BENEFITS PAYABLE

On a consolidated basis, activity in benefits payable, excluding military services, was as follows for the three months ended March 31, 2017 and 2016:



	For the three months ended March 31,
	2017			2016
	(in millions)
Balances at January 1	$	4,563		$	4,976
Less: Premium deficiency reserve	—			(176		)
Less: Reinsurance recoverables	(76		)	(85		)
Balances at January 1, net	4,487			4,715
Incurred related to:
Current year	11,580			11,751
Prior years	(231		)	(340		)
Total incurred	11,349			11,411
Paid related to:
Current year	(7,695		)	(7,692		)
Prior years	(3,451		)	(3,576		)
Total paid	(11,146		)	(11,268		)
Premium deficiency reserve	—			189
Reinsurance recoverable	71			67
Ending Balance	$	4,761		$	5,114

Amounts incurred related to prior periods vary from previously estimated liabilities as the claims ultimately are settled. Negative amounts reported for incurred related to prior years result from claims being ultimately settled for amounts less than originally estimated (favorable development).

Our reserving practice is to consistently recognize the actuarial best estimate of our ultimate liability for claims. Actuarial standards require the use of assumptions based on moderately adverse experience, which generally results in favorable reserve development, or reserves that are considered redundant.

Benefits expense excluded from the previous table was as follows for the three months ended March 31, 2017 and 2016.



	March 31, 2017			March 31, 2016
	(in millions)
Premium deficiency reserve - Individual Commercial	$	—		$	13
Military services	—			3
Future policy benefits:
Individual Commercial	(33		)	(40		)
Other Businesses	10			10
Total future policy benefits	(23		)	(30		)
Total	$	(23	)	$	(14	)

Military services benefits expense for the three months ended March 31, 2016 in the table above reflect expenses associated with our contracts with the Veterans Administration.

Incurred and Paid Claims Development

The following discussion provides information about incurred and paid claims development for our Retail, Group and Specialty, and Individual Commercial segments as of March 31, 2017 and 2016, net of reinsurance and the total of IBNR included within the net incurred claims amounts.

Retail Segment

Activity in benefits payable for our Retail segment was as follows for the three months ended March 31, 2017 and 2016:



	For the three months ended March 31,
	2017			2016
	(in millions)
Balances at January 1	$	3,507		$	3,600
Less: Reinsurance recoverables	(76		)	(85		)
Balances at January 1, net	3,431			3,515
Incurred related to:
Current year	10,255			9,851
Prior years	(204		)	(218		)
Total incurred	10,051			9,633
Paid related to:
Current year	(7,014		)	(6,706		)
Prior years	(2,572		)	(2,685		)
Total paid	(9,586		)	(9,391		)
Reinsurance recoverable	71			67
Ending Balance	$	3,967		$	3,824

At March 31, 2017, benefits payable for our Retail segment included IBNR of approximately $2.7 billion, primarily associated with claims incurred in 2017.

Group and Specialty Segment

Activity in benefits payable for our Group and Specialty segment, excluding military services, was as follows for the three months ended March 31, 2017 and 2016:



	For the three months ended March 31,
	2017			2016
	(in millions)
Balances at January 1	$	578		$	616
Incurred related to:
Current year	1,306			1,260
Prior years	(20		)	(41		)
Total incurred	1,286			1,219
Paid related to:
Current year	(824		)	(728		)
Prior years	(493		)	(502		)
Total paid	(1,317		)	(1,230		)
Ending Balance	$	547		$	605

At March 31, 2017, benefits payable for our Group and Specialty segment included IBNR of approximately $468 million, primarily associated with claims incurred in 2017.

Individual Commercial Segment

Activity in benefits payable for our Individual Commercial segment was as follows for the three months ended March 31, 2017 and 2016:



	For the three months ended March 31,
	2017			2016
	(in millions)
Balances at January 1	$	454		$	740
Less: Premium deficiency reserve	—			(176		)
Balances at January 1, net	454			564
Incurred related to:
Current year	185			826
Prior years	(6		)	(80		)
Total incurred	179			746
Paid related to:
Current year	(49		)	(465		)
Prior years	(363		)	(370		)
Total paid	(412		)	(835		)
Premium deficiency reserve	—			189
Ending Balance	$	221		$	664

At March 31, 2017, benefits payable for our Individual Commercial segment included IBNR of approximately $169 million, primarily associated with claims incurred in 2017.

Reconciliation to Consolidated

The reconciliation of the net incurred and paid claims development tables to benefits payable in the consolidated

statement of financial position is as follows:



Reconciliation of the Disclosure of Incurred and Paid Claims Development to Benefits Payable, net of reinsurance

	March 31,
	2017
Net outstanding liabilities
Retail	$	3,896
Group and Specialty	547
Individual Commercial	221
Other Businesses	26
Benefits payable, net of reinsurance	4,690

Reinsurance recoverable on unpaid claims
Retail	71
Total reinsurance recoverable on unpaid claims	71

Total benefits payable, gross	$	4,761