 
 
 
 
 
Total
 
 
$
1,804,157,374

 
143,649

 
(87,794,883
)
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 

(5)
Plan Termination
Although it has expressed no intent to do so, the Company has the right to terminate the Plan subject to the provisions of ERISA. In the event of Plan termination, the Company shall make no further contributions. The Plan's trust shall be continued, however, as long as the trustee deems it to be necessary for the effective discharge of any remaining duties of the Plan. Participants will receive their account value (at fair market value) after allocation of interest, dividends, gains, losses and expenses.

(6)
Tax Status
The Internal Revenue Service has determined and informed the plan administrator by a letter dated March 18, 2011, that the Plan and related trust are designed in accordance with applicable sections of the IRC. Although the Plan has been amended since receiving the determination letter, the plan administrator and the plan's tax counsel believe that the plan is designed and is currently being operated in compliance with the applicable requirements of the IRC and therefore believe that the plan is qualified and the related trust is tax‑exempt.

GAAP requires plan management to evaluate tax positions taken by the plan and recognize a tax liability (or asset) if the plan has taken an uncertain position that more likely than not would not be sustained upon examination by the Internal Revenue Service. The plan administrator has analyzed the tax positions taken by the plan, and has concluded that as of December 31, 2012, there are no uncertain positions taken or expected to be taken that would require recognition of a liability (or asset) or disclosure in the financial statements. The plan is subject to routine audits by taxing jurisdictions; however, there are currently no audits for any tax periods in progress. The plan administrator believes it is no longer subject to income tax examinations for years prior to 2005.


12

AETNA 401(k) PLAN
Notes to Financial Statements
December 31, 2012 and 2011




(7)
Related‑Party Transactions
Certain Plan investments are managed by State Street Global Advisors (SSgA), a division of State Street Bank and Trust Company. State Street Bank is the Plan Trustee as defined by the Plan and, therefore, these investments constitute party‑in‑interest transactions.

The Plan invests in the Aetna Common Stock Fund, which consists primarily of the Plan Sponsor's own stock, and therefore, the Plan's investments in the Aetna Common Stock Fund constitute party‑in‑interest transactions.

The Plan's SVO includes four ING Life & Annuity Company insurance contracts. ING IPS is the Plan recordkeeper. Both entities are owned by ING and, therefore, these transactions constitute party‑in‑interest transactions.

Fees paid during the Plan year for legal, accounting, and other professional services rendered or purchased by parties‑in‑interest were based on customary and reasonable rates for such services.

(8)
Employer Contribution Receivable
At December 31, 2012 and 2011, a contribution receivable of $5,081,119 and $4,854,471 was recorded to accrue for year‑end employer matching contributions for certain employees whose pretax deferrals had not been made proportionately over the course of the year, respectively.

Accrued employer matching contributions for the days remaining after the last pay cycle of the year totaled $2,462,491 and $1,920,359 for December 31, 2012 and 2011, respectively.

(9)
Employee Contribution Receivable
Accrued participant contributions for the days remaining after the last pay cycle of the year totaled $4,762,920 and $3,703,113 for December 31, 2012 and 2011, respectively.

(10)
Other Receivable
At December 31, 2012 and 2011, other receivables of $911,147 and $242,454 were recorded to accrue for year‑end fund transactions that were settled in the following year, respectively.

(11)
Mergers
The Company acquired PayFlex Holdings, Inc. in October, 2011. As a result, on December 3, 2012, the PayFlex 401(k) Plan was merged into the Aetna 401(k) Plan, transferring all of its assets, totaling approximately $4,741,551.


13

AETNA 401(k) PLAN
Notes to Financial Statements
December 31, 2012 and 2011




(12)
Reconciliation of Financial Statements to Form 5500
The following are reconciliations of amounts reported in the financial statements to amounts reported on Form 5500, Schedule H as of December 31, 2012 and 2011:
 
 
 
 
 
 
 
 
2012
 
2011
Net assets available for benefits per the financial statements
$
4,270,455,195

 
3,895,810,374

Amounts allocated to withdrawing participants
 
(4,517,062
)
 
(2,897,488
)
Adjustment from contract value to fair value for fully
 
 
 
 
 
benefit-responsive investment contracts
 
99,495,316

 
87,794,883

Net assets available for benefits per Form 5500
$
4,365,433,449

 
3,980,707,769

Increase in net assets available for benefits per the
 
 
 
 
 
financial statements, excluding transfers in
$
369,903,270

 
244,689,589

Net change in amounts allocated to withdrawing participants
 
(1,619,574
)
 
(1,132,215
)
Net change on adjustment from contract value to fair
 
 
 
 
 
value for fully benefit-responsive investment contracts
 
11,700,433

 
15,379,949

Net income per Form 5500
$
379,984,129

 
258,937,323

Benefits paid to participants per the financial statements
$
281,380,116

 
209,619,834

Net change in amounts allocated to withdrawing participants
 
1,619,574

 
1,132,215

Benefits paid to participants per Form 5500
$
282,999,690

 
210,752,049

 
 
 
 
 
 
 
 
 
 
 

Amounts allocated to withdrawing participants are recorded as a liability on the Form 5500 for benefit claims that have been processed and approved for payment prior to December 31, but not yet paid as of that date. Also, investments are recorded at fair value on the Form 5500 and at fair value (with an adjustment from fair value to contract value) on the accompanying financial statements.



14

AETNA 401(k) PLAN
Notes to Financial Statements
December 31, 2012 and 2011




(13)
Risk and Uncertainties
The Plan invests in various investment securities. Investment securities are exposed to various risks such as interest rate, market, and credit risks. Due to the level of risk associated with certain investment securities, it is at least reasonably possible that changes in the values of investment securities will occur in the near term and that such changes could materially affect participants' account balances and the amounts reported in the Statements of Net Assets Available for Benefits.


15



AETNA 401(k) PLAN
Schedule I - Schedule H, Line 4i – Schedule of Assets (Held at End of Year)
December 31, 2012
EIN: 23-2229683 Plan# 004
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
(b)
 
(c)
 
(d)
 
(e)
(a)
 
Identity of Issuer, Borrower, Lessor or Similar Party
 
Description of investment
 
Cost**
 
Current value
*
 
SSB SHORT TERM INVESTMENT FUND
 
Money Market Fund
 
$

 
$
1,996,616

*
 
SSgA International Index SL Series Fund
 
Common/Collective Trust
 

 
257,398,057

*
 
SSgA Emerging Markets Index NL Series Fund
 
Common/Collective Trust
 

 
23,107,171

*
 
SSgA U.S.Bond Market Index SL Series Fund
 
Common/Collective Trust
 

 
146,277,406

*
 
SSgA Real Asset NL Series Fund
 
Common/Collective Trust
 

 
55,092,199

*
 
SSgA Russell Small Cap Index SL Series Fund
 
Common/Collective Trust
 

 
170,593,889

*
 
SSgA S&P 500 Index SL Series Fund
 
Common/Collective Trust
 

 
686,500,635

*
 
SSgA S&P MidCap Index NL Series Fund
 
Common/Collective Trust
 

 
226,910,020

*
 
SSgA Target Retirement Income SL Series Fund
 
Common/Collective Trust
 

 
11,119,564

*
 
SSgA Target Retirement 2010 SL Series Fund
 
Common/Collective Trust
 

 
12,288,013

*
 
SSgA Target Retirement 2015 SL Series Fund
 
Common/Collective Trust
 

 
54,989,329

*
 
SSgA Target Retirement 2020 SL Series Fund
 
Common/Collective Trust
 

 
79,468,793

*
 
SSgA Target Retirement 2025 SL Series Fund
 
Common/Collective Trust
 

 
72,062,620

*
 
SSgA Target Retirement 2030 SL Series Fund
 
Common/Collective Trust
 

 
80,962,062

*
 
SSgA Target Retirement 2035 SL Series Fund
 
Common/Collective Trust
 

 
68,184,870

*
 
SSgA Target Retirement 2040 SL Series Fund
 
Common/Collective Trust
 

 
48,477,821

*
 
SSgA Target Retirement 2045 SL Series Fund
 
Common/Collective Trust
 

 
39,010,159

*
 
SSgA Target Retirement 2050 SL Series Fund
 
Common/Collective Trust
 

 
16,054,370

 
 
Stable value option:
 
 
 
 
 
 
 
 
 
 
*
SSGA Prime Fund
 
Money Market Fund
 

 
31,501,428

 
 
 
 
Prudential Insurance Company Contract GA-62273
 
Insurance Contract
 
 
 
 
 
 
 
 
 
Invesco Intermediate Gov/Credit Fund
 
Common/Collective Trust
 

 
92,244,649

 
 
 
 
 
Jennison Intermediate Gov/Credit Fund
 
Common/Collective Trust
 

 
93,010,076

 
 
 
 
 
PIMCO Intermediate Gov/Credit Fund
 
Common/Collective Trust
 

 
93,720,085

 
 
 
 
 
Invesco Short-term Bond Fund
 
Common/Collective Trust
 

 
12,061,644

 
 
 
 
Pacific Life Insurance G-27330.01.001
 
Insurance Contract
 
 
 
 
 
 
 
 
 
Blackrock Intermediate Gov/Credit Fund
 
Common/Collective Trust
 

 
67,642,014

 
 
 
 
 
Invesco Intermediate Gov/Credit Fund
 
Common/Collective Trust
 

 
67,651,180

 
 
 
 
 
Invesco Short-term Bond Fund
 
Common/Collective Trust
 

 
12,061,658

 
 
 
 
 
Jennison Intermediate Gov/Credit Fund
 
Common/Collective Trust
 

 
67,634,152

 
 
 
 
 
PIMCO Intermediate Gov/Credit Fund
 
Common/Collective Trust
 

 
67,878,621

 
 
 
 
New York Life Contract GA-29016
 
Insurance Contract (Pooled Separate Account)
 

 
259,972,260

 
 
 
 
Monumental Life Insurance Contract MDA-00728TR
 
Insurance Contract (Common/Collective Trust)
 

 
352,522,693

 
 
 
*
ING Life & Annuity Contract 60363-A
 
Insurance Contract (Common/Collective Trust)
 

 
92,338,050

 
 
 
*
ING Life & Annuity Contract 60363-B
 
Insurance Contract (Common/Collective Trust)
 

 
12,489,472

 
 
 
*
ING Life & Annuity Contract 60363-C
 
Insurance Contract (Synthetic GIC)
 

 
267,574,453

 
 
 
*
ING Life & Annuity Contract 60363-D
 
Insurance Contract (Common/Collective Trust)
 

 
225,127,846

 
 
 
 
 
Subtotal stable value option
 
 
 
 
 
 
1,815,430,281

*
 
Aetna Inc.
 
Employer Common Stock
 

 
378,780,300

 
 
Participant Self-Directed Accounts
 
Brokerage Accounts
 

 
20,728,957

*
 
Participant Loan Fund
 
Participant loans; various maturities
 

 
92,775,559

 
 
 
 
 
 
 
 
Interest rates: 4.25% – 10.50%
 
 
 
 
 
 
 
 
 
 
 
Total assets held at end of year
 
$

 
$
4,358,208,691

 
 
 
 
 
 
 
 
 
 
 
 
 
*
 
Party in interest
 
 
 
 
 
 
 
**
 
Historical cost is not required as all investments are participant-directed.
 
 
 
 

See accompanying report of independent registered public accounting firm.

16