Discontinued Operations

At December 31, 2015, Torchmark met the criteria to account for its Medicare Part D Prescription Drug Plan business as a discontinued operation. Historically, the business was a reportable segment. Effective July 1, 2016, Torchmark sold its Medicare Part D Prescription Drug Plan business to an unaffiliated third party.

The sale resulted in a net gain of $1.8 million ($1.2 million net of tax) in 2016. The operating results from discontinued operations are reflected in income for the twelve months ended December 31, 2017. The remaining assets and liabilities reflected on the Torchmark balance sheet related to discontinued operations are receivables and payables associated with the 2016 and prior plan years that are expected to be settled in the ordinary course of business during 2018.

The net assets related to discontinued operations at December 31, 2017 and 2016 were as follows:



	At December 31,
	2017		2016
Assets:
Due premiums	$	3,945	$	8,840
Other receivables⁽¹⁾	64,575		118,692
Total assets related to discontinued operations	68,520		127,532

Liabilities:
Risk sharing payable	8,731		8,374
Current and deferred income taxes payable	1,077		3,820
Other⁽²⁾	40,046		15,230
Total liabilities related to discontinued operations	49,854		27,424

Net assets	$	18,666	$	100,108


(1)	At December 31, 2017, other receivables included $65 million from Centers for Medicare and Medicaid Services (CMS). At December 31, 2016, the comparable amounts were $50 million from CMS and $69 million from drug manufacturer rebates.


(2)	At December 31, 2017, the balance included $37.3 million due to CMS. At December 31, 2016, the balance includes $3.6 million contingent sale price reserve.

Income from discontinued operations for the three years ended December 31, 2017 is as follows:



	Year Ended December 31,
	2017			2016			2015
Revenue:
Health premium	$	—		$	222,840		$	260,657

Benefits and expenses:
Health policyholder benefits	3,827			183,423			213,114
Amortization of deferred acquisition costs	—			3,747			3,506
Commissions, premium taxes, and non-deferred acquisition expenses	763			16,396			20,909
Other operating expense	1,209			5,377			6,502
Total benefits and expenses	5,799			208,943			244,031

Income before income taxes for discontinued operations	(5,799		)	13,897			16,626
Gain from sale of discontinued operations	—			1,779			—
Income taxes	2,030			(5,487		)	(5,819		)
Income from discontinued operations	$	(3,769	)	$	10,189		$	10,807

Income taxes paid related to discontinued operations for the three years ended December 31, 2017 were as follows:



	Year Ended December 31,
	2017		2016		2015
Income taxes paid	$	714	$	15,271	$	3,409