What changed in this filing

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Item 1. Business

2026-02-06 compared with 2025-02-20 · 187 added, 180 removed, 418 unchanged (47% of the section changed)

Elevance Health and its direct and indirect subsidiaries, referred to throughout this document as “we,” “us,” “our,” the “Company” or “Elevance Health,” is a leading health company bringing together the concepts of elevate and advance, in order to exemplify and follow our purpose of improving the health of humanity.

We serve people across their entire health journey to better address their full range of needs with an integrated whole-health approach.

Through our broad view, we aim to meaningfully improve the health of the people and communities we serve.

We strive to deliver on our mission by maximizing the power of partnerships, innovating to fuel growth and health equity, and maintaining a high-performance culture.

Our strategy is to be a lifetime trusted health partner through the following four core competencies:

We are focused on enhancing well-being and advancing health outcomes by delivering integrated, whole health solutions across the care journey.

We support consumers throughout their full health journeys with medical, pharmacy, and behavioral health services designed to address their whole health needs.

Through this comprehensive approach, we aim to improve the health of the people and communities we serve.

We advance our mission by collaborating with care providers and community organizations, fostering innovation that supports growth and equal opportunity for health access, and cultivating a high-performance culture.

With an unyielding commitment to meeting the needs of our diverse customers, we are guided by the following values:

We are one of the largest health insurers in the United States in terms of medical membership, serving approximately 45.2 million medical members through our affiliated health plans as of December 31, 2025.

We offer a broad spectrum of

network-based managed care risk-based plans to Individual, Employer Group, Medicaid and Medicare markets.

In addition, we provide a broad array of managed care services to fee-based customers, including claims processing, stop loss insurance, provider network access, medical management, care management, wellness programs, actuarial services and other administrative services.

We offer a broad spectrum of network-based managed care risk-based plans to Individual, Employer Group, Medicaid and Medicare markets.

In addition, we provide a broad array of managed care services to fee-based customers, including claims processing, stop loss insurance, care provider network access, medical management, care management, wellness programs, actuarial services and other administrative services.

Across these markets, we generate revenue through risk-based premiums, administrative fees from self-funded employers and pharmacy and health service fees through our Carelon businesses.

We provide services to the federal government in connection with our Federal Health Products & Services business, which administers the Federal Employee Program ® (“FEP ® ”).

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We are licensed to conduct insurance operations in all 50 states, the District of Columbia and Puerto Rico through our subsidiaries.

Through various subsidiaries, we also offer pharmacy services through our CarelonRx business, and other healthcare related services as Carelon Insights and Carelon Health.

We have organized our brand portfolio into the following core go-to-market brands:

• Anthem Blue Cross/Anthem Blue Cross and Blue Shield — represents our Anthem-branded and affiliated Blue Cross and/or Blue Shield licensed plans;

• Wellpoint — unites select non-BCBSA licensed Medicare, Medicaid and commercial plans under the Wellpoint name;

• Carelon — this brand brings together our healthcare related services and capabilities, including our CarelonRx and Carelon Services businesses, under a single brand name.

Through various subsidiaries, we also offer pharmacy services through our CarelonRx business, and other healthcare related services as Carelon Services.

Our portfolio consists of the following core go-to-market brands:

• Anthem Blue Cross/Anthem Blue Cross and Blue Shield — represents our Anthem-branded and affiliated Blue Cross and/or Blue Shield licensed Medicare, Medicaid, and commercial Health Benefit plans;

• Wellpoint — represents our Wellpoint branded Medicare, Medicaid and commercial Health Benefit plans and other non-BCBSA brands;

• Carelon — represents our healthcare related services and capabilities, including our CarelonRx and Carelon Services businesses.

We report our results of operations in the following four reportable segments:

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For additional discussion, see “Reportable Segments” below in this “Business” section and Note 1, “Organization,” and Note 20, “Segment Information,” of the Notes to Consolidated Financial Statements included in Part II, Item 8 of this Annual Report on Form 10-K.

We believe healthcare is local and that we have the strong local presence required to understand and meet local customer needs with regard to any product customers are enrolled in with us.

Further, we believe we are well-positioned to deliver what customers want:

innovative, choice-based and affordable products;

We believe healthcare is local and that our broad local presence positions us to meet evolving local customer needs with regard to any product customers who are enrolled with us.

We aim to provide innovative, affordable and choice-based products;

distinctive service;

simplified transactions;

and better access to information for quality care.

Our local presence, combined with our national expertise, has created opportunities for collaborative programs that reward physicians and hospitals for clinical quality and excellence.

We feel that our commitment to health improvement and care management provides added value to customers and healthcare professionals.

Ultimately, we believe that practical and sustainable improvements in healthcare must focus on improving healthcare quality while managing costs for total affordability.

We have implemented initiatives driving payment innovation and partnered with providers to lower cost and improve the quality of healthcare for our members, and we continue to develop new and innovative ways to effectively manage risk and engage our members.

Further, we continue to expand our financial arrangements with providers to implement payment models that advance value-based care.

We believe focusing on quality of care rather than volume of care is the foundation for improving patient outcomes.

Our value-based payment models support patient-centered care by improving collaboration between providers and health partners and delivering to our members the right care, at the right time, in the right place.

In addition, we are focused on achieving efficiencies from our national scale while optimizing service performance for our customers.

and improved access to information that supports quality care.

Our combination of local market focus and national scale enables us to collaborate with physicians and hospitals on programs that reward clinical quality, excellence and cost-effective practices.

We continue to promote value-based payment models that align incentives to deliver the right care at the right time in the right setting.

Our targeted approach aligns care providers to the appropriate financial incentives and support to drive improved quality and health outcomes.

We are actively engaged with care providers across all payment models to enable them to achieve better outcomes for our members.

In addition, we seek efficiencies through our national scale and optimized service performance for our customers.

Finally, we expect to continue to rationalize our portfolio of businesses and products and align our investments to optimize our core businesses, invest in high-growth opportunities, and accelerate value creation through expanded capabilities and services.

Impact on Our Results of Operations

Our results of operations depend in large part on our ability to accurately predict and effectively manage healthcare costs through effective contracting with providers of care to our members, product pricing, medical management and health and wellness programs, including service coordination and case management for addressing complex and specialized healthcare needs, innovative product design and our ability to maintain or achieve improvement in our Centers for Medicare and Medicaid Services (“CMS”) Star Ratings.

CMS Star Ratings affect Medicare Advantage plan reimbursements as well as our eligibility to earn quality-based bonus payments for those plans.

Our results of operations depend in large part on our ability to accurately predict and effectively manage healthcare costs through effective care provider contracting, product pricing, medical management and health and wellness programs, including service coordination and case management for complex and specialized healthcare needs.

Our results are also affected by our performance under the Centers for Medicare & Medicaid Services (“CMS”) Star Ratings program, which influences Medicare Advantage plan reimbursements as well as our eligibility to earn quality-based bonus payments for those plans.

See “Regulation” below in this “Business” section for additional information on our CMS Star Ratings.

For additional information on our networks and provider relations, product pricing and healthcare cost management programs, see “Pricing and Underwriting of Our Products,” “Networks and Provider Relations,” “Medical Management Programs,” “Care Management and Wellness Products and Programs” and “Healthcare Quality Initiatives” below in this “Business” section.

Advances in medical technology, including new specialty drugs, and new indications for existing prescription drugs, changes in regulations, the aging population and other demographic characteristics continue to contribute to rising healthcare costs.

Our managed care plans and products are designed to encourage providers and members to participate in quality, cost-effective health benefit programs by using the full range of our innovative medical management services, health outcomes-based initiatives and health quality-based financial incentives.

We believe our market position and high business retention rates will enable us to realize the long-term benefits of investing in preventive and early detection programs.

Our ability to provide cost-effective health benefits products and services is enhanced through a disciplined approach to internal cost containment, prudent management of our risk exposure and successful integration of acquired businesses.

In addition, our ability to manage operating expenses continues to be a driver of our overall profitability.

Our future results of operations will be impacted by certain external forces and resulting changes in our business model and strategy.

Changes to our business environment will continue as elected officials at the national and state levels enact modifications to existing laws and regulations, including changes to available subsidies, taxes and fees.

For further information on our networks and care provider relations, product pricing and healthcare cost management programs, see “Pricing and Underwriting of Our Products,” “Networks and Provider Relations,” “Medical Management Programs,” “Care Management and Wellness Products and Programs” and “Healthcare Quality Initiatives” below in this “Business” section.

Advances in medical technology, changes in prescription drug utilization, demographic trends and regulatory changes continue to contribute to rising healthcare costs.

Our managed care plans are designed to deliver high quality, cost-effective health benefit programs to our members via optimized care provider networks, outcomes-based financial incentives, and effective medical management support.

Our ability to maintain competitive, cost-effective products is supported by our disciplined internal cost management, prudent risk management and successful integration of acquired businesses.

Managing operating expenses remains critical to our overall profitability.

Our future results of operations will also be shaped by changes in the legislative and regulatory environment at the federal and state levels, including changes to available subsidies, taxes and fees.

For additional discussion, see “Regulation” below in this “Business” section and Part I, Item 1A, “Risk Factors” included in this Annual Report on Form 10-K.

Our results of operations are also impacted by levels and mix of membership, which has changed, and will continue to change, as a result of the quality and pricing of our health benefits products and services, Medicaid redeterminations, an aging population, healthcare utilization patterns, previously uninsured members entering the healthcare system, provider and member fraud, economic conditions, changes in unemployment, the continued and future impact of large-scale emergencies, acquisitions, entry into new markets and expansions in or exits from existing markets.

Our results of operations are also impacted by membership levels and mix of membership, which has changed, and will continue to change, as a result of the pricing of our health benefits products and services, Medicaid redeterminations, an aging population, healthcare utilization patterns, previously uninsured members entering the healthcare system, provider and member fraud, economic conditions, changes in unemployment, the continued and future impact of large-scale emergencies, acquisitions, entry into new markets and expansions in or exits from existing markets.

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, changes in how our members access healthcare services or our exit from a specific market.

See Part I, Item 1A “Risk Factors” 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.

We continue to enhance interactions with customers, providers, brokers, agents, employees and other stakeholders through digital technology and improvements to internal operations.

Our approach includes not only the sales and distribution of health benefits products through digital technology, but also implementing advanced capabilities that improve services benefiting customers, agents, brokers and providers while optimizing administrative costs.

These enhancements can also help improve the quality, coordination and safety of healthcare through increased communications between patients and their physicians.

We continue to enhance interactions with our customers, care providers, brokers, agents, employees and other stakeholders through technological solutions and operational improvements, including advanced tools that support distribution, service, clinical coordination and administrative efficiency.

Through our participation in various federal government programs, we generated approximately 32%, 31% and 29% of our total consolidated revenues from agencies of the U.S.

government for the years ended December 31, 2025, 2024 and 2023, respectively.

The majority of these revenues are contained in our Health Benefits segment as described below.

The majority of these revenues are included in our Health Benefits segment as described below.

An immaterial amount of our total consolidated revenues is derived from activities outside of the U.S.

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We report our results of operations in the following four reportable segments:

Health Benefits, CarelonRx, Carelon Services and Corporate & Other (our businesses that do not individually meet the quantitative thresholds for an operating segment, as well as corporate expenses not allocated to our other reportable segments).

Health Benefits, CarelonRx, Carelon Services and Corporate & Other (which includes our businesses that do not individually meet the quantitative thresholds for an operating segment, along with certain enterprise-level corporate expenses not allocated to our other reportable segments).

Our Health Benefits segment offers a comprehensive suite of health plans and services to our Individual, Employer Group risk-based, Employer Group fee-based, BlueCard ® , Medicare, Medicaid and FEP ® members.

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and provides a variety of specialty and other insurance products and services such as stop loss, dental, vision and supplemental health insurance benefits.

Key drivers impacting the results of operations for our Health Benefits segment include membership levels and the health status of our members, premium pricing, medical cost trend, network performance, risk adjustment accuracy, quality ratings, and operating efficiency.

This segment benefits from working with our Carelon businesses, which support medical and pharmacy cost management, care coordination, behavioral health, and analytics.

Our CarelonRx segment includes our pharmacy services business.

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and its subsidiaries.

Our Carelon Services segment integrates physical, behavioral, pharmacy, and social services with the aim of delivering whole health affordably by offering a broad array of healthcare related services and capabilities to internal and external customers through our Carelon Health and Carelon Insights businesses.

Our Carelon businesses promote affordability by managing complex areas of the healthcare system, leveraging data and insights to improve how our members receive safe, appropriate, high-quality care and providers are reimbursed accurately and timely.

CarelonRx contributes to affordability and outcomes for our members by integrating pharmacy, specialty drug management, and clinical programs with our broader whole-health model.

Key drivers impacting the results of operations for this segment include specialty drug trends, script volume, clinical program adoption, network optimization, rebate and pricing strategies, and operational performance.

Our Carelon Services segment integrates physical, behavioral, pharmacy, and social-care capabilities to support whole-health services and enhance affordability for both internal and external customers through our Carelon Health and Carelon Insights businesses.

Our approach to cost management relies on capabilities including provider enablement, value-based networks, member engagement, and utilization management.

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and certain affiliated entities (d/b/a CareBridge) at the end of 2024, which provides virtual care to complex Medicaid and Medicare patients and supports plans in managing home and community-based services.

Key drivers impacting the results of this segment include growth in care management and behavioral health capabilities, expansion of value-based networks, care provider enablement, digital and virtual care models, and scalability of analytics-driven services.

Our Corporate & Other segment includes our businesses that do not individually meet the quantitative threshold for an operating segment, as well as corporate expenses not allocated to our other reportable segments.

This segment also includes investments supporting long-term enterprise initiatives, digital and technology development, and portfolio optimization activities.

For additional information, see Note 20, “Segment Information,” of the Notes to Consolidated Financial Statements included in Part II, Item 8 of this Annual Report on Form 10-K.

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Individual, Employer Group risk-based, Employer Group fee-based, BlueCard ® , Medicare, Medicaid and FEP ® .

In addition, we also serve customers who purchase one or more of our other products or services that are often ancillary to our health business.

In addition, we serve customers who purchase one or more of our other products or services, such as behavioral health, pharmacy benefit management and care solutions, often delivered through our Carelon portfolio, which complement our core health business.

Our products are generally developed and marketed with an emphasis on the differing needs of our customers.

In particular, our product development and marketing efforts take into account the differing characteristics between the various customers served by us, as well as the unique needs of educational and public entities, labor groups, the FEP ® , national employers and state-run programs servicing low-income, high-risk and underserved markets.

Overall, we seek to establish pricing and product designs to provide value for our customers while achieving an appropriate level of profitability for each of our customer categories balanced with the competitive objective to grow market share.

We believe that one of the keys to our success has been our focus on these distinct customer types, which better enables us to develop benefit plans and services that meet our customers’ unique needs.

In particular, our product development and marketing efforts take into account the differing characteristics between the various

customers served by us, as well as the unique needs of educational and public entities, labor groups, FEP ® , national employers and state-run programs servicing low-income, high-risk and underserved markets.

We align product design, pricing, care management programs, and network strategies to reflect the needs, risk profiles, and purchasing dynamics of our customer categories.

Our goal is to maintain market-competitive value while achieving appropriate profitability across segments.

We market our Individual, Medicare and certain Employer Group products with a smaller employee base through direct marketing activities and an extensive network of independent agents, brokers and retail partnerships.

Products for commercial customers with a larger employee base are generally sold through independent brokers or consultants retained by the customer who work with industry specialists from our in-house sales force.

In the Individual markets, we offer on-exchange products through state- or federally-facilitated marketplaces (the “Public Exchange”) in compliance with the Patient

Protection and Affordable Care Act and the Health Care and Education Reconciliation Act of 2010, as amended (collectively, the “ACA”) and off-exchange products.

We also continue to expand our digital platforms, which enhance consumer engagement and supplement broker-facing distribution capabilities.

In the Individual markets, we offer on-exchange products through state- or federally-facilitated marketplaces (the “Public Exchange”) in compliance with the Patient Protection and Affordable Care Act and the Health Care and Education Reconciliation Act of 2010, as amended (collectively, the “ACA”) and off-exchange products.

Federal subsidies are available for certain members, subject to eligibility, who purchase Public Exchange products.

We continue to participate in the Public Exchange in nearly all of our Anthem Blue Cross and Anthem Blue Cross and Blue Shield service areas.

We anticipate growth in our Public Exchange membership as former Medicaid members, no longer eligible for Medicaid coverage, continue to seek alternative coverage options.

Additionally, we are entering select service areas in Florida, Maryland, and Texas in 2025, using our Simply Healthcare and Wellpoint brands, and we are actively evaluating expansion opportunities in additional marketplaces beyond 2025.

In 2025, we expanded our operations into select service areas in Florida, Maryland, and Texas through our Simply Healthcare and Wellpoint brands.

Going forward, we expect the Public Exchange to be influenced by policy and regulatory changes, particularly around federal subsidies, compliance requirements and market stability.

See “Regulation” below in this “Business” section for additional discussion about the Public Exchange marketplace.

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Non-BCBS-branded business refers to members in our non-BCBS-branded plans, which include Wellpoint, MMM and Simply Healthcare plans.

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

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

Product and Service Descriptions

Various forms of managed care products have been developed to contain the cost of healthcare by negotiating contracts with hospitals, physicians and other providers to deliver high-quality healthcare to members at favorable rates.

These products usually feature medical management and other quality and cost optimization measures such as pre-admission review and approval for certain non-emergency services, pre-authorization of outpatient surgical procedures, network credentialing to determine that network physicians and hospitals have the required certifications and expertise, and various levels of care management programs to help members better understand and navigate the healthcare system.

These products usually feature medical management and other quality and cost optimization measures such as pre-admission review and approval for certain non-emergency services, pre-authorization of select outpatient surgical procedures, network credentialing to confirm that contracted in-network physicians and hospitals have the required certifications and expertise, and various types of care management programs that engage members to support navigation, appropriate care transitions and complex condition management.

In addition, providers may have incentives to achieve certain quality measures, may share medical cost risk or may have other incentives to deliver quality medical services in a cost-effective manner.

Also, certain plans offer members incentives for healthy behaviors, such as smoking cessation and weight management.

Certain plans also offer members incentives for healthy behaviors, such as smoking cessation and weight management.

Members are charged periodic, prepaid premiums and generally pay copayments, coinsurance and/or deductibles when they receive services.

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• Commercial Risk-Based Products.

We offer employer groups a diversified mix of managed care risk-based products including:

Preferred Provider Organization (“PPO”), Health Maintenance Organization (“HMO”), Consumer-Driven Health Plans (“CDHP”), Traditional Indemnity and Point-of-Service (“POS”) plans.

We offer employer groups a diversified mix of managed care risk-based products including Preferred Provider Organization (“PPO”), Health Maintenance Organization (“HMO”), Consumer-Driven Health Plans (“CDHP”), Traditional Indemnity and Point-of-Service (“POS”) plans.

PPO plans generally provide members the freedom to choose any healthcare provider, but require the member to pay a greater portion of the provider’s fee in the event the member chooses not to use a provider participating in the PPO’s network.

HMOs include comprehensive managed care benefits generally through a participating network of physicians, hospitals and other providers.

CDHPs generally combine a high-deductible PPO plan with an employer-funded and/or employee-funded personal care account, which may result in tax benefits to the employee and allow some or all of the dollars remaining in the personal care account at year-end to be rolled over to the next year for future healthcare needs.

Traditional indemnity plans offer the member an option to select any healthcare provider for covered services, with coverage subject to deductibles and coinsurance and with member cost-sharing usually limited by out-of-pocket maximums.

blend the characteristics of HMO, PPO and indemnity plans.

CDHPs generally combine a high-deductible PPO plan with an employer-funded and/or employee-funded personal care account, which can offer tax benefits to the employee and allow some or all of the dollars remaining in the personal care account at year-end to be rolled over for future healthcare needs.

Traditional indemnity plans offer the member an option to select any healthcare provider for covered services, with coverage subject to deductibles, coinsurance, and out-of-pocket maximums.

POS products blend the characteristics of HMO, PPO and indemnity plans.

In general, POS plans allow members to choose to seek care from a provider within the plan’s network or outside the network, subject to, among other things, certain deductibles and coinsurance.

These offerings allow employers flexibility in selecting network breadth, funding arrangements, and cost-sharing levels aligned with workforce needs and affordability objectives.

We also offer Individual risk-based products on and off the Public Exchange, covering essential health benefits (as defined in the ACA) along with many other requirements and cost-sharing features.

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We provide a broad array of managed care services to fee-based groups, including claims processing, provider network access, medical management, care management and wellness programs, actuarial services and other administrative services.

Fee-based health plans are also able to use our provider networks and to realize savings through our negotiated provider arrangements, while allowing employers the ability to design certain health benefit plans in accordance with their own requirements and objectives.

Fee-based health plans are also able to use our provider networks and to benefit from savings through our negotiated provider arrangements, while allowing employers the ability to design certain health benefit plans to meet their own workforce and cost-management objectives.

We also charge a premium to underwrite stop loss insurance for employers that maintain fee-based plans but want to limit their retained risk.

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Our vision plans include networks within the states in which we operate and are offered on both a risk-based and fee-based basis.

These plans provide routine eye exams, corrective eyewear coverage, and access to national retail optical chains.

◦ Supplemental Health.

We offer supplemental health products, including accident, critical illness and hospital indemnity, which provide coverage for specific conditions or circumstances.

These offerings help members address unexpected healthcare expenses and complement traditional medical coverage.

• Medicare Plans.

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In addition, our Medicare Advantage SNPs provide tailored benefits to special needs individuals who are institutionalized or have severe or disabling chronic conditions and to dual-eligible customers, who are low-income seniors and persons under age 65 with disabilities.

Medicare Advantage SNPs are coordinated care plans specifically designed to provide targeted care, covering all the healthcare services considered medically necessary for members and often providing professional care coordination services, with personal guidance and programs that help members maintain their health.

These plans emphasize coordinated care, care management, and customized benefits aligned to members’ clinical and social needs.

Medicare Advantage membership also includes Medicare Advantage members in our Group Retiree Solutions business who are retired members of commercial accounts or groups who are not affiliated with our commercial accounts that have selected a Medicare Advantage product through us.

MMP is focused on serving members who are dually eligible for Medicaid and Medicare.

MMPs are focused on serving members who are dually eligible for Medicaid and Medicare.

Medicare Supplement plans typically pay the difference between healthcare costs incurred by a beneficiary and amounts paid by the traditional Medicare Fee-For-Service program.

Medicare Part D offers a prescription drug plan to Medicare and MMP beneficiaries.

In 2026, we will no longer offer Medicare Part D plans.

• Medicaid Plans and Other State-Sponsored Programs.

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programs for seniors and people with disabilities (“SPD”);

Children’s Health Insurance

Programs (“CHIP”);

Children’s Health Insurance Programs (“CHIP”);

and specialty programs such as those focused on long-term services and support (“LTSS”), HIV/AIDS, children living in foster care, behavioral health and/or substance abuse disorders, and intellectual disabilities and/or developmental disabilities.

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Our Medicaid plans also cover certain dual-eligible customers, as previously described above, who also receive Medicare benefits.

In 2024, we provided Medicaid and other state sponsored services, such as administrative services, in Arkansas, California, Colorado, District of Columbia, Florida, Georgia, Indiana, Iowa, Kentucky, Louisiana, Maryland, Minnesota, Missouri, Nebraska, Nevada, New Jersey, New York, North Carolina, Ohio, Puerto Rico, South Carolina, Tennessee, Texas, Virginia, Washington, West Virginia and Wisconsin.

In 2025, we provided Medicaid and other state sponsored services, such as administrative services, in Arkansas, California, Colorado, District of Columbia, Florida, Georgia, Indiana, Iowa, Kansas, Louisiana, Maryland, Missouri, Nevada, New Jersey, New York, North Carolina, Ohio, Puerto Rico, Tennessee, Texas, Virginia, Washington, West Virginia and Wisconsin.

• Federal Employee Program ® .

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Carelon Services integrates physical, behavioral, pharmacy, and social services with the aim of delivering whole health affordably by offering a broad array of healthcare related services and capabilities to internal and external customers through our Carelon Health and Carelon Insights businesses.

Carelon businesses promote affordability by managing complex areas of the healthcare system, leveraging data and insights to improve how our members receive safe, appropriate, high-quality care and providers are reimbursed accurately and timely.

Our approach to cost management relies on capabilities including provider enablement, value-based networks, member engagement, and utilization management.

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Carelon Medical Benefits Management provides specialty care enablement and utilization management support for specialized clinical domains.

Carelon Post Acute Solutions manages home health, post-acute institutional management, and durable medical equipment costs.

Carelon Behavioral Health provides comprehensive behavioral health management services through clinical services and network

administration.

Carelon Post Acute Solutions, which includes Carebridge, manages home health, post-acute institutional management, durable medical equipment costs, provides virtual care to complex Medicaid and Medicare patients and supports plans in managing home and community-based services.

Carelon Behavioral Health provides comprehensive behavioral health management services through clinical services and network administration.

Carelon Care Navigation provides comprehensive care management services.

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(“Mosaic Health”), a joint venture with Clayton, Dubilier & Rice (“CD&R”).

At the end of 2024, we completed our acquisition of CareBridge, which provides virtual care to complex Medicaid and Medicare patients and supports plans in managing home and community-based services.

• Carelon Insights:

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Carelon Insights' capabilities include payment integrity, subrogation, clinical data exchange through our HealthOS platform, research and data services, reporting and clinical analytics, and information technology services and global business process support.

The HealthOS platform is dedicated to facilitating seamless clinical data exchange by establishing connectivity between healthcare providers, Electronic Medical Records (“EMRs”), and our health plans.

The managed care industry is highly competitive, both nationally and in our local markets.

Competition continues to be intense due to aggressive marketing, pricing, bid activity for government-sponsored programs, business consolidations, new strategic alliances, new competitors in the market, a proliferation of new products, technological advancements, the impact of legislative reform, increased quality awareness and price sensitivity among customers and changing market practices, such as increased usage of telehealth.

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, effective use of digital technology, breadth and flexibility of products and benefits, expertise and reputation (including National Committee on Quality Assurance (“NCQA”) accreditation status as well as CMS Star Ratings), brand recognition and financial stability.

We believe that participants in the managed care industry compete for customers based on quality of service, price, access to care provider networks, access to care management and wellness programs (including health information), innovation, effective use of digital technology, breadth and flexibility of products and benefits, expertise and reputation (including National Committee for Quality Assurance (“NCQA”) accreditation status as well as CMS Star Ratings), 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 believe our exclusive right to market products under the most recognized brand in the industry, BCBS, in our most significant markets provides us with greater brand recognition over competitive product offerings.

Typically, we are the largest participant in each of our BCBS branded markets, and thus are closely watched by other health benefits companies.

Typically, we are the largest participant in each of our BCBS branded markets, and thus are closely watched by other health benefits companies.The strength of the BCBS brand, combined with our scale, network assets, and local-market expertise, supports competitive positioning across customer segments, including national accounts.

Product pricing remains competitive, and we strive to price our health benefit products and design our Medicare and Medicaid bids consistent with anticipated underlying medical trends.

We believe our pricing and bid strategy, based on predictive modeling, proprietary research and data-driven processes, has positioned us to benefit from the potential growth opportunities available through entry into new markets, expansions in existing markets and as a result of any future changes to the current regulatory scheme.

We believe our pricing and bid strategy, based on predictive modeling, proprietary research and data-driven processes, has positioned us to pursue growth opportunities available through entry into new markets, expansions in existing markets and in response to future changes to the current regulatory scheme.

We believe that our pricing and bid strategy, brand name and network quality will provide a strong foundation for membership growth opportunities in the future.

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In addition, the pharmacy industry is highly competitive, and CarelonRx is subject to competition from national, regional and local pharmacy service providers, insurers, health plans, large retail pharmacy chains, large retail stores, supermarkets, mail order pharmacies, web pharmacies and specialty pharmacies.

Strong competition within the pharmacy industry has

generated greater demand for lower product and service pricing, increased revenue sharing and enhanced product and service offerings.

Strong competition within the pharmacy industry has generated greater demand for lower product and service pricing, increased revenue sharing and enhanced product and service offerings.

Pricing and Underwriting of Our Products

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While following industry standards, we are simultaneously seeking to lead transformation efforts within our healthcare system, moving from a fragmented model premised on episodic intervention to one based on proactive, coordinated care built around the whole health needs of the patient.

We establish “market-based” hospital reimbursement payments that we believe are fair, but aggressive, and among the most competitive in the market.

We also seek to ensure that physicians in our network are paid in a timely manner at appropriate rates.

In most instances, we deploy multi-year contracting strategies, including fixed case rates and fee schedules, to limit our exposure to medical cost inflation and to increase cost predictability.

Our network contracting strategy is focused on ensuring competitive market-based hospital reimbursement terms and timely, appropriate payment for physicians and other clinicians.

Across our markets, we deploy multi-year contracting strategies, including fixed rates and standard fee schedules, to enhance cost predictability, mitigate exposure to medical cost inflation, and establish long-term stability with providers.

We maintain both broad and narrow provider networks to ensure member choice, based on both price and access needs, while implementing programs designed to improve the quality of care our members receive.

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Our reimbursement strategies are tailored to each market and reflect the degree of consolidation and integration of physician groups and hospitals.

Under a fee-for-service reimbursement methodology for physicians, fee schedules are developed at the state level based on an assessment of several factors and conditions, including the CMS resource-based relative value system (“RBRVS”), medical practice cost inflation and physician supply of each specialty.

Under a fee-for-service reimbursement methodology for physicians, fee schedules are developed at the state level based on an assessment of several factors and conditions, including the CMS resource-based relative value scale system (“RBRVS”), medical practice cost inflation and physician supply of each specialty.

We utilize CMS RBRVS fee schedules as a reference point for fee schedule development and analysis.

The RBRVS structure was developed, maintained, and updated by CMS and is used by the Medicare program and other major health plans.

In addition, we have implemented and continue to expand physician incentive contracting, which ties physician payment levels to performance on efficiency, clinical and patient experience measures.

While we generally do not delegate full financial responsibility to our physician providers in the form of capitation-based reimbursement, we maintain capitation-based arrangements in certain markets where we determine that market dynamics result in it being a useful method to lower costs and reduce underwriting risk.

Our provider engagement and contracting strategies have evolved to include value-based contracting arrangements that meet providers where they are in the movement from traditional fee-for-service to value-based care.

These programs are designed to support commercial, Medicare and Medicaid programs and the unique characteristics of these populations.

Our value-based contracting programs are designed to reward our contracted providers for improving the overall quality of care they deliver by adhering to evidence-based medicine.

In addition, these value-based contracts also share with the providers total cost of care savings that are achieved by adhering to evidence-based medicine over time.

For providers who contract in one of our value-based programs, we work with them to share gaps in care information and other important data to assist them in managing the care of their patients.

Often providers will also grant us access to data to support the efficient administration of program components.

This data can allow us to more efficiently capture information regarding the risk of our membership and the overall adherence to evidence-based medicine, as well as information to more efficiently perform utilization management administration.

Our hospital contracts provide for a variety of reimbursement arrangements depending on local market dynamics and current hospital utilization efficiency.

Most hospitals are reimbursed a per-case amount, per admission, for inpatient covered services.

Our “per-case” reimbursement methods utilize many of the same attributes contained in Medicare’s Diagnosis Related Groups methodology.

Hospital outpatient services are reimbursed by fixed case rates, fee schedules or percent of approved charges.

A small percentage of hospitals, primarily rural, sole community hospitals, are reimbursed on a discount from approved charge basis for covered outpatient services.

Our hospital contracts recognize unique hospital attributes, such as academic medical centers or sole community hospitals, and the volume of care performed for our members.

To improve predictability of expected costs, we frequently use a multi-year contracting approach with providers.

In addition, the majority of our hospital contracts include a pay-for-performance component where reimbursement levels are linked to improved clinical performance, patient safety and medical error reduction.

Within our Health Benefits segment, although premium revenues for our commercial business are not seasonal, our benefit costs rise as members pay their contractual portion of claims responsibility, hitting their deductibles and out-of-pocket maximums.

The RBRVS structure was developed, and is maintained and updated, by CMS and is used by the Medicare program and other major health plans.

We also continue to expand physician incentive contracting, which ties physician payment levels to performance on efficiency, clinical and patient experience measures.

While we generally do not use full-risk capitation models for physician groups, we employ capitation arrangements in selected markets where they help reduce underwriting risk and effectively manage total cost of care.

Our broader provider engagement strategy increasingly centers on value-based contracting across our Commercial, Medicare, and Medicaid businesses.

These arrangements reward adherence to evidence-based care guidelines and encourage providers to improve overall quality and manage total cost of care over time.

Our portfolio of value-based models is designed to provide options for our providers as they move from traditional fee-for-service to value-based care.

To support performance in these models, we share actionable data such as gaps-in-care information, risk insights, and utilization patterns;

in some arrangements, providers also share data to strengthen program administration and risk assessment.

Our hospital reimbursement approaches vary by market but commonly include per-case payments for inpatient services and fixed case rates, fee schedules, or percentage-of-charges methodologies for outpatient services.

Per-case methodologies incorporate attributes similar to Medicare’s Diagnosis Related Groups system.

A small number of hospitals, primarily rural or sole community facilities, are reimbursed based on discounts from approved charges.

Our hospital contracts also account for unique facility characteristics, such as teaching status or specialized service lines, as well as the volume of care delivered to our members.

Most contracts include pay-for-performance components that link reimbursement to improvements in clinical outcomes, patient safety, and reductions in medical errors.

To promote stability and predictability, we frequently utilize multi-year agreements across both physician and hospital settings.

Within our Health Benefits segment, premium revenues for our commercial business are generally not seasonal, and our benefit costs rise as members satisfy their deductibles and out-of-pocket maximums over the course of the year.

Seasonality in our Medicaid business can vary depending on the timing of the recognition of premium rates during the year, and we typically experience additional costs in our Medicare business in the fourth quarter to support the annual enrollment period.

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Seasonality in our Carelon Services segment aligns with the claims and revenue seasonality for services covered, which can vary by Carelon product and line of business.

As the year progresses, members will generally reach their deductible and out-of-pocket maximum limit, and benefit expense in our Carelon Services businesses will typically increase to cover member costs.

As the year progresses, members will generally reach their deductible and out-of-pocket maximum limit, and benefit expense in our Carelon Services businesses will typically increase.

Medical Management Programs

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These medical management activities and programs are administered and directed by physicians and nurses with the goal of ensuring that the care delivered to our members is supported by appropriate medical and scientific evidence, is received on a timely basis and occurs in the most appropriate setting.

The medical management programs available to our members may vary depending on the particular plan or product in which they participate.

Care coordination is one of the strategies we utilize and is based on nationally recognized criteria developed by third-party medical specialists to help coordinate inpatient as well as outpatient care and monitor appropriate utilization of such services.

Our case management focuses on identifying membership that will require a high level of intervention and providing assistance to manage their healthcare needs.

Precertification is utilized to assess appropriateness of certain medical services and sites of care prior to the services being rendered.

Our medical policy committee determines our national policies

and guidelines for the application of medical technologies, procedures and services and reviews these policies and guidelines at least once a year or as new published clinical evidence becomes available.

We are actively engaged with our hospital and physician networks to enable them to achieve better outcomes for our members.

We also work with outside experts through a process of external review to provide our members scientifically and clinically evidence-based medical care.

Our web-based tools allow our members to obtain or compare cost estimates for care, including out-of-pocket costs.

The medical management programs available to our members may vary depending on the particular plan or product in which they

Our objective is to ensure that members receive the right care, safely, at the right time, and in the most appropriate setting.

Our medical policy committee establishes national clinical policies and guidelines, which are reviewed at least annually or updated sooner when new clinical evidence becomes available.

We collaborate closely with our contracted physicians and hospitals to support improved clinical outcomes and employ external review where appropriate to ensure that medical determinations reflect the latest evidence-based standards.

Through our Carelon Medical Benefits Management, Inc.

subsidiary, we promote appropriate, safe and affordable member care in areas including maternity care, imaging, sleep disorders, cardiac testing, oncology drugs and musculoskeletal procedures.

These expanded specialty benefit management solutions leverage clinical expertise and technology to engage provider communities and members in the more effective and efficient use of outpatient services and to promote the most appropriate use of clinical services to improve the quality of care.

We remain committed to assisting our members in making informed and value-based healthcare decisions, providing for easier navigation of healthcare services and delivering a better healthcare experience.

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Our digital engagement platform, Sydney Health, is designed to give our members access to personalized health and wellness resources, medical, pharmacy, dental and vision benefits details, and virtual care services, all in one place.

With our integrated information systems and sophisticated data analytics, we help our members improve their compliance with evidence-based care guidelines, provide personal care notes that alert members to potential gaps in care, enable more prudent healthcare choices and assist in the realization of member out-of-pocket cost savings.

Our care management, infertility services and maternity management programs serve as adjuncts to physician care.

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Our Carelon Palliative Care Services subsidiary engages with members near end of life and/or requiring palliative care to manage serious illnesses and improve quality of life during a difficult time.

Our employee assistance programs provide 24/7 telephonic support for personal and crisis events and provide resources such as counseling and referral assistance with childcare, health and wellness, financial issues, legal issues, adoption and daily living.

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The program assists members and their families with obtaining appropriate behavioral health treatment, offering community resources, providing education and telephonic support, and promoting provider collaboration.

Healthcare Quality Initiatives

Increasingly, the healthcare industry is able to define quality healthcare based on effective, safe, equitable and affordable care in preventive health, and optimal care management for chronic disease.

A key to our success has been our ability to develop partnerships by working with our network physicians, hospitals, and social resources providers to improve the quality outcomes of the healthcare and social impact services provided to our members, their families, and the community-at-large.

Our ability to promote quality medical care and patient safety, address health-related social risks and advance health equity has been recognized by the National Committee for Quality Assurance (“NCQA”), the largest and most respected national accreditation program for managed care health plans, and our company was awarded the NCQA 2023-2024 Innovation Award for the advancement of better maternal and neonatal outcomes.

Several quality healthcare measures, including the Healthcare Effectiveness Data and Information Set (“HEDIS ® ”), have been incorporated into NCQA’s accreditation processes.

HEDIS ® measures range from preventive services, such as screening mammography and pediatric immunization, to elements of care, including decreasing the complications of diabetes, improving treatment for patients with heart disease, integration of behavioral health, and racial and ethnic stratification measurement to help close healthcare disparities.

Through our Carelon Medical Benefits Management, Inc.

subsidiary, we promote appropriate, safe and affordable member care in areas including maternity care, imaging, sleep disorders, cardiac testing, oncology drugs and musculoskeletal procedures.

We perform management review for home health and post-acute institutional services provided to Medicare members through our Carelon Post Acute Solutions, Inc.

subsidiary, with the goal of ensuring they receive appropriate, high-quality

care and supporting their transition back into the home.

Effective management of these services can help reduce preventable hospital admissions and readmissions, thereby improving healthcare outcomes for patients.

Additionally, Carelon Medical Benefits Management, Inc.

has developed programs to address healthcare quality by identifying and closing care gaps.

A social determinants of health program screens our members for social needs and connects members to appropriate community resources to encourage better care outcomes.

Both medical benefits management and post-acute solutions programs are examples of how we facilitate improvements in the quality of care provided to our members and promote cost-effective, affordable medical care.

The physical aspects of health have been traditionally the focus and the priority for healthcare.

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We seek to understand our members' health-related social needs to create a healthcare system that synchronizes care delivery for physical, behavioral, social and pharmacy needs.

We have invested in a number of strategies to improve how we address health related social needs.

We are advancing our efforts through consistent screening of our members for their social needs by using industry-standard tools such as the Protocol for Responding to & Assessing Patients’ Assets, Risks & Experiences, co-creating social action plans with our members, connecting members to related social support services, and evaluating the entire process for continuous quality improvement.

We have also implemented our “Food as Medicine” strategy across many of our lines of business to create interventions that not only prevent, manage, and treat diseases but also address food and nutrition insecurity among our members.

We have invested in a number of strategies to improve how we address our members' health-related social needs.

We are advancing our efforts in this area by using industry-standard tools such as the Protocol for Responding to & Assessing Patients’ Assets, Risks & Experiences, co-creating social action plans with our members, connecting members to related social support services, and evaluating the entire process for continuous quality improvement.

We have also implemented our

“Food as Medicine” strategy across many of our lines of business to create interventions that not only prevent, manage, and treat diseases but also address food and nutrition insecurity among our members.

We are committed to ensuring that all people, regardless of age, race or ethnicity, sexual orientation, gender identity, disability, and geographic or financial access, can receive individualized care.

Harnessing data gives a more complete picture of each member and their health needs and can help make healthcare more personalized and equitable.

Harnessing data gives a more complete picture of each member and their health needs and can help make healthcare more personalized.

Strengthening communities has a positive effect on health;

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Using our data, we also identify the resources needed to support local residents, including the people who we serve, to ensure those resources can better meet local needs.

Care coordination is also one of the strategies we utilize and is based on nationally recognized criteria developed by third-party medical specialists to help coordinate inpatient as well as outpatient care and monitor appropriate utilization of such services.

Our case management focuses on identifying membership that will require a high level of intervention and providing assistance to manage their healthcare needs.

Healthcare Quality Initiatives

Our ability to promote quality medical care and patient safety, address health-related social risks and advance equal opportunity for health access has been recognized by the NCQA, the largest and most respected national accreditation program for managed care health plans.

Several quality healthcare measures, including the Healthcare Effectiveness Data and Information Set (“HEDIS ® ”), have been incorporated into NCQA’s accreditation processes.

We perform management review for home health and post-acute institutional services provided to Medicare members through Carelon Post Acute Solutions, with the goal of ensuring they receive appropriate, high-quality care and supporting their transition back into the home.

Effective management of these services can help reduce preventable hospital admissions and readmissions, thereby improving healthcare outcomes for patients.

Additionally, Carelon Medical Benefits Management has developed programs to address healthcare quality by identifying and closing care gaps.

A social determinants of health program screens our members for social needs and connects members to appropriate community resources to encourage better care outcomes.

Our post-acute solutions and medical benefits management programs help facilitate improvements in the quality of care provided to our members and promote cost-effective, affordable medical care.

BCBSA Licenses

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Each BCBSA licensee is an independent legal organization and is not responsible for obligations of other BCBSA member organizations.

Although previously we did not have a right to sell products and services using the BCBS names and marks outside of our exclusive service areas, under the terms of the In re Blue Cross Blue Shield Antitrust Litigation subscriber settlement agreement and release (“Subscriber Settlement Agreement”) some large national employers with self-funded plans (specifically identified in the Subscriber Settlement Agreement), have a right to request a second Blue plan bid in addition to a bid from the local Blue plan, effective as of September 2024.

Although previously we did not have a right to sell products and services using the BCBS names and marks outside of our exclusive service areas, under the terms of the In re Blue Cross Blue Shield Antitrust Litigation subscriber settlement agreement and release (the “Subscriber Settlement Agreement”), some large national employers with self-funded plans (specifically identified in the Subscriber Settlement Agreement) have a right to request a second Blue plan bid in addition to a bid from the local Blue plan, effective as of September 2024.

We are required to pay an annual license fee to the BCBSA based on enrollment and to comply with various requirements and restrictions regarding our operations and our use of the BCBS names and marks.

These requirements and restrictions include, among other things:

These requirements and

restrictions include, among other things:

minimum capital and liquidity requirements;

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and a requirement that we indemnify the BCBSA against any claims asserted against it resulting from the contractual and financial obligations of any subsidiary that serves as a fiscal intermediary providing administrative services for Medicare Parts A and B.

In addition, a change of control or violation of the BCBSA ownership limitations on our capital stock, impending financial insolvency or the appointment of a trustee or

receiver or the commencement of any action against us seeking our dissolution could cause a termination of our license agreements.

In addition, a change of control or violation of the BCBSA ownership limitations on our capital stock, impending financial insolvency or the appointment of a trustee or receiver or the commencement of any action against us seeking our dissolution could cause a termination of our license agreements.

We believe that we and our licensed affiliates are currently in compliance with these standards.

The standards under the license agreements may be modified in certain instances by the BCBSA.

See Part I, Item 1A, “Risk Factors” in this Annual Report on Form 10-K for additional details on the impact if we were not to comply with these license agreements and Note 14, “Commitments and Contingencies – Litigation and Regulatory Proceedings – Blue Cross Blue Shield Antitrust Litigation ,” of the Notes to our Consolidated Financial Statements included in Part II, Item 8 of this Annual Report on Form 10-K for additional information on the Subscriber Settlement Agreement.

See Part I, Item 1A, “Risk Factors” in this Annual Report on Form 10-K for additional details on the impact if we were not to comply with these license agreements and Note 14, “Commitments and Contingencies – Litigation and Regulatory Proceedings – Blue Cross Blue Shield Antitrust Litigation ,” of the Notes to Consolidated Financial Statements included in Part II, Item 8 of this Annual Report on Form 10-K for additional information on the Subscriber Settlement Agreement.

Our operations are subject to comprehensive and detailed state, federal and international regulation throughout the jurisdictions in which we do business.

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See Part I, Item 1A, “Risk Factors” in this Annual Report on Form 10-K.

The Consolidation Appropriations Act of 2023

The Consolidated Appropriations Act of 2023

The Consolidated Appropriations Act of 2023 decoupled Medicaid eligibility redetermination from the COVID-19 Public Health Emergency, initially declared in January 2020.

As a result, states were permitted to begin removing ineligible beneficiaries from their Medicaid programs starting April 1, 2023, and the majority of our Medicaid markets began doing so as of June 30, 2023.

Although most states have completed this process, CMS has provided that states have until December 31, 2025, to complete these eligibility redeterminations.

Since redeterminations resumed, we have continued to experience a decline in our Medicaid membership.

We expect growth over time in our commercial plans, including through the Public Exchanges, as members who have lost Medicaid coverage in states where we offer commercial plans seek coverage elsewhere.

CMS required states to complete Medicaid eligibility redeterminations by December 31, 2025.

In addition, subsequent budget reconciliation legislation enacted during 2023-2025 included provisions affecting Medicaid eligibility enrollment and program financing, which may influence state Medicaid policies and beneficiary coverage dynamics over time.

The Inflation Reduction Act of 2022

The Inflation Reduction Act of 2022 contains a variety of provisions that have impacted, and continue to impact, our business including extending the American Rescue Plan Act of 2021's enhanced Premium Tax Credits (“PTC”) through 2025;

The Inflation Reduction Act of 2022 (“IRA”) includes several provisions that have impacted, and continue to impact, our business.

These provisions include extending the American Rescue Plan Act of 2021's enhanced PTCs through 2025;

imposing a new corporate alternative minimum tax;

providing a one percent excise tax on repurchases of stock;

allowing CMS to negotiate prices on a limited set of prescription drugs beginning in 2026;

establishing a one percent excise tax on repurchases of stock by issuers;

authorizing CMS to negotiate prices on a limited set of Medicare prescription drugs beginning in 2026;

instituting caps on insulin cost sharing in Medicare;

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requiring drug manufacturers to pay rebates if prices increase beyond inflation;

and delaying the implementation of the Trump Administration Medicare drug rebate rule to 2032.

The extension of the enhanced PTC has allowed for growth in Individual Public Exchange enrollment and has supported continuity of coverage since Medicaid eligibility redeterminations resumed in 2023.

If Congress does not act to extend the enhanced PTC, they will expire at the end of 2025, which could have a material adverse effect on our business and results of operations.

and delaying the implementation of the Trump Administration Medicare drug rebate rule until at least 2032.

From 2021 to 2025, Individual market enrollment grew significantly, driven in part by enhanced PTCs, which reduced Public Exchange coverage premiums for individuals who qualified.

This, in combination with lower membership effectuation rates, particularly in geographies with high concentrations of highly subsidized members, have driven a market-wide increase in morbidity, resulting in elevated medical cost trends.

The enhanced PTCs expired on December 31, 2025.

As a result, the amount of Public Exchange coverage premiums may increase for those individuals previously receiving the enhanced PTCs, which may negatively impact individual market enrollment.

The Consolidated Appropriations Act of 2021

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In September 2024, the Tri-Agencies issued final regulations related to mental health parity that will require health plans to make administrative and operational changes to comply with these final regulations.

Although some provisions became effective on January 1, 2025, additional guidance from the Tri-Agencies will be necessary to assess the full impact of these regulations on our operations and financial results.

Litigation has been filed challenging the final regulation and is pending court action.

While some provisions became effective on January 1, 2025, additional guidance from the Tri-Agencies is necessary to assess the full impact of these regulations on our operations and financial results.

Litigation has been filed challenging these final regulations.

State Regulation of Insurance Companies and HMOs

Our insurance and HMO subsidiaries must obtain a certificate of authority and maintain that license in the jurisdictions in which they conduct business.

The National Association of Insurance Commissioners (“NAIC”) has adopted model regulations that, where adopted by states, require expanded governance practices, risk and solvency assessment reporting and the filing of periodic financial and operating reports.

the filing of periodic financial and operating reports.

Most states have adopted these or similar measures to expand the scope of regulations relating to corporate governance and internal control activities of HMOs and insurance companies.

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These acts contain certain reporting requirements, as well as restrictions on transactions between an insurer or HMO and its affiliates, and may restrict the ability of our regulated subsidiaries to pay dividends to our holding companies.

These holding company laws and regulations

generally require registration with applicable state departments of insurance and the filing of reports describing capital structure, ownership, financial condition, certain intercompany transactions, enterprise risks, corporate governance and general business operations.

These holding company laws and regulations generally require registration with applicable state departments of insurance and the filing of reports describing capital structure, ownership, financial condition, certain intercompany transactions, enterprise risks, corporate governance and general business operations.

State insurance holding company laws and regulations require notice or prior regulatory approval of transactions including acquisitions, material intercompany transfers of assets, guarantees and other transactions between the regulated companies and their affiliates, including parent holding companies.

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The methodology and measures included in the Star Ratings system can be modified by CMS annually.

Our 2024 Star Ratings, which are

used for payment year 2025, reflect that 53% of our Medicare Advantage members are enrolled in plans rated at least 4.0 Stars or higher.

This was an increase over the original 2024 Star Rating of 34% that were released in October 2023 and were subsequently recalculated by CMS.

Our 2025 Star Ratings, which are used for payment year 2026, reflect that approximately 40% of our Medicare Advantage members are enrolled in plans rated at least 4.0 Stars or higher.

CMS released our 2026 Star Ratings in October 2025, which will be used to determine our Medicare Advantage bonus payments in 2027.

Our 2025 Star Ratings reflect that 38% of our Medicare Advantage members are enrolled in plans rated at least 4.0 Stars or higher.

We expect this will result in a reduction to our 2026 operating revenue of approximately $183 million, net of offsets from contracting provisions.

Further, we expect to mitigate the financial impact to our 2026 operating gain and net income per share through various strategies such as contract diversification, operating expense efficiencies, capital deployment alternatives and network enhancements.

Our 2026 Stars Ratings reflect that approximately 59% of our Medicare Advantage members are enrolled in plans rated at least 4.0 Stars or higher, or the equivalent.

• The implementation of a Medicare Advantage payment formula, which prevents reimbursement rates from increasing as much as otherwise would be expected.

We continue to participate in the Public Exchange in nearly all of our Anthem Blue Cross and Anthem Blue Cross and Blue Shield service areas.

We anticipate growth in our Public Exchange membership as former Medicaid members, no longer eligible for Medicaid coverage, continue to seek alternative coverage options.

In 2025, we expanded our operations into select service areas in Florida, Maryland, and Texas through our Simply Healthcare and Wellpoint brands.

Going forward, we expect the Public Exchange to be influenced by policy and regulatory changes, particularly around federal subsidies, compliance requirements and market stability.

Any variation from our expectations regarding acuity, enrollment levels, adverse selection, or other assumptions utilized in setting premium rates could have a material adverse effect on our results of operations, financial position, and cash flows, and may require further adjustments to our rates and participation going forward.

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Pharmacy Services and Drug Benefit Regulation

Pharmacy services, including pharmacy benefit managers, are regulated at both the federal and state levels and must comply with federal and state statutes and regulations governing a pharmacy benefit manager's business, including, but not limited to, pharmacy network restrictions and configurations, formulary management, affiliate pharmacy reimbursement, anti-steering to affiliated pharmacies, prohibition on pharmacy claim processing/transaction fees, pharmacy effective rates, guarantees and reconciliations, reimbursement pricing type mandates, purchase discount and/or rebate arrangements with drug manufacturers, advertising and licensing.

Regulation in the states varies dramatically and ranges from licensure of pharmacy benefit managers as third-party administrators, licensure specifically as a pharmacy benefit manager, and licensure accompanied by additional disclosures and limitations of business practices to varying degrees.

Pharmacy benefit managers are also subject to continued changes in public policy, legislation, laws, and regulations relating to drug benefits and pharmacy services, which include, but are not limited to, (1) regulation of rebates from drug manufacturers that would require rebate dollars to be applied at the point-of-sale or passed through to the plan sponsor, (2) federal policy changes to set the prices for a subset of drugs covered under the Medicare program, (3) reforms to the Medicare drug benefit, such as beneficiary cost-sharing changes that aim to lower consumer costs and prohibit pharmacy benefit managers and their affiliates from deriving income based on the price of the drug, (4) attempts at both the federal and state levels to prohibit the use of spread pricing contracts in both the commercial and Medicaid markets, (5) prior authorizations of drugs, (6) transparency and public disclosure of costs and profits, (7) prohibiting exclusive specialty and mail pharmacy networks, (8) limiting pharmacy accreditation and credentialing requirements, (9) consumer choice/any willing provider requirements, and (10) prohibiting steering to affiliated pharmacies.

Pharmacy benefit managers are also subject to continued changes in public policy, legislation, laws, and regulations relating to drug benefits and pharmacy services, which include, but are not limited to, (1) federal policy changes to set the prices for a subset of drugs covered under the Medicare program, (2) reforms to the Medicare drug benefit, such as beneficiary cost-sharing changes that aim to lower consumer costs and prohibit pharmacy benefit managers and their affiliates from deriving income based on the price of the drug, (3) prior authorizations of drugs, (4) prohibiting exclusive specialty and mail pharmacy networks, (5) limiting pharmacy accreditation and credentialing requirements, (6) consumer choice/any willing provider requirements, and (7) prohibiting steering to affiliated pharmacies.

These changes in public policy, legislation, laws, and regulations have the potential to have broad impacts on our pharmacy benefit management services and could materially adversely affect our business.

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Certain pharmacies must also register with the U.S.

Drug Enforcement Agency (“DEA”) and individual state-controlled substance authorities to dispense controlled substances.

In addition to adhering to the laws and regulations in the states where our pharmacies are located, we may also be required to comply with certain laws and regulations in certain states into which one of our pharmacies delivers prescription drugs, including those requiring us to register with Boards of Pharmacy as a non-resident pharmacy.

These non-resident states generally expect our pharmacies to follow the laws of the state in which the

pharmacies are located, but some non-resident states also require us to comply with certain of their pharmacy regulations as well.

Drug Enforcement Administration (“DEA”) and individual state-controlled substance authorities to dispense controlled substances.

In addition to adhering to the laws and regulations in the states where our pharmacies are located, we may also be required to comply with certain laws and regulations in certain states into which

one of our pharmacies delivers prescription drugs, including those requiring us to register with Boards of Pharmacy as a non-resident pharmacy.

These non-resident states generally expect our pharmacies to follow the laws of the state in which the pharmacies are located, but some non-resident states also require us to comply with certain of their pharmacy regulations.

Additionally, pharmacies that participate in Medicare or Medicaid pharmacy networks are required to comply with applicable Medicare and Medicaid provider rules and regulations.

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• Federal regulations on data interoperability that require claims data to be made available to third parties unaffiliated with us that may not be HIPAA regulated;

• Federal regulations requiring hospitals and health insurers to publish negotiated prices for services, including the health plan price transparency regulations issued in October 2020 by the U.S.

Departments of Health and Human Services, Labor and Treasury (the “Health Plan Transparency Rule”).

• Federal regulations requiring hospitals and health insurers to publish negotiated prices for services, including the health plan price transparency regulations (the “Health Plan Transparency Rule”) issued in October 2020 by the HHS and U.S.

Departments of Labor and Treasury (collectively, the Tri-Agencies).

Beginning in July 2022, the Health Plan Transparency Rule required us to disclose, on a monthly basis, detailed pricing information regarding negotiated rates for all covered items and services between the plan or issuer and in-network providers and historical payments to, and billed charges from, out-of-network providers.

Additionally, beginning in 2023, we were

required to make available to members personalized out-of-pocket cost information and the underlying negotiated rates for 500 covered healthcare items and services, including prescription drugs.

Additionally, beginning in 2023, we were required to make available to members personalized out-of-pocket cost information and the underlying negotiated rates for 500 covered healthcare items and services, including prescription drugs.

Effective January 1, 2024, this ongoing requirement has expanded to include all items and services.

In December 2025, the Tri-Agencies published a proposed rule that would revise the structure and content of the machine readable files issuers must submit under the Health Plan Transparency Rule, which could result in additional administrative burden and costs.

Employee Retirement Income Security Act of 1974

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Additionally, the Governance Committee of our Board has primary responsibility for monitoring our corporate social responsibility and environmental sustainability initiatives and performance.

We provide the age, gender and racial and ethnic compositions of our U.S.

We provide the age, gender and racial and ethnic compositions of

work force in our annual Impact Report, which includes Equal Employment Opportunity Employer Information Report (EEO-1) data.

Culture, Engagement and Inclusion

Each year we conduct internal associate engagement surveys that provide our associates with an opportunity to share their opinions and experiences with respect to their roles, their teams and the Company, and we also offer online feedback

Our management team reviews, monitors and analyzes associate feedback and acts on responses to identify opportunities to adjust our policies and benefits to improve our associates’ experiences.

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Our initiatives in this area are led by our Chief Talent Officer, and our workforce embodies a multitude of dimensions, including skills, experiences, age, tenure, gender, race, ethnicity, physical abilities and geographic location.

We are committed to a fair pay workplace.

We were in the first cohort of companies certified by the Fair Pay Workplace (“FPW”), an independent certification that takes a holistic approach to pay equity, partnering to design an annual pay equity action plan that includes a perpetual review of all positions, new hires and promotions to effect meaningful and measurable change.

This independent certification is based on a set of publicly available rules and standards and the endorsed methodology of a group of leading experts from forward-thinking corporations, academia, human resources, data science and the legal field.

After partnering with and overseeing our review process examining pay equity for cash compensation, including base and short-term incentives, in December 2024 FPW again validated our analysis of our U.S.

associate population, which found that pay for women is 99.2% of men, and pay for people of color is 99.8% of white associates, after taking into account neutral, job related factors.

Elevance Health is committed to maintaining a fair and equitable pay workplace grounded in our pay-for-performance philosophy.

We benchmark compensation by role, have eliminated inquiries into applicants’ prior pay, and regularly monitor the pay of our workforce for potential disparities.

Each year, we conduct a comprehensive pay equity analysis to ensure associates performing similar work in similar capacities are compensated fairly and equitably.

In 2025, we completed a rigorous gender and race pay equity review of our U.S.

associates using an industry-leading third-party platform.

After accounting for neutral, job-related factors, the analysis found that female associates earn more than 99 cents for every dollar earned by similarly situated male associates, and ethnic minority associates earn more than 99 cents for every dollar earned by similarly situated white associates.

We remain committed to preventing unexplained pay gaps and will continue to monitor our practices and proactively address any disparities to ensure equitable pay for all associates.

Talent Development and Retention

Growing, developing and retaining our talent internally is key to our succession plans and our ability to lead at our best every day.

To inspire a high-performance culture, promote talent excellence and accelerate growth and innovation, we offer individual, career and leadership development opportunities, encouraging associates to continually learn, grow and expand their skill sets.

To inspire a high-performance culture, promote talent excellence and accelerate growth and innovation, we offer individual, career and leadership development opportunities (including a focus on the responsible adoption and use of AI and other technologies), encouraging associates to continually learn, grow and expand their skill sets.

We offer various instructor-led and virtual instructor-led programs and maintain a vast curriculum of relevant, on-demand learning and development resources.

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In addition, we offer our associates wellness and behavioral health programs and tools to help them get and stay healthy and more easily manage their work and personal lives.

We have a mixed in-office, hybrid and remote workplace strategy, and we foster associate engagement through a variety of activities based in our key office locations.

We have a mixed in-office, hybrid and remote workplace strategy, and we foster associate engagement through a variety of activities in our key office locations.

Information About Our Executive Officers

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46 Executive Vice President and Chief Financial Officer

46 Executive Vice President and Chief Human Resources Officer

Haytaian 56 Executive Vice President and President, Carelon and CarelonRx

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Norwood 66 Executive Vice President and President, Government Health Benefits

48 Executive Vice President and Chief Legal Officer

Penczek 61 Chief Accounting Officer and Controller

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Kaye worked in the investment banking division of Credit Suisse First Boston.

Craig has been serving as our Executive Vice President and Chief Human Resources Officer since August 2025.

From January 2025 until August 2025, he served as our Chief Talent Officer & Interim Chief Human Resources Officer, and as our Chief Talent & Diversity Officer from October 2024 until January 2025.

Prior to that, he served as our Chief Talent Officer from January 2024 until October 2024.

Prior to joining us, he served as Head of People at Ralph Lauren Corporation (lifestyle products company) from May 2022 until January 2024, and Chief Talent Officer at UHGI from May 2018 until May 2022.

Prior to joining UHGI, Mr.

Craig served as Global Senior Director at Apple, Inc.

(technology company) from 2011 to 2018, as well as Director of Human Resources and Director of Learning & Development/Talent Acquisition at The Ritz Carlton Hotel Company, LLC (hotel chain) from 2008 to 2011 and from 1999 to 2007, respectively.

Haytaian has been serving as our Executive Vice President and President of Carelon and CarelonRx since October 2021.

4 unchanged sentences

From 2005 to 2013, Mr.

Haytaian held various leadership positions with Amerigroup, including Chief Executive Officer of the North Region for its Medicaid business from 2012 until 2013.

Haytaian held various leadership positions with Amerigroup, including Chief Executive Officer of the North

Region for its Medicaid business from 2012 until 2013.

Haytaian has extensive experience leading Medicare and Medicaid programs both at Amerigroup and, prior thereto, with Oxford Health Plans, Inc.

6 unchanged sentences

(“Nike”) (retailer) from July 2019 to February 2023.

Prior to Nike, he served as Chief Technology Officer/CIO of Kohl’s Corporation (“Kohls”) (retailer) from March 2016 to June 2019, and he held other various roles at Kohl's beginning in 2011, including Executive Vice President, Digital Technology, and Senior Vice President of Digital Innovation.

Prior to Nike, he served as Chief Technology Officer/CIO of Kohl’s Corporation (“Kohls”) (retailer) from March 2016 to June 2019, and he held various other roles at Kohl's beginning in 2011, including Executive Vice President, Digital Technology, and Senior Vice President of Digital Innovation.

Prior to Kohl's, Mr.

4 unchanged sentences

Norwood held various leadership roles at Aetna, with her most recent role as President of the Mid-America Region for Aetna from 2010 until 2013.

Wessling has been serving as our Executive Vice President and Chief Legal Officer since August 2025.

From January 2025 until August 2025, Ms.

Wessling served as our General Counsel and Interim Chief Legal Officer, and as our General Counsel from August 2024 until January 2025.

Prior to joining us, she held various leadership roles at The Cigna Group (diversified healthcare company) from November 2021 until July 2024, with her most recent role as Senior Vice President, Chief Counsel.

Prior to that, she held various leadership roles at HCSC from 2018 until 2021, with her most recent role as Vice President, Legal.

Before joining HCSC, Ms.

Wessling served as Principal Legal Counsel at Medtronic plc (“Medtronic”) (healthcare technology company) from 2016 until 2018.

Prior to Medtronic, she was an attorney at UHGI from 2008 until 2016.

Penczek has been serving as our Controller since November 2015 and as our Chief Accounting Officer since December 2015.

17 unchanged sentences

Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-K

Item 1. Business