Item 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA.

Elevance Health, Inc.

CONSOLIDATED FINANCIAL STATEMENTS

Years ended December 31, 2023, 2022 and 2021

Contents

Reports of Independent Registered Public Accounting Firm (PCAOB ID:42)			67
Audited Consolidated Financial Statements:
Consolidated Balance Sheets			69
Consolidated Statements of Income			70
Consolidated Statements of Comprehensive Income			71
Consolidated Statements of Cash Flows			72
Consolidated Statements of Shareholders’ Equity			73
Notes to Consolidated Financial Statements			74

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Report of Independent Registered

Public Accounting Firm

To the Shareholders and the Board of Directors of Elevance Health, Inc.

Opinion on the Financial Statements

We have audited the accompanying consolidated balance sheets of Elevance Health, Inc. (the Company) as of December 31, 2023 and 2022, the related consolidated statements of income, comprehensive income, cash flows and shareholders’ equity for each of the three years in the period ended December 31, 2023, and the related notes and financial statement schedule listed in the Index at Item 15(c) (collectively referred to as the “consolidated financial statements”). In our opinion, the consolidated financial statements present fairly, in all material respects, the financial position of the Company at December 31, 2023 and 2022, and the results of its operations and its cash flows for each of the three years in the period ended December 31, 2023, in conformity with U.S. generally accepted accounting principles.

We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States) (PCAOB), the Company’s internal control over financial reporting as of December 31, 2023, based on criteria established in Internal Control—Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission (2013 framework), and our report dated February 21, 2024 expressed an unqualified opinion thereon.

Basis for Opinion

These financial statements are the responsibility of the Company’s management. Our responsibility is to express an opinion on the Company’s financial statements based on our audits. We are a public accounting firm registered with the PCAOB and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.

We conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement, whether due to error or fraud. Our audits included performing procedures to assess the risks of material misstatement of the financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the financial statements. Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the financial statements. We believe that our audits provide a reasonable basis for our opinion.

Critical Audit Matter

The critical audit matter communicated below is a matter arising from the current period audit of the financial statements that was communicated or required to be communicated to the audit committee and that: (1) relates to accounts or disclosures that are material to the financial statements and (2) involved our especially challenging, subjective, or complex judgments. The communication of the critical audit matter does not alter in any way our opinion on the consolidated financial statements, taken as a whole, and we are not, by communicating the critical audit matter below, providing a separate opinion on the critical audit matter or on the account or disclosures to which it relates.

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Valuation of Incurred but Not Paid Claims
Description of the Matter						Medical claims payable was $16,111 million at December 31, 2023, a significant portion of which related to the Company’s estimate for claims that are incurred but not paid. As discussed in Note 2 to the consolidated financial statements, the Company’s liability for incurred but not paid claims is determined using actuarial methods that include a number of factors and assumptions, including completion factors, which represent the average percentage of total incurred claims that have been paid through a given date after being incurred based on historical paid claims data, and trend factors, which represent an estimate of claims expense based on recent claims expense levels and healthcare cost levels. There is significant uncertainty inherent in determining management’s best estimate of completion and trend factors, which are used to calculate actuarial estimates of incurred but not paid claims.
						Auditing management’s estimate of incurred but not paid claims was complex and required the involvement of our actuarial specialists due to the highly judgmental nature of the completion and trend factor assumptions used in the valuation process. The significant judgment was primarily due to the sensitivity of management’s best estimate of completion and trend factor assumptions, which have a significant impact on the valuation of incurred but not paid claims.
How We Addressed the Matter in Our Audit						We obtained an understanding, evaluated the design and tested the operating effectiveness of controls over the Company’s actuarial process for estimating the liability for incurred but not paid claims. These audit procedures included among others, testing management review controls over completion and trend factor assumptions and the review and approval processes that management has in place for estimating the liability for incurred but not paid claims.
						To test the Company’s liability for incurred but not paid claims, our audit procedures included, among others, testing the completeness and accuracy of the underlying claims and membership data recorded in the source claims processing and disbursement systems to the data used by management in developing completion and trend factor assumptions and agreeing a sample of incurred and paid claims to source documentation. With the support of actuarial specialists, we analyzed the Company’s completion and trend factor assumptions based on historical claim experience and emerging cost trends and independently calculated a range of reasonable reserve estimates for comparison to management’s best estimate of the liability for incurred but not paid claims. Additionally, we performed a review of the prior period liabilities for incurred but not paid claims to subsequent claims development.

/s/ Ernst & Young LLP

We have served as the Company’s auditor since 1944.

Indianapolis, Indiana

February 21, 2024

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Elevance Health, Inc.

Consolidated Balance Sheets

			December 31, 2023						December 31, 2022
(In millions, except share data)
Assets
Current assets:
Cash and cash equivalents			$	6,526					$	7,387
Fixed maturity securities (amortized cost of $30,446 and $28,226; allowance for credit losses of $4 and $9)			29,614						25,952
Equity securities			229						953
Premium receivables			7,902						7,083
Self-funded receivables			4,558						4,663
Other receivables			5,405						4,298
Other current assets			5,795						5,281
Total current assets			60,029						55,617
Long-term investments:
Fixed maturity securities (amortized cost of $890 and $789; allowance for credit losses of $0 and $0)			876						752
Other invested assets			6,107						5,685
Property and equipment, net			4,359						4,316
Goodwill			25,317						24,383
Other intangible assets			10,273						10,315
Other noncurrent assets			1,967						1,687
Total assets			$	108,928					$	102,755
Liabilities and equity
Liabilities
Current liabilities:
Medical claims payable			$	16,111					$	15,596
Other policyholder liabilities			5,600						5,933
Unearned income			1,402						1,112
Accounts payable and accrued expenses			6,910						5,607
Short-term borrowings			225						265
Current portion of long-term debt			1,649						1,500
Other current liabilities			9,894						9,683
Total current liabilities			41,791						39,696
Long-term debt, less current portion			23,246						22,349
Reserves for future policy benefits			778						803
Deferred tax liabilities, net			1,970						2,015
Other noncurrent liabilities			1,738						1,562
Total liabilities			69,523						66,425
Commitments and Contingencies—Note 14
Shareholders’ equity
Preferred stock, without par value, shares authorized - 100,000,000; shares issued and outstanding - none			—						—
Common stock, par value 0.01, shares authorized - 900,000,000; shares issued and outstanding - 233,071,088 and 237,958,067			2						2
Additional paid-in capital			8,868						9,084
Retained earnings			31,749						29,647
Accumulated other comprehensive loss			(1,313)						(2,490)
Total shareholders’ equity			39,306						36,243
Noncontrolling interests			99						87
Total equity			39,405						36,330
Total liabilities and equity			$	108,928					$	102,755

See accompanying notes.

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Elevance Health, Inc.

Consolidated Statements of Income

			Years Ended December 31
(In millions, except per share data)			2023						2022						2021
Revenues
Premiums			$	142,854					$	133,229					$	117,373
Product revenue			19,452						14,978						12,657
Service fees			7,903						7,453						6,913
Total operating revenue			170,209						155,660						136,943
Net investment income			1,825						1,485						1,378
Net (losses) gains on financial instruments			(694)						(550)						318
Total revenues			171,340						156,595						138,639
Expenses
Benefit expense			124,330						116,642						102,571
Cost of products sold			17,293						13,035						10,895
Operating expense			20,087						17,700						15,918
Interest expense			1,030						851						798
Amortization of other intangible assets			885						767						441
Loss on extinguishment of debt			—						—						21
Total expenses			163,625						148,995						130,644
Income before income tax expense			7,715						7,600						7,995
Income tax expense			1,724						1,712						1,846
Net income			5,991						5,888						6,149
Net (gain) loss attributable to noncontrolling interests			(4)						6						9
Shareholders’ net income			$	5,987					$	5,894					$	6,158
Shareholders’ earnings per share
Basic			$	25.38					$	24.56					$	25.26
Diluted			$	25.22					$	24.28					$	24.95
Dividends per share			$	5.92					$	5.12					$	4.52

See accompanying notes.

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Elevance Health, Inc.

Consolidated Statements of Comprehensive Income

			Years Ended December 31
(In millions)			2023						2022						2021
Net income			$	5,991					$	5,888					$	6,149
Other comprehensive income (loss), net of tax:
Change in net unrealized gains/losses on investments			1,117						(2,260)						(457)
Change in non-credit component of impairment losses on investments			—						(3)						2
Change in net unrealized gains/losses on cash flow hedges			18						10						11
Change in net periodic pension and postretirement costs			40						(70)						123
Change in future policy benefits			(3)						32						(7)
Foreign currency translation adjustments			(1)						(13)						(9)
Other comprehensive income (loss)			1,171						(2,304)						(337)
Net (gain) loss attributable to noncontrolling interests			(4)						6						9
Other comprehensive loss attributable to noncontrolling interests			6						11						2
Total shareholders’ comprehensive income			$	7,164					$	3,601					$	5,823

See accompanying notes.

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Elevance Health, Inc.

Consolidated Statements of Cash Flows

			Years Ended December 31
(In millions)			2023						2022						2021
Operating activities
Net income			$	5,991					$	5,888					$	6,149
Adjustments to reconcile net income to net cash provided by operating activities:
Net losses (gains) on financial instruments			694						550						(318)
Equity in net earnings (losses) of other invested assets			33						(293)						(562)
Depreciation and amortization			1,745						1,675						1,302
Deferred income taxes			(602)						(115)						342
Impairment of property and equipment			446						7						73
Share-based compensation			289						264						255
Changes in operating assets and liabilities:
Receivables, net			(1,762)						(2,510)						(2,138)
Other invested assets			(79)						11						(70)
Other assets			(675)						133						41
Policy liabilities			147						2,411						2,523
Unearned income			290						(42)						(113)
Accounts payable and other liabilities			1,640						824						719
Income taxes			(103)						(338)						140
Other, net			7						(66)						21
Net cash provided by operating activities			8,061						8,399						8,364
Investing activities
Purchases of investments			(16,236)						(24,946)						(18,669)
Proceeds from sale of investments			10,596						11,988						10,269
Maturities, calls and redemptions from investments			2,940						10,620						4,344
Changes in securities lending collateral			78						(301)						(956)
Purchases of subsidiaries, net of cash acquired			(1,552)						(649)						(3,476)
Purchases of property and equipment			(1,296)						(1,152)						(1,087)
Other, net			(102)						(120)						(63)
Net cash used in investing activities			(5,572)						(4,560)						(9,638)
Financing activities
Proceeds from long-term borrowings			2,574						3,071						3,462
Repayments of long-term borrowings			(1,909)						(1,899)						(1,068)
Proceeds from short-term borrowings			225						1,365						1,375
Repayments of short-term borrowings			(265)						(1,675)						(1,050)
Changes in securities lending payable			(77)						302						956
Changes in bank overdrafts			114						933						(376)
Repurchase and retirement of common stock			(2,676)						(2,316)						(1,900)
Cash dividends			(1,395)						(1,229)						(1,104)
Proceeds from issuance of common stock under employee stock plans			152						182						203
Taxes paid through withholding of common stock under employee stock plans			(99)						(93)						(102)
Other, net			7						41						27
Net cash (used in) provided by financing activities			(3,349)						(1,318)						423
Effect of foreign exchange rates on cash and cash equivalents			(1)						(14)						(10)
Change in cash and cash equivalents			(861)						2,507						(861)
Cash and cash equivalents at beginning of year			7,387						4,880						5,741
Cash and cash equivalents at end of year			$	6,526					$	7,387					$	4,880

See accompanying notes.

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Elevance Health, Inc.

Consolidated Statements of Shareholders’ Equity

			Total Shareholders’ Equity
			Common Stock												Additional Paid-in Capital												Accumulated Other Comprehensive (Loss) Income						Noncontrolling Interests						Total Equity
(In millions)			Number of Shares						Par Value									Retained Earnings
January 1, 2021			245.4						$	3					$	9,244					$	23,802					$	138					$	—					$	33,187
Net income			—						—						—						6,158						—						(9)						6,149
Other comprehensive loss									—						—						—						(335)						(2)						(337)
Accumulated noncontrolling interest			—						—						—						—						—						79						79
Repurchase and retirement of common stock			(5.1)						(1)						(192)						(1,707)						—						—						(1,900)
Dividends and dividend equivalents			—						—						—						(1,111)						—						—						(1,111)
Issuance of common stock under employee stock plans, net of related tax benefits			1.5						—						355						—						—						—						355
Convertible debenture repurchases and conversions			—						—						(259)						—						—						—						(259)
December 31, 2021			241.8						2						9,148						27,142						(197)						68						36,163
Adoption of Accounting Standards Update 2020-06 (Note 2)			—						—						—						(23)						—						—						(23)
January 1, 2022			241.8						2						9,148						27,119						(197)						68						36,140
Net income			—						—						—						5,894						—						(6)						5,888
Other comprehensive loss			—						—						—						—						(2,293)						(11)						(2,304)
Noncontrolling interests adjustment			—						—						—						—						—						36						36
Repurchase and retirement of common stock			(4.8)						—						(184)						(2,132)						—						—						(2,316)
Dividends and dividend equivalents			—						—						—						(1,234)						—						—						(1,234)
Issuance of common stock under employee stock plans, net of related tax benefits			1.0						—						352						—						—						—						352
Convertible debenture repurchases and conversions									—						(232)						—						—						—						(232)
December 31, 2022			238.0						2						9,084						29,647						(2,490)						87						36,330
Net income			—						—						—						5,987						—						4						5,991
Other comprehensive income (loss)			—						—						—						—						1,177						(6)						1,171
Noncontrolling interests adjustment			—						—						—						—						—						14						14
Repurchase and retirement of common stock			(5.8)						—						(217)						(2,481)						—						—						(2,698)
Dividends and dividend equivalents			—						—						—						(1,404)						—						—						(1,404)
Issuance of common stock under employee stock plans, net of related tax benefits			0.9						—						342						—						—						—						342
Convertible debenture repurchases and conversions			—						—						(341)						—						—						—						(341)
December 31, 2023			233.1						$	2					$	8,868					$	31,749					$	(1,313)					$	99					$	39,405

See accompanying notes.

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Elevance Health, Inc.

Notes to Consolidated Financial Statements

December 31, 2023

(In Millions, Except Per Share Data or As Otherwise Stated Herein)

1. Organization

References to the terms “we,” “our,” “us” or “Elevance Health” used throughout these Notes to Consolidated Financial Statements refer to Elevance Health, Inc., an Indiana corporation, and unless the context otherwise requires, its direct and indirect subsidiaries. References to the “states” include the District of Columbia and Puerto Rico, unless the context otherwise requires.

Elevance Health is a health company with the purpose of improving the health of humanity. We are one of the largest health insurers in the United States in terms of medical membership, serving approximately 47 million medical members through our affiliated health plans as of December 31, 2023. 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 provide services to the federal government in connection with our Federal Health Products & Services business, which administers the Federal Employees Health Benefits (“FEHB”) Program. We provide an array of specialty services both to customers of our subsidiary health plans and also to unaffiliated health plans, including pharmacy services, dental, vision, life, disability and supplemental health insurance benefits, as well as integrated health services.

We are an independent licensee of the Blue Cross and Blue Shield Association (“BCBSA”), an association of independent health benefit plans. We serve our members as the Blue Cross licensee for California and as the Blue Cross and Blue Shield (“BCBS”) licensee for Colorado, Connecticut, Georgia, Indiana, Kentucky, Maine, Missouri (excluding 30 counties in the Kansas City area), Nevada, New Hampshire, New York (in the New York City metropolitan area and upstate New York), Ohio, Virginia (excluding the Northern Virginia suburbs of Washington, D.C.) and Wisconsin. In a majority of these service areas, we do business as Anthem Blue Cross and Anthem Blue Cross and Blue Shield. We also conduct business through arrangements with other BCBS licensees as well as other strategic partners. In addition, we serve members in numerous states as Amerigroup, Freedom Health, HealthSun, MMM, Optimum Healthcare, Simply Healthcare and/or Wellpoint. We are licensed to conduct insurance operations in all 50 states, the District of Columbia and Puerto Rico through our subsidiaries.

As we announced in 2022, we are organizing our brand portfolio into the following core go-to-market brands:

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

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

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

Our branding strategy reflects the evolution of our business from a traditional health insurance company to a lifetime, trusted health partner. Given this evolution, we reviewed and modified how we manage our business, monitor our performance and allocate resources, and made changes to our reportable segments beginning in the first quarter of 2023. We now report our results of operations in the following four reportable segments: Health Benefits (aggregates our previously reported Commercial & Specialty Business and Government Business segments), CarelonRx, Carelon Services (previously included in our Other segment) 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). During the fourth quarter of 2023, we moved our Carelon Global Solutions international businesses from the Corporate & Other reportable segment to the Carelon Services reportable segment. All prior period reportable segment information has been

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Elevance Health, Inc.

Notes to Consolidated Financial Statements (continued)

reclassified for comparability to conform to the current presentation. For additional discussion, see Note 20, “Segment Information.”

2. Basis of Presentation and Significant Accounting Policies

Basis of Presentation: The accompanying consolidated financial statements include the accounts of Elevance Health and its subsidiaries and have been prepared in conformity with U.S. generally accepted accounting principles (“GAAP”). All significant intercompany accounts and transactions have been eliminated in consolidation.

The accompanying consolidated financial statements and the notes to the consolidated financial statements have been recast and are presented as they would have appeared had we changed our reportable segments, discussed in Note 20, “Segment Information,” and adopted the long-duration contracts accounting standard, discussed in this Note 2 below, prior to January 1, 2023.

Certain of our subsidiaries operate outside of the United States and have functional currencies other than the U.S. dollar (“USD”). We translate the assets and liabilities of those subsidiaries to USD using the exchange rate in effect at the end of the period. We translate the revenues and expenses of those subsidiaries to USD using the average exchange rates in effect during the period. The net effect of these translation adjustments is included in “Foreign currency translation adjustments” in our consolidated statements of comprehensive income.

Reclassifications: Certain prior year amounts have been reclassified to conform to the current year presentation.

Use of Estimates: The preparation of consolidated financial statements in conformity with GAAP requires us to make estimates and assumptions that affect the amounts reported in our consolidated financial statements and accompanying notes. Our most significant estimate relates to estimates and judgments for medical claims payable. Actual results could differ from those estimates.

Cash and Cash Equivalents: Cash and cash equivalents includes available cash and all highly liquid investments with maturities of three months or less when purchased. We control a number of bank accounts that are used exclusively to hold customer funds for the administration of customer benefits, and we have cash and cash equivalents on deposit to meet certain regulatory requirements. These amounts totaled $294 and $258 at December 31, 2023 and 2022, respectively, and are included in the cash and cash equivalents line on our consolidated balance sheets.

Investments: We classify fixed maturity securities in our investment portfolio as “available-for-sale” and report those securities at fair value. Certain fixed maturity securities are available to support current operations and, accordingly, we classify such investments as current assets without regard to their contractual maturity. Investments used to satisfy contractual, regulatory or other requirements are classified as long-term, without regard to contractual maturity.

If a fixed maturity security is in an unrealized loss position and we have the intent to sell the fixed maturity security, or it is more likely than not that we will have to sell the fixed maturity security before recovery of its amortized cost basis, we write down the fixed maturity security’s cost basis to fair value and record an impairment loss in our consolidated statements of income. For impaired fixed maturity securities that we do not intend to sell or if it is more likely than not that we will not have to sell such securities, but we expect that we will not fully recover the amortized cost basis, we recognize the credit component of the impairment as an allowance for credit loss in our consolidated balance sheets and record an impairment loss in our consolidated statements of income. The non-credit component of the impairment is recognized in accumulated other comprehensive loss. Furthermore, unrealized losses entirely caused by non-credit-related factors related to fixed maturity securities for which we expect to fully recover the amortized cost basis continue to be recognized in accumulated other comprehensive loss.

The credit component of an impairment is determined primarily by comparing the net present value of projected future cash flows with the amortized cost basis of the fixed maturity security. The net present value is calculated by discounting our best estimate of projected future cash flows at the effective interest rate implicit in the fixed maturity security at the date of purchase. For mortgage-backed and asset-backed securities, cash flow estimates are based on assumptions regarding the underlying collateral, including prepayment speeds, vintage, type of underlying asset, geographic concentrations, default rates, recoveries and changes in value. For all other securities, cash flow estimates are driven by assumptions regarding

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Elevance Health, Inc.

Notes to Consolidated Financial Statements (continued)

probability of default, including changes in credit ratings and estimates regarding timing and amount of recoveries associated with a default.

For asset-backed securities included in fixed maturity securities, we recognize income using an effective yield based on anticipated prepayments and the estimated economic life of the securities. When estimates of prepayments change, the effective yield is recalculated to reflect actual payments to date and anticipated future payments. The net investment in the securities is adjusted to the amount that would have existed had the new effective yield been applied since the purchase date of the securities. Such adjustments are reported within net investment income.

The changes in fair value of our marketable equity securities are recognized in our results of operations within net gains and losses on financial instruments. Certain marketable equity securities are held to satisfy contractual obligations, and are reported under the caption “Other invested assets” in our consolidated balance sheets.

Mortgage loans on real estate are classified as held for investment and are reported at their amortized cost basis net of loss allowance under the caption “Other invested assets” in our consolidated balance sheets. Amortized cost is the amount at which the loan is originated, adjusted for accrued interest, amortization of premium, discount and net deferred fees or costs, collection of cash and write-offs.

We have corporate-owned life insurance policies on certain participants in our deferred compensation plans and other members of management. The cash surrender value of the corporate-owned life insurance policies is reported under the caption “Other invested assets” in our consolidated balance sheets.

We use the equity method of accounting for investments in companies in which our ownership interest may enable us to influence the operating or financial decisions of the investee company. Our proportionate share of equity in net income of these unconsolidated affiliates is reported within net investment income. The equity method investments are reported under the caption “Other invested assets” in our consolidated balance sheets.

Investment income is recorded when earned. All securities sold resulting in investment realized gains and losses are recorded on the trade date. Realized gains and losses are determined on the basis of the cost or amortized cost of the specific securities sold.

We participate in securities lending programs whereby marketable securities in our investment portfolio are transferred to independent brokers or dealers in exchange for cash and securities collateral. Under Financial Accounting Standards Board (“FASB”) guidance related to accounting for transfers and servicing of financial assets and extinguishments of liabilities, we recognize the collateral as an asset, which is reported in other current assets on our consolidated balance sheets, and we record a corresponding liability for the obligation to return the collateral to the borrower, which is reported in other current liabilities. The securities on loan are reported in the applicable investment category on our consolidated balance sheets. Unrealized gains or losses on securities lending collateral are included in accumulated other comprehensive income as a separate component of shareholders’ equity. The market value of loaned securities and that of the collateral pledged can fluctuate in non-synchronized fashions. To the extent the loaned securities’ value appreciates faster or depreciates slower than the value of the collateral pledged, we are exposed to the risk of the shortfall. As a primary mitigating mechanism, the loaned securities and collateral pledged are marked to market on a daily basis and the shortfall, if any, is collected accordingly. Secondarily, the collateral level is set at 102% of the value of the loaned securities, which provides a cushion before any shortfall arises. The investment of the cash collateral is subject to market risk, which is managed by limiting the investments to higher quality and shorter duration instruments.

Receivables: Receivables are reported net of amounts for expected credit losses. The allowance for doubtful accounts is based on historical collection trends, future forecasts and our judgment regarding the ability to collect specific accounts.

Premium receivables include the uncollected amounts from insured groups, individuals and government programs. Premium receivables are reported net of an allowance for doubtful accounts of $212 and $152 at December 31, 2023 and 2022, respectively.

Self-funded receivables include administrative fees, claims and other amounts due from fee-based customers. Self-funded receivables are reported net of an allowance for doubtful accounts of $87 and $68 at December 31, 2023 and 2022, respectively.

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Elevance Health, Inc.

Notes to Consolidated Financial Statements (continued)

Other receivables include pharmacy rebates, provider advances, claims recoveries, reinsurance receivables, proceeds due from brokers on investment trades, accrued investment income and other miscellaneous amounts due to us. These receivables are reported net of an allowance for doubtful accounts of $941 and $744 at December 31, 2023 and 2022, respectively.

Income Taxes: We file a consolidated U.S. federal income tax return. Deferred income tax assets and liabilities are recognized for temporary differences between the financial statement and tax return basis of assets and liabilities based on enacted tax rates and laws and are reported net on our consolidated balance sheets. The deferred tax benefits of the deferred tax assets are recognized to the extent realization of such benefits is more likely than not. Deferred income tax expense or benefit generally represents the net change in deferred income tax assets and liabilities during the year, excluding the impact from amounts initially recorded for business combinations, if any, and amounts recorded to accumulated other comprehensive income. Current income tax expense represents the tax consequences of revenues and expenses currently taxable or deductible on various income tax returns for the year reported.

The Internal Revenue Code subjects a U.S. shareholder to tax on Global Intangible Low-Taxed Income (“GILTI”) earned by certain foreign subsidiaries. We have elected to account for GILTI tax in the year the tax is incurred.

The Inflation Reduction Act of 2022 includes a provision that imposes a new corporate alternative minimum tax (the “Corporate AMT”) that became effective for us beginning January 1, 2023. We have elected to account for the effects of the Corporate AMT on deferred tax assets and carryforwards and tax credits in the period they arise. We have also elected to disregard Corporate AMT when evaluating the need for a valuation allowance for non-Corporate AMT deferred tax assets. We do not believe the Corporate AMT will have a material impact on our consolidated financial position, results of operations, cash flows or related disclosures. Additionally, the Inflation Reduction Act of 2022 imposes an excise tax on the fair market value of net stock repurchases made after December 31, 2022. These are included as a charge to retained earnings as a component of the repurchase and retirement of common stock.

We account for income tax contingencies in accordance with FASB guidance that contains a model to address uncertainty in tax positions and clarifies the accounting for income taxes by prescribing a minimum recognition threshold, which all income tax positions must achieve before being recognized in the financial statements.

Property and Equipment: Property and equipment is recorded at cost, net of accumulated depreciation. Depreciation is computed principally by the straight-line method over estimated useful lives ranging from fifteen to thirty years for buildings and improvements, three to five years for computer equipment and software, and seven years for furniture and other equipment. Leasehold improvements are depreciated over the term of the related lease. Certain costs related to the development or purchase of internal-use software are capitalized and amortized over estimated useful lives ranging from three to ten years.

Goodwill and Other Intangible Assets: FASB guidance requires business combinations to be accounted for using the acquisition method of accounting, and it also specifies the types of acquired intangible assets that are required to be recognized and reported separately from goodwill. Goodwill represents the excess of the cost of acquisition over the fair value of net assets acquired. Other intangible assets represent the values assigned to customer relationships, provider and hospital networks, Blue Cross and Blue Shield and other trademarks, licenses and other agreements, such as non-compete agreements. Goodwill and other intangible assets are allocated to reportable segments based on the relative fair value of the components of the businesses acquired.

Goodwill and other intangible assets with indefinite lives are not amortized but are tested for impairment at least annually. Goodwill and other intangible assets are allocated to reporting units for purposes of the annual goodwill impairment test. Other intangible assets with indefinite lives, such as trademarks, are tested for impairment separately. We complete our annual impairment tests of existing goodwill and other intangible assets with indefinite lives during the fourth quarter of each year. Our impairment tests require us to make assumptions and judgments regarding the estimated fair value of our reporting units, including goodwill and other intangible assets with indefinite lives. Certain interim impairment tests are also performed when potential impairment indicators exist or changes in our business or other triggering events occur.

FASB guidance allows for qualitative assessments of whether it is more likely than not that the fair value of a reporting unit is less than its carrying amount for purposes of a goodwill impairment analysis and whether it is more likely than not that an indefinite-lived intangible asset is impaired for purposes of an indefinite-lived intangible asset impairment analysis. Estimated fair values developed based on our assumptions and judgments might be different if other reasonable assumptions

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Notes to Consolidated Financial Statements (continued)

and estimates were to be used. Qualitative analysis involves assessing situations and developments that could affect key drivers used to evaluate whether the fair value of our goodwill and indefinite-lived intangible assets are impaired. Our procedures include assessing our financial performance, macroeconomic conditions, industry and market considerations, various asset specific factors, and entity specific events.

Quantitative analysis must be performed if qualitative analyses are not conclusive. Entities also have the option to bypass the assessment of qualitative factors and proceed directly to performing quantitative analyses. Fair value for purposes of a quantitative goodwill impairment test is calculated using a blend of the projected income and market valuation approaches. The projected income approach is developed using assumptions about future revenue, expenses and net income derived from our internal planning process. Our assumed discount rate is based on our industry’s weighted-average cost of capital and reflects volatility associated with the cost of equity capital. Market valuations include market comparisons to publicly traded companies in our industry and are based on observed multiples of certain measures including revenue; earnings before interest, taxes, depreciation and amortization (“EBITDA”); and book value of invested capital.

A goodwill impairment loss is recognized to the extent that the carrying amount exceeds the asset’s fair value. This determination consists of a one-step test comparing the fair value of a reporting unit, including goodwill, to its carrying amount. If the carrying amount of a reporting unit exceeds its fair value, an impairment loss is recognized. This goodwill impairment loss is equal to the excess of the reporting unit’s carrying amount over its fair value.

Fair value for purposes of a quantitative impairment test for indefinite-lived intangible assets is estimated using a projected income approach. We recognize an impairment loss when the estimated fair value of indefinite-lived intangible assets is less than the carrying value. If significant impairment indicators are noted relative to other intangible assets subject to amortization, we may be required to record impairment losses against future income.

Derivative Financial Instruments: We primarily invest in the following types of derivative financial instruments: interest rate swaps, futures, forward contracts, put and call options, collars, swaptions, embedded derivatives and warrants. Derivatives embedded within non-derivative instruments, such as options embedded in convertible fixed maturity securities, are bifurcated from the host instrument when the embedded derivative is not clearly and closely related to the host instrument. Our use of derivatives is limited by statutes and regulations promulgated by the various regulatory bodies to which we are subject, and by our own derivative policy. Our derivative use is generally limited to hedging purposes, on an economic basis, and we generally do not use derivative instruments for speculative purposes.

We have exposure to economic losses due to interest rate risk arising from changes in the level or volatility of interest rates. We attempt to mitigate our exposure to interest rate risk through active portfolio management, including rebalancing our existing portfolios of assets and liabilities, as well as changing the characteristics of investments to be purchased or sold in the future. In addition, derivative financial instruments are used to modify the interest rate exposure of certain liabilities or forecasted transactions. These strategies include the use of interest rate swaps and forward contracts, which are used to lock-in interest rates or to hedge, on an economic basis, interest rate risks associated with variable rate debt. We have used these types of instruments as designated hedges against specific liabilities.

All investments in derivatives are recorded as assets or liabilities at fair value. If certain correlation, hedge effectiveness and risk reduction criteria are met, a derivative may be specifically designated as a hedge of exposure to changes in fair value or cash flow. The accounting for changes in the fair value of a derivative depends on the intended use of the derivative and the nature of any hedge designation thereon. Amounts excluded from the assessment of hedge effectiveness, if any, are reported in results of operations immediately. If the derivative is not designated as a hedge, the gain or loss resulting from the change in the fair value of the derivative is recognized in results of operations in the period of change. Cash flows associated with the settlement of non-designated derivatives are shown on a net basis in investing activity in our consolidated statements of cash flow.

From time to time, we may also purchase derivatives to hedge, on an economic basis, our exposure to foreign currency exchange fluctuations associated with the operations of certain of our subsidiaries. We generally use futures or forward contracts for these transactions. We generally do not designate these contracts as hedges and, accordingly, the changes in fair value of these derivatives are recognized in results of operations immediately.

Credit exposure associated with non-performance by the counterparties to derivative instruments is generally limited to the uncollateralized fair value of the asset related to instruments recognized in the consolidated balance sheets. We attempt to

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Notes to Consolidated Financial Statements (continued)

mitigate the risk of non-performance by selecting counterparties with high credit ratings and monitoring their creditworthiness and by diversifying derivatives among multiple counterparties. At December 31, 2023, we believe there were no material concentrations of credit risk with any individual counterparty.

We generally enter into master netting agreements, which reduce credit risk by permitting net settlement of transactions with the same counterparty. Certain of our derivative agreements also contain credit support provisions that require us or the counterparty to post collateral if there are declines in the derivative fair value or our credit rating. The derivative assets and derivative liabilities are reported at their fair values net of collateral and netting by the counterparty.

Retirement Benefits: We recognize the funded status of pension and other postretirement benefit plans on the consolidated balance sheets based on fiscal-year-end measurements of plan assets and benefit obligations. Prepaid pension benefits represent prepaid costs related to defined benefit pension plans and are reported with other noncurrent assets. Postretirement benefits represent outstanding obligations for retiree medical, life, vision and dental benefits. Liabilities for pension and other postretirement benefits are reported with noncurrent assets, current liabilities and noncurrent liabilities based on the amount by which the actuarial present value of benefits payable in the next twelve months included in the benefit obligation exceeds the fair value of plan assets.

We determine the expected return on plan assets using the calculated value of plan assets, which recognizes changes in the fair value of plan assets in a systematic manner over three years. We apply a corridor approach to amortize unrecognized actuarial gains or losses. Under this approach, only accumulated net actuarial gains or losses in excess of 10% of the greater of the projected benefit obligation or the fair value of plan assets are amortized over the average remaining service or lifetime of the workforce as a component of net periodic benefit cost.

The discount rate reflects the current rate at which the pension liabilities could be effectively settled at the end of the year based on our most recent measurement date. We use the annual spot rate approach for setting our discount rate. Under the spot rate approach, individual spot rates from a full yield curve of published rates are used to discount each plan’s cash flows to determine the plan’s obligations.

The assumed healthcare cost trend rates used to measure the expected cost of other postretirement benefits are based on an initial assumed healthcare cost trend rate declining to an ultimate healthcare cost trend rate over a select number of years.

Medical Claims Payable: Liabilities for medical claims payable include estimated provisions for incurred but not paid claims on an undiscounted basis, as well as estimated provisions for expenses related to the processing of claims. Incurred but not paid claims include (1) an estimate for claims that are incurred but not reported, as well as claims reported to us but not yet processed through our systems; and (2) claims reported to us and processed through our systems but not yet paid.

Liabilities for both claims incurred but not reported and reported but not yet processed through our systems are determined in the aggregate, employing actuarial methods that are commonly used by health insurance actuaries and meet Actuarial Standards of Practice. Our reserving practice for claim liabilities is to consistently recognize the appropriate amount of reserve within a level of confidence required by Actuarial Standards of Practice. We determine the amount of the liability for incurred but not paid claims by following a detailed actuarial process that uses both historical claim payment patterns as well as emerging medical cost trends to project our best estimate of claim liabilities. Under this process, historical paid claims data is formatted into “claim triangles,” which compare claim incurred dates to the dates of claim payments. This information is analyzed to create “completion factors” that represent the average percentage of total incurred claims that have been paid through a given date after being incurred. Completion factors are applied to claims paid through the period-end date to estimate the ultimate claim expense incurred for the period. Actuarial estimates of incurred but not paid claim liabilities are then determined by subtracting the actual paid claims from the estimate of the ultimate incurred claims.

For the most recent incurred months (typically the most recent two months), the percentage of claims paid for claims incurred in those months is generally low. This makes the completion factor methodology less reliable for such months. Therefore, incurred claims for recent months are not projected from historical completion and payment patterns; rather, they are projected by estimating the claims expense for those months based on recent claims expense levels and healthcare trend levels (“trend factors”).

On a regular basis, we review cost trends and utilization assumptions set upon initial establishment of claim liabilities. We utilize subsequent paid claims activity to monitor and continuously adjust the claims liability and benefit expense. If

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Notes to Consolidated Financial Statements (continued)

actual results are determined to be materially different than assumptions regarding cost trends and utilization, future periods of our income statement and overall financial position could be impacted.

Premium deficiencies are recognized when it is probable that expected claims and administrative expenses will exceed future premiums on existing medical insurance contracts without consideration of investment income. Determination of premium deficiencies for longer duration life and disability contracts includes consideration of investment income. For purposes of evaluating premium deficiencies, contracts are deemed to be either short or long duration and are grouped in a manner consistent with our method of acquiring, servicing and measuring the profitability of such contracts. Once established, reserves for premium deficiencies are released commensurate with actual claims experience over the remaining life of the contract. No reserves for premium deficiencies were established at December 31, 2023 or 2022.

Benefit expense includes incurred medical claims as well as quality improvement expenses for our risk-based members. Quality improvement activities are those designed to improve member health outcomes, prevent hospital readmissions and improve patient safety. They also include expenses for wellness and health promotion provided to our members.

Other Policyholder Liabilities: Other policyholder liabilities include rate stabilization reserves associated with retrospectively rated insurance contracts and certain case-specific reserves. Other policyholder liabilities also include liabilities for premium refunds based upon the minimum medical loss ratio (“MLR”), the relative health risk of members, and other contractual or regulatory requirements. Rate stabilization reserves represent accumulated premiums that exceed what customers owe us based on actual claim experience. The timing of payment of these retrospectively rated refunds is based on the contractual terms with our customers and can vary from period to period based on the specific contractual requirements.

We are required to meet certain minimum MLR thresholds prescribed by the Patient Protection and Affordable Care Act and the Health Care and Education Reconciliation Act of 2010, as amended (collectively the “ACA”). If we do not meet or exceed the minimum MLR thresholds specified by the ACA, we are required to pay rebates to certain customers. Minimum MLR rebates are calculated by subsidiary, state and applicable line of business in accordance with regulations issued by the Department of Health and Human Services (“HHS”). Such calculations are made using estimated calendar year medical loss expense and premiums, as defined by HHS.

We follow HHS guidelines for determining the types of expenses that may be included in our minimum MLR rebate calculations, which differ from benefit expense and premiums as reported in our consolidated financial statements prepared in conformity with GAAP. Certain amounts reported as expense in our consolidated GAAP financial statements may be reported as a reduction of premiums in accordance with HHS regulations. In addition, profit amounts included in our payments to third-party administrative service providers are recorded as benefit expense in our consolidated GAAP financial statements, while HHS does not allow for the inclusion of these expenses within the medical loss expense for purposes of calculating minimum MLR.

Reserves for Future Policy Benefits: Reserves for future policy benefits include liabilities for life and long-term disability insurance policy benefits based upon interest, mortality and morbidity assumptions from published actuarial tables, modified based upon our experience. Future policy benefits also include liabilities for insurance policies for which some of the premiums received in earlier years are intended to pay anticipated benefits to be incurred in future years. Future policy benefits are continually monitored and reviewed, and when reserves are adjusted, differences are reflected in benefit expense.

We believe that our liabilities for future policy benefits, along with future premiums received, are adequate to satisfy our ultimate benefit liability; however, these estimates are inherently subject to a number of variable circumstances. Consequently, the actual results could differ materially from the amounts recorded in our consolidated financial statements.

Revenue Recognition: Premiums for risk-based contracts are recognized as revenue over the period insurance coverage is provided, and, if applicable, net of amounts recognized for MLR rebates, risk adjustment, reinsurance and risk corridor under contractual premium stabilization arrangements, the ACA or other regulatory requirements. Premiums may also include performance incentives and penalties, which are recognized based on contractual terms. We estimate amounts receivable and payable under these contractual terms, and to the extent that such estimated amounts vary from the final amounts paid, the adjustments are included in earnings in the period of final settlement. Premium payments from contracted government agencies are based on eligibility lists produced by the government agencies. Premiums related to the unexpired contractual coverage periods are reflected in the accompanying consolidated balance sheets as unearned income. Premiums include revenue adjustments for retrospectively rated contracts where revenue is based on the estimated loss experience of the

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Notes to Consolidated Financial Statements (continued)

contract. Premium rates for certain lines of business are subject to approval by the Department of Insurance of each respective state. Additionally, delays in annual premium rate changes from contracted government agencies require that we defer the recognition of any increases to the period in which the premium rates become final. The value of the impact can be significant in the period in which it is recognized depending on the magnitude of the premium rate increase, the membership to which it applies and the length of the delay between the effective date of the rate increase and the final contract date. Premium rate decreases are recognized in the period the change in premium rate becomes effective and the change in the rate is known, which may be prior to the period when the contract amendment affecting the rate is finalized.

Service fees include revenue from certain group contracts that provide for the group to be at risk for all, or with supplemental insurance arrangements, a portion, of their claims experience. We charge these fee-based groups an administrative fee, which is based on the number of members in a group and the group’s claim experience. In addition, service fees include amounts received for the administration of Medicare, certain other government programs, and administrative services arrangements of our Carelon subsidiaries. Generally, each fee-based arrangement includes services which constitute a single suite of services provided and for which consideration is based upon an agreed-upon rate, regardless of the amount of services provided in a given period. As with premiums, each fee-based arrangement may include terms with retroactive rate or membership adjustments, performance incentives and penalties, each of which is a form of variable consideration within the transaction price. As such, each fee-based arrangement contains a single performance obligation that constitutes a series, and revenue is recognized over time as the services are performed. All benefit payments under these programs are excluded from benefit expense.

The determination of whether services are distinct performance obligations that should be accounted for separately or combined as one unit of accounting may require significant judgment. The estimation of variable consideration to be recognized requires significant judgment in the determination of the level of achievement of performance incentives, service level achievements subject to performance penalties, and the completion level of tasks subject to implementation fees.

Product revenue includes revenue for services performed by CarelonRx for unaffiliated pharmacy customers as well as any co-payments and subsidies made by or on behalf of affiliated customers. Unaffiliated pharmacy customers include our fee-based groups that have contracted with CarelonRx for pharmacy services and third-party health plans. Product revenues and costs of goods sold for our affiliated health plans are eliminated in consolidation, excluding co-payments and subsidies made by or on behalf of affiliated customers. Product revenue for pharmacy services is recognized using the gross method at the negotiated contract price when CarelonRx has concluded that it is the principal and it controls the services before prescription drugs are transferred to the customer. CarelonRx determined it is the principal due to its contractual rights to design and develop a listing of prescription drugs offered to the customer (formulary management); its control over establishing the pharmacy network available to the customer to have its prescription fulfilled (network management); and its discretion over establishing the pricing for prescription drugs. Overall, control over these activities indicate CarelonRx is primarily responsible for fulfilling the promise to provide pharmacy services. Product revenue includes ingredient costs (net of any rebates or discounts), including any co-payments and subsidies made by or on behalf of the customer, and administrative fees. CarelonRx recognizes revenue when control of the prescription drugs is transferred to customers, in an amount it expects to be entitled to in exchange for the products or services provided.

For our non-risk-based contracts, we had no material contract assets, contract liabilities or deferred contract costs recorded on our consolidated balance sheets at December 31, 2023 and 2022. Revenue recognized in 2023 and 2022 from performance obligations related to prior years, such as due to changes in transaction price, was not material. For contracts that have an original expected duration of greater than one year, revenue expected to be recognized in future periods related to unfulfilled contractual performance obligations and contracts with variable consideration related to undelivered performance obligations is not material.

Cost of Products Sold: CarelonRx’s cost of products sold includes the cost of prescription drugs dispensed to unaffiliated pharmacy customers (net of rebates or discounts). Cost of products sold includes per-claim administrative fees for prescription fulfillment by its vendor and certain CarelonRx direct costs related to sales and administration of customer contracts.

Share-Based Compensation: Our current compensation philosophy provides for share-based compensation, including stock options, restricted stock awards and an employee stock purchase plan. Stock options are granted for a fixed number of shares with an exercise price at least equal to the fair value of the shares at the date of the grant. Restricted stock awards are

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Notes to Consolidated Financial Statements (continued)

issued at the fair value of the stock on the grant date. The employee stock purchase plan allows for a purchase price per share which is 90% of the fair value of a share of common stock on the lower of the first or last trading day of the plan quarter. The employee stock purchase plan discount is recognized as compensation expense based on GAAP guidance. All other share-based payments to employees are recognized as compensation expense in our consolidated statements of income based on their fair values. Additionally, excess tax benefits, which result from actual tax benefits realized when awards vest or options are exercised exceeding deferred tax benefits previously recognized based on grant date fair value, are recognized as tax benefits in the consolidated statements of income.

Advertising and Marketing Costs**:** We use print, broadcast and other advertising to promote our products and to develop our corporate image. We market our products through direct marketing activities and an extensive network of independent agents, brokers and retail partnerships for Individual and Medicare customers, and for certain Employer Group risk-based customers with a smaller employee base. Products for Employer Group risk-based 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 and Group markets, we offer products through state or federally facilitated marketplaces, or Public Exchanges, and off-exchange products. The cost of advertising and marketing for product promotion is expensed as incurred, while advertising and marketing costs associated with our corporate image are expensed when first aired. Total advertising and marketing expense was $599, $511 and $588 for the years ended December 31, 2023, 2022 and 2021, respectively.

Leases: We lease office space and certain computer and related equipment under noncancelable operating leases. We determine whether an arrangement is or contains a lease at its inception. We recognize lease liabilities based on the present value of the minimum lease payments not yet paid by using the lease term, any amounts probable of being owed under any residual value guarantees and the discount rate determined at lease commencement. As our leases do not generally provide an implicit rate, we use our incremental secured borrowing rate commensurate with the underlying lease terms to determine the present value of our lease payments. Our lease liabilities may include amounts for options to extend or terminate a lease when it is reasonably certain that we will exercise that option. We recognize operating right-of-use (“ROU”) assets at an amount equal to the lease liability adjusted for prepaid or accrued rent, the remaining balance of any lease incentives and unamortized initial direct costs.

The operating lease liabilities are reported in other current liabilities and other noncurrent liabilities and the related ROU assets are reported in other noncurrent assets on our consolidated balance sheets. Lease expense for our operating leases is calculated on a straight-line basis over the lease term and is reported in operating expense on our consolidated statements of income. For our office space leases, we account for the lease and non-lease components (such as common area maintenance) as a single lease component. We also do not recognize a lease liability or ROU asset for our office space leases whose lease terms, at commencement, are twelve months or less and that do not include a purchase option or option to extend that we are reasonably certain to exercise.

We assess our ROU assets for impairment when there are indicators of impairment and compare the carrying amount of the ROU asset to its estimated undiscounted future cash flows. If the estimated undiscounted future cash flows are less than the carrying amount of the ROU asset, an impairment calculation is performed. An impairment loss is recorded for the difference of the ROU asset’s carrying value that exceeds its estimated discounted cash flows. During the years ended December 31, 2023, 2022 and 2021, we recorded $23, $34 and $136, respectively, for impairment and abandonment of ROU assets. See Note 18, “Leases,” for additional information about the ROU asset impairment and abandonment charges.

Shareholders’ Earnings per Share: Earnings per share amounts, on a basic and diluted basis, have been calculated based upon the weighted-average common shares outstanding for the period.

Basic shareholders’ earnings per share excludes dilution and is computed by dividing income available to common shareholders by the weighted-average number of common shares outstanding for the period. Diluted shareholders’ earnings per share may include the dilutive effect of stock options, restricted stock and convertible debentures, using the treasury stock method. The treasury stock method assumes exercise of stock options and vesting of restricted stock, with the assumed proceeds used to purchase common stock at the average market price for the period. The difference between the number of shares assumed issued and the number of shares assumed purchased represents the dilutive shares.

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Notes to Consolidated Financial Statements (continued)

Recently Adopted Accounting Guidance: In November 2020, the FASB issued Accounting Standards Update No. 2020-11, Financial Services—Insurance (Topic 944): Effective Date and Early Application (“ASU 2020-11”). The amendments in ASU 2020-11 changed the effective date and early application of Accounting Standards Update No. 2018-12, Financial Services—Insurance (Topic 944): Targeted Improvements to the Accounting for Long-Duration Contracts, which was issued in November 2018. The amendments in ASU 2020-11 extended the original effective date by one year to our interim and annual reporting periods beginning after December 15, 2022. This standard requires us to review cash flow assumptions for our long-duration insurance contracts at least annually and recognize the effect of changes in future cash flow assumptions in net income. This standard also requires us to update discount rate assumptions quarterly and recognize the effect of changes in these assumptions in other comprehensive income. The rate used to discount our reserves for future policy benefits will be based on an estimate of the yield for an upper-medium grade fixed-income instrument with a duration profile matching that of our liabilities. In addition, this standard changes the amortization method for deferred acquisition costs. We adopted these amendments on January 1, 2023, using the modified retrospective transition method for changes to the liability for future policy benefits and deferred acquisition costs as of the transition date, January 1, 2021. While the adoption did not have an overall material impact, our prior period financial statements presented in this Annual Report on Form 10-K have been restated to reflect the impacts of our adoption as required by the new standard. Adjustments of $(131) and $54, respectively, were made to shareholders’ net income for the years ended December 31, 2022 and 2021, which include adjustments to benefit expense of $155 and $(74), respectively. In addition, the following balance sheet adjustments were made at years ended December 31, 2022 and 2021: $(17) and $(4), respectively, to total assets; $47 and $(39), respectively, to total liabilities; $13 and $(19), respectively, to accumulated other comprehensive loss; and $(64) and $35, respectively to shareholders’ equity and total equity.

In August 2020, the FASB issued Accounting Standards Update No. 2020-06, Debt—Debt with Conversion and Other Options (Subtopic 470-20) and Derivatives and Hedging—Contracts in Entity’s Own Equity (Subtopic 815-40): Accounting for Convertible Instruments and Contracts in an Entity’s Own Equity (“ASU 2020-06”). The amendments eliminate two of the three accounting models that require separate accounting for convertible features of debt securities, simplify the contract settlement assessment for equity classification, require the use of the if-converted method for all convertible instruments in the diluted shareholders’ earnings per share calculation and expand disclosure requirements. The amendments became effective for our annual and interim reporting periods beginning after December 15, 2021. We adopted ASU 2020-06 on January 1, 2022 using the modified retrospective transition method, which resulted in an increase to our reported debt outstanding of $31, a decrease to our deferred tax liabilities of $8, and a corresponding cumulative-effect reduction to our opening retained earnings of $23, by eliminating the bifurcation of the embedded conversion option. These amounts were not material to our overall consolidated financial position. The adoption of ASU 2020-06 did not have an impact on our results of operations or our consolidated cash flows. Use of the if-converted method did not have an impact on our overall shareholders’ earnings per share calculation.

Recent Accounting Guidance Not Yet Adopted: In November 2023, the FASB issued Accounting Standards Update No. 2023-07, Segment Reporting (Topic 280): Improvements to Reportable Segment Disclosures (“ASU 2023-07”). The amendments in ASU 2023-07 are intended to improve reportable segment disclosure requirements, primarily through enhanced disclosures about significant segment expenses. ASU 2023-07 is effective for our fiscal year beginning after December 15, 2023, and interim periods within our fiscal year beginning after December 15, 2024. The amendments are to be applied retrospectively to all prior periods presented in the financial statements, and upon transition, the significant segment expense categories and amounts disclosed in the prior periods should be based on the significant segment expense categories identified and disclosed in the period of adoption. We are currently evaluating the effects the adoption of ASU 2023-07 will have on our consolidated financial statements and related disclosures.

In August 2023, the FASB issued Accounting Standards Update No. 2023-05, Business Combinations—Joint Venture Formations (Subtopic 805-60): Recognition and Initial Measurement (“ASU 2023-05”). ASU 2023-05 clarifies existing guidance to reduce diversity in practice and is requiring a joint venture to recognize and initially measure its assets and liabilities using a new basis of accounting, at fair value, upon formation. These amendments are effective prospectively for all joint venture formations with a formation date on or after January 1, 2025. We do not believe the adoption of ASU 2023-05 will have a material impact on our consolidated financial statements and disclosures.

There were no other new accounting pronouncements that were issued or became effective during the year ended December 31, 2023 that had, or are expected to have, a material impact on our financial position, results of operations, cash flows or financial statement disclosures.

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Elevance Health, Inc.

Notes to Consolidated Financial Statements (continued)

3. Business Acquisitions and Divestitures

Completed Acquisitions

During the year ended December 31, 2023, we completed business combinations for total cash consideration of approximately $1,655. These acquisitions included BioPlus Parent, LLC and subsidiaries (“BioPlus”) which were acquired in February 2023. Prior to the acquisition, BioPlus was one of the largest independent specialty pharmacy organizations in the United States. BioPlus seeks to connect payors and providers of specialty pharmaceuticals to meet the medication therapy needs of patients with complex medical conditions. The purchase prices for all business combinations were preliminarily allocated to the tangible and intangible net assets acquired based on management's initial estimates of their fair values, of which $820 was allocated to finite-lived intangible assets and $918 to goodwill. Of these amounts, $1,718 was allocated to our CarelonRx reportable segment and $20 to our Carelon Services reportable segment. The majority of goodwill is not deductible for income tax purposes. As of December 31, 2023, the initial accounting for the acquisition had not been finalized. Any subsequent adjustments made to the assets acquired or liabilities assumed during the measurement period will be recorded as an adjustment to goodwill. The proforma effects of this acquisition for prior periods were not material to our consolidated results of operations.

During the year ended December 31, 2022, we completed business combinations for total cash consideration of approximately $751. These acquisitions included Integra MLTC, Inc. (“Integra”), acquired in May 2022, a managed long-term care plan serving New York state Medicaid members, enabling adults with long-term care needs and disabilities to live safely and independently in their own homes. The purchase prices for all business combinations were allocated to the tangible and intangible net assets acquired based on management’s final estimates of their fair values, of which $89 was allocated to finite-lived intangible assets, $250 to indefinite-lived intangible assets, and $161 to goodwill including measurement period adjustments of $16 during the year ended December 31, 2023. The intangible assets and goodwill acquired were assigned to our Health Benefits reportable segment. The majority of goodwill is deductible for income tax purposes. The proforma effects of these acquisitions for prior periods were not material to our consolidated results of operations.

Acquired tangible assets (liabilities) at the acquisition date were:

			2023						2022
Cash, cash equivalents and short-term investments			$	6					$	170
Accounts receivable and other current assets			241						240
Property, equipment and other long-term assets			18						109
Medical claims and other policyholder liabilities payable			—						(185)
Accounts payable and other current liabilities			(159)						(20)
Other long-term liabilities			(2)						(15)
Deferred tax liabilities			(187)						(48)
Total net tangible assets (liabilities)			$	(83)					$	251

The preliminary purchase price allocations for the various business combinations are subject to adjustment as valuation analyses, primarily related to intangible assets and contingent and tax liabilities, are finalized.

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Elevance Health, Inc.

Notes to Consolidated Financial Statements (continued)

Acquisition date fair values and weighted-average useful lives assigned to intangible assets include:

			2023												2022
			Fair Value						Weighted Average Useful Life						Fair Value						Weighted Average Useful Life
Customer-related			$	796					25 years						$	85					10 years
Provider and hospital relationships			—						—						2						15 years
Other			24						5 years						2						0.5 years
State Medicaid licenses			—						—						250						Indefinite
Total intangible assets			$	820											$	339

The results of operations and financial condition of acquired entities have been included in our consolidated results and the results of the corresponding operating segment as of the date of acquisition. Through December 31, 2023, the impact of the acquired entities on revenue and net earnings was not material. Unaudited pro forma revenues for the years ended December 31, 2023 and 2022 as if the acquisitions had occurred on January 1, 2022 were immaterial for both periods.

Pending Divestiture

On March 28, 2023, we announced our entrance into an agreement to sell our life and disability businesses to StanCorp Financial Group, Inc. (“The Standard”), a provider of financial protection products and services for employers and individuals. Upon closing, we and The Standard will enter into a product distribution partnership. The divestiture is expected to close in the first half of 2024 and is subject to standard closing conditions and customary approvals. The related net assets held for sale and results of operations for the life and disability businesses to be divested as of and for the year ended December 31, 2023 were not material.

Pending Acquisitions

On January 4, 2024, we announced our entrance into an agreement to acquire Paragon Healthcare, Inc., a company providing infusion services and injectable therapies through its omnichannel model of ambulatory infusion centers, home infusion pharmacies, and other specialty pharmacy services. This acquisition aligns with our vision to be an innovative, valuable and inclusive healthcare partner by providing care management programs that improve the lives of the people we serve. The acquisition is expected to close in the first half of 2024 and is subject to standard closing conditions and customary approvals.

On December 31, 2023, we entered into an agreement to acquire Centers Plan for Healthy Living LLC and Centers for Specialty Care Group IPA, LLC (“Centers”). Centers is a managed long-term care plan that serves New York state Medicaid and dually-eligible Medicaid/Medicare members, enabling adults with long-term care needs and disabilities to live safely and independently in their own home. This acquisition aligns with Elevance Health’s strategic plan to grow the Health Benefits segment and leverage industry-leading expertise while serving Medicaid and dually eligible populations. The acquisition is expected to close in the third quarter of 2024 and is subject to standard closing conditions and customary approvals.

On January 23, 2023, we announced our entrance into an agreement to acquire Louisiana Health Service & Indemnity Company, d/b/a Blue Cross and Blue Shield of Louisiana, an independent licensee of the BCBSA that provides healthcare plans to the Individual, Employer Group, Medicaid and Medicare markets, primarily in the State of Louisiana. This acquisition aligns with our vision to be an innovative, valuable and inclusive healthcare partner by providing care management programs that improve the lives of the people we serve. The acquisition is subject to closing conditions and approvals.

4. Business Optimization Initiatives

2023-2024 Business Efficiency Program

In the third quarter of 2023, we implemented the “2023-2024 Business Efficiency Program” as a result of a strategic review of our operations, assets and investments. The purpose of this program is to enhance operating efficiency, refine the

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Notes to Consolidated Financial Statements (continued)

focus of our investments and optimize our physical footprint. This efficiency program includes the write-off of certain information technology assets and contract exit costs, a reduction in staff including the relocation of certain job functions, and the impairment of assets associated with the closure or partial closure of data centers and offices. We anticipate substantial completion of the 2023-2024 Business Efficiency Program by the end of the third quarter of 2024. Cash outlays associated with this program, primarily for personnel-related costs, are expected to be paid through 2024.

In 2023, we incurred $752 of expense, which included $468 of pre-tax charges for information technology assets and contract write-offs related to projects that have been de-prioritized and stopped, $230 of pre-tax personnel-related charges for the reduction and/or relocation of workforce, which includes severance and related costs primarily determined under our existing severance plans, and $54 of pre-tax charges from asset impairments related to the closure or partial closure of data centers and offices, including operating lease-related ROU assets and other property and equipment. These charges were recognized in operating expense in the Corporate & Other segment; see Note 20, “Segment Information.”

2020 Business Optimization Program

During 2020, our management introduced initiatives across the enterprise to optimize our business operations, including recognition of liabilities for future payments for employee termination costs in connection with the repositioning and reskilling of our workforce.

During 2021, we identified reductions of office space and recorded a charge of $202 in operating expense related to this optimization program. This charge included $136 for impairment and abandonment of operating-lease related ROU assets and $66 for impairment and abandonment of property and equipment. The charges recognized in the Health Benefits, CarelonRx, Carelon Services and Corporate & Other segments in 2021, were $168, $1, $33 and $0, respectively.

During 2022, while evaluating our real estate strategy as it relates to the changing needs of a more hybrid remote workforce, we identified additional reductions of office space and recorded a net charge of $39 in operating expense related to this optimization program. This charge included $34 for impairment and abandonment of operating-lease related ROU assets and $7 for impairment and abandonment of property and equipment. In addition, we released $2 of employee termination costs. The net charges (benefits) recognized in the Health Benefits, CarelonRx, Carelon Services and Corporate & Other segments in 2022, were $36, $0, $5 and $(2), respectively.

During 2023, we released $33 of employee termination costs related to this optimization program, as reflected in the table below, which was recognized in the Health Benefits segment.

Liabilities for Employee Termination Costs

A summary of the activity for the year ended December 31, 2023 and the ending balance at that date, related to the liability for employee termination costs, is as follows:

			Health Benefits						CarelonRx						Carelon Services						Corporate & Other						Total
2023-2024 Business Efficiency Program
Liabilities for employee termination costs at January 1, 2023			$	—					$	—					$	—					$	—					$	—
Charges			—						—						—						230						230
Payments			—						—						—						(39)						(39)
Total liabilities for employee termination costs ending balance at December 31, 2023			$	—					$	—					$	—					$	191					$	191

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Notes to Consolidated Financial Statements (continued)

			Health Benefits						CarelonRx						Carelon Services						Corporate & Other						Total
2020 Business Optimization Initiatives
Liabilities for employee termination costs at January 1, 2023			$	80					$	1					$	—					$	—					$	81
Payments			(39)						(1)						—						—						(40)
Releases			(33)						—						—						—						(33)
Total liabilities for employee termination costs ending balance at December 31, 2023			$	8					$	—					$	—					$	—					$	8

5. Investments

A summary of current and long-term fixed maturity securities, available-for-sale, at December 31, 2023 and 2022 is as follows:

			Cost or Amortized Cost						Gross Unrealized Gains						Gross Unrealized Losses						Allowance For Credit Losses						Estimated Fair Value
December 31, 2023
Fixed maturity securities:
United States Government securities			$	1,873					$	25					$	(54)					$	—					$	1,844
Government sponsored securities			112						1						(3)						—						110
Foreign government securities			5						1						(2)						—						4
States, municipalities and political subdivisions, tax-exempt			3,985						69						(152)						—						3,902
Corporate securities			14,838						322						(580)						(2)						14,578
Residential mortgage-backed securities			4,071						40						(279)						—						3,832
Commercial mortgage-backed securities			2,174						13						(138)						(2)						2,047
Other asset-backed securities			4,278						25						(130)						—						4,173
Total fixed maturity securities			$	31,336					$	496					$	(1,338)					$	(4)					$	30,490
December 31, 2022
Fixed maturity securities:
United States Government securities			$	1,502					$	2					$	(103)					$	—					$	1,401
Government sponsored securities			82						1						(5)						—						78
Foreign government securities			321						1						(46)						(2)						274
States, municipalities and political subdivisions, tax-exempt			4,389						19						(265)						—						4,143
Corporate securities			13,721						31						(1,218)						(5)						12,529
Residential mortgage-backed securities			2,978						9						(324)						—						2,663
Commercial mortgage-backed securities			2,055						1						(176)						(2)						1,878
Other asset-backed securities			3,967						12						(241)						—						3,738
Total fixed maturity securities			$	29,015					$	76					$	(2,378)					$	(9)					$	26,704

Other asset-backed securities primarily consist of collateralized loan obligations and other debt securities.

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Notes to Consolidated Financial Statements (continued)

For fixed maturity securities in an unrealized loss position at December 31, 2023 and 2022, the following table summarizes the aggregate fair values and gross unrealized losses by length of time those securities have continuously been in an unrealized loss position.

			Less than 12 Months																		12 Months or Greater
			Number of Securities						Estimated Fair Value						Gross Unrealized Loss						Number of Securities						Estimated Fair Value						Gross Unrealized Loss
(Securities are whole amounts)
December 31, 2023
Fixed maturity securities:
United States Government securities			35						$	552					$	(9)					44						$	370					$	(45)
Government sponsored securities			0						—						—						40						52						(3)
Foreign government securities			0						—						—						2						4						(2)
States, municipalities and political subdivisions, tax-exempt			203						354						(2)						1,034						1,811						(150)
Corporate securities			389						608						(15)						2,624						6,871						(565)
Residential mortgage-backed securities			183						438						(5)						1,620						2,075						(274)
Commercial mortgage-backed securities			112						353						(6)						534						1,317						(132)
Other asset-backed securities			110						394						(18)						761						2,342						(112)
Total fixed maturity securities			1,032						$	2,699					$	(55)					6,659						$	14,842					$	(1,283)
December 31, 2022
Fixed maturity securities:
United States Government securities			61						$	701					$	(40)					38						$	442					$	(63)
Government sponsored securities			39						73						(4)						6						5						(1)
Foreign government securities			150						100						(10)						198						142						(36)
States, municipalities and political subdivisions, tax-exempt			1,398						2,615						(147)						396						652						(118)
Corporate securities			3,551						7,826						(549)						2,204						3,521						(669)
Residential mortgage-backed securities			1,341						1,435						(121)						496						982						(203)
Commercial mortgage-backed securities			457						1,082						(76)						324						719						(100)
Other asset-backed securities			784						2,203						(124)						398						1,074						(117)
Total fixed maturity securities			7,781						$	16,035					$	(1,071)					4,060						$	7,537					$	(1,307)

Unrealized losses on our securities shown in the table above have not been recognized into income because, as of December 31, 2023, we do not intend to sell these investments and it is likely that we will not be required to sell these investments prior to their anticipated recovery. The declines in fair values are largely due to increasing interest rates driven by the higher rate of inflation and other market conditions.

Allowances for credit losses have been recorded in the amounts of $4 and $9 at December 31, 2023 and 2022, respectively, for declines in fair value due to unfavorable changes in the credit quality characteristics that impact our assessment of collectability of principal and interest.

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Notes to Consolidated Financial Statements (continued)

The amortized cost and fair value of fixed maturity securities at December 31, 2023, by contractual maturity, are shown below. Expected maturities may differ from contractual maturities because the issuers of the securities may have the right to prepay obligations.

			Amortized Cost						Estimated Fair Value
Due in one year or less			$	473					$	470
Due after one year through five years			7,350						7,193
Due after five years through ten years			10,495						10,325
Due after ten years			6,773						6,624
Mortgage-backed securities			6,245						5,878
Total fixed maturity securities			$	31,336					$	30,490

Equity Securities

A summary of current equity securities at December 31, 2023 and 2022 is as follows:

			December 31, 2023						December 31, 2022
Equity Securities:
Exchange traded funds			$	106					$	822
Common equity securities			45						43
Private equity securities			78						88
Total			$	229					$	953

Investment Income

The major categories of net investment income for the years ended December 31, 2023, 2022 and 2021 are as follows:

			2023						2022						2021
Fixed maturity securities			$	1,387					$	971					$	755
Equity securities			18						48						43
Cash equivalents			305						77						5
Other invested assets			157						432						616
Investment income			1,867						1,528						1,419
Investment expenses			(42)						(43)						(41)
Net investment income			$	1,825					$	1,485					$	1,378

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Notes to Consolidated Financial Statements (continued)

Investment (Losses) Gains

Net investment (losses) gains for the years ended December 31, 2023, 2022 and 2021 are as follows:

			2023						2022						2021
Net gains (losses):
Fixed maturity securities:
Gross realized gains from sales			$	47					$	52					$	170
Gross realized losses from sales			(488)						(469)						(44)
Impairment (losses) recoveries recognized in income			(15)						(31)						1
Net realized gains on fixed maturity securities			(456)						(448)						127
Equity securities:
Unrealized (losses) gains recognized on equity securities still held			(1)						(78)						2
Net realized (losses) gains recognized on equity securities sold			6						(102)						(73)
Net (losses) gains on equity securities			5						(180)						(71)
Other investments:
Gross gains			103						96						293
Gross losses			(63)						(64)						(22)
Impairment losses recognized in income			(291)						(34)						(16)
Net (losses) gains on other investments			(251)						(2)						255
Net (losses) gains on investments			$	(702)					$	(630)					$	311

A primary objective in the management of our fixed maturity and equity portfolios is to maximize total return relative to underlying liabilities and respective liquidity needs. In achieving this goal, assets may be sold to take advantage of market conditions or other investment opportunities as well as tax considerations. Sales will generally produce realized gains and losses. In the ordinary course of business, we may sell securities at a loss for a number of reasons, including, but not limited to: (i) changes in the investment environment; (ii) expectations that the fair value could deteriorate further; (iii) desire to reduce exposure to an issuer or an industry; (iv) changes in credit quality; or (v) changes in expected cash flow.

Total proceeds from sales, maturities, calls or redemptions of fixed maturity securities was $12,289, $22,048 and $10,565 for the years ended December 31, 2023, 2022 and 2021, respectively.

A significant judgment in the valuation of investments is the determination of when a credit loss has occurred. We follow a consistent and systematic process for recognizing impairments on securities that sustain credit declines in value. We have established a committee responsible for the impairment review process. The decision to impair a security incorporates both quantitative criteria and qualitative information. The impairment review process considers a number of factors including, but not limited to: (i) the extent to which the fair value is less than book value, (ii) the financial condition and near term prospects of the issuer, (iii) our intent and ability to retain impaired investments for a period of time sufficient to allow for any anticipated recovery in fair value, (iv) our intent to sell or the likelihood that we will need to sell a fixed maturity security before recovery of its amortized cost basis, (v) whether the debtor is current on interest and principal payments, (vi) the reasons for the decline in value (i.e., credit event compared to liquidity, general credit spread widening, currency exchange rate or interest rate factors) and (vii) general market conditions and industry or sector specific factors. When a decision has been made to sell an impaired security or it is more likely than not that the impaired security will be required to be disposed of prior to recovery of its cost basis, the security is written down to fair value at the reporting date. For all other impaired securities, if the impairment is deemed to be credit related, an allowance is created.

Investment securities are exposed to various risks, such as interest rate, market and credit. Due to the level of risk associated with certain investment securities and the level of uncertainty related to changes in the value of investment securities, it is possible that changes in these risk factors in the near term could have a material adverse impact on our results of operations or shareholders’ equity.

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Notes to Consolidated Financial Statements (continued)

At December 31, 2023 and 2022, there were no individual investments that exceeded 10% of shareholders’ equity.

At December 31, 2023 and 2022, there were eleven and eight respectively, fixed maturity investments that did not produce income during the years then ended.

As of December 31, 2023 and 2022, we had committed approximately $1,321 and $1,504, respectively, to future capital calls from various third-party investments in exchange for an ownership interest in the related entities.

As of December 31, 2023 and 2022, we had committed approximately $497 and $185, respectively, to future investments in rated notes.

At December 31, 2023 and 2022, securities with carrying values of approximately $876 and $752, respectively, were deposited by our insurance subsidiaries under requirements of regulatory authorities.

Accrued Investment Income

Accrued investment income totaled $301 and $245 at December 31, 2023 and 2022, respectively. We recognize accrued investment income under the caption “Other receivables” on our consolidated balance sheets.

Securities Lending Programs

The fair value of the cash and securities received as collateral for securities loaned at December 31, 2023 and 2022 was $2,380 and $2,457, respectively. The collateral received was 102% of the market value of the loaned securities at each of December 31, 2023 and 2022.

We recognize the collateral as an asset under the caption “Other current assets” in our consolidated balance sheets, and we recognize a corresponding liability for the obligation to return the collateral to the borrower under the caption “Other current liabilities.” The securities on loan are reported in the applicable investment category on our consolidated balance sheets.

At December 31, 2023 and 2022, the remaining contractual maturities of our securities lending transactions included overnight and continuous transactions of cash for $2,255 and $2,221, respectively, United States Government securities for $99 and $224, respectively, and residential mortgage-backed securities for $26 and $12, respectively.

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Notes to Consolidated Financial Statements (continued)

6. Derivative Financial Instruments

We primarily invest in the following types of derivative financial instruments: interest rate swaps, futures, forward contracts, put and call options, collars, swaptions, embedded derivatives and warrants. We also enter into master netting agreements which reduce credit risk by permitting net settlement of transactions. At December 31, 2023 and 2022, we had received collateral of $35 and $57, respectively, related to our derivative financial instruments.

A summary of the aggregate contractual or notional amounts and estimated fair values related to derivative financial instruments at December 31, 2023 and 2022 is as follows:

			Contractual/ Notional Amount						Balance Sheet Location						Estimated Fair Value
			Asset						(Liability)
December 31, 2023
Hedging instruments
Interest rate swaps - fixed to floating			$	1,475					Other assets/other liabilities						$	15					$	(52)
Non-hedging instruments
Derivatives embedded in convertible securities			15						Fixed maturity securities						1						—
Interest rate swaps			5						Equity securities/other assets/other liabilities						—						—
Options			161						Other assets/other liabilities						—						(85)
Collars			19						Equity securities						14						(3)
Futures/Forwards			151						Equity securities/other assets/other liabilities						7						—
Subtotal non-hedging			351						Subtotal non-hedging						22						(88)
Total derivatives			$	1,826					Total derivatives						37						(140)
									Amounts netted						(15)						15
									Net derivatives						$	22					$	(125)
December 31, 2022
Hedging instruments
Interest rate swaps - fixed to floating			$	1,125					Other assets/other liabilities						$	3					$	(60)
Non-hedging instruments
Derivatives embedded in convertible securities			18						Fixed maturity securities						4						—
Interest rate swaps			5						Equity securities/other assets/other liabilities						—						—
Options			—						Other assets/other liabilities						1						—
Collars			19						Equity securities						23						(9)
Futures/Forwards			358						Equity securities/other assets/other liabilities						2						(2)
Subtotal non-hedging			400						Subtotal non-hedging						30						(11)
Total derivatives			$	1,525					Total derivatives						33						(71)
									Amounts netted						(12)						12
									Net derivatives						$	21					$	(59)

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Notes to Consolidated Financial Statements (continued)

Fair Value Hedges

We have entered into various interest rate swap contracts to convert a portion of our interest rate exposure on our long-term debt from fixed rates to floating rates. The floating rates payable on all of our fair value hedges are benchmarked to the Secured Overnight Financing Rate. A summary of our outstanding fair value hedges at December 31, 2023 and 2022 is as follows:

Type of Fair Value Hedges						Year Entered Into						Outstanding Notional Amount												Interest Rate Received									Expiration Date
			2023						2022
Interest rate swap						2023						$	300					$	—					5.500			%						April 15, 2032
Interest rate swap						2023						150						—						2.550									September 15, 2030
Interest rate swap						2023						500						—						4.900									February 8, 2026
Interest rate swap						2023						125						—						4.101									September 1, 2027
Interest rate swap						2023						100						—						2.250									November 15, 2029
Interest rate swap						2022						150						150						5.500									April 15, 2032
Interest rate swap						2022						75						75						4.101									September 1, 2027
Interest rate swap						2022						75						75						2.250									November 15, 2029
Interest rate swap						2021						—						150						2.550									September 15, 2030
Interest rate swap						2021						—						100						2.250									November 15, 2029
Interest rate swap						2020						—						75						4.101									September 1, 2027
Interest rate swap						2018						—						50						4.101									September 1, 2027
Interest rate swap						2018						—						450						3.300									January 15, 2023
Total notional amount outstanding												$	1,475					$	1,125

The following amounts were recorded on our consolidated balance sheets related to cumulative basis adjustments for fair value hedges at December 31, 2023 and 2022:

Balance Sheet Classification in Which Hedged Item is Included						Carrying Amount of Hedged Liability												Cumulative Amount of Fair Value Hedging Adjustment Included in the Carrying Amount of the Hedged Liability
			2023						2022						2023						2022
Long-term debt						$	23,246					$	22,349					$	(37)					$	(57)

Cash Flow Hedges

We have entered into a series of forward starting pay fixed interest rate swaps with the objective of eliminating the variability of cash flows in the interest payments on future financings that were anticipated at the time of entering into the swaps. During 2023 and 2022, swaps in the notional amount of $550 and $700, respectively, were terminated.

The unrecognized loss for all expired and terminated cash flow hedges included in accumulated other comprehensive loss, net of tax, was $211 and $229 at December 31, 2023 and 2022, respectively. As of December 31, 2023, the total amount of amortization over the next twelve months for all cash flow hedges is estimated to increase interest expense by approximately $13. No amounts were excluded from effectiveness testing.

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Notes to Consolidated Financial Statements (continued)

Non-Hedging Derivatives

A summary of the effect of non-hedging derivatives on our consolidated statements of income for the years ended December 31, 2023, 2022 and 2021 is as follows:

Type of Non-hedging Derivatives						Income Statement Location of Gain (Loss) Recognized						Derivative (Loss) Gain Recognized
Year ended December 31, 2023
Derivatives embedded in convertible securities						Net (losses) gains on financial instruments						$	(2)
Options (including swaptions)						Net (losses) gains on financial instruments						3
Collars						Net (losses) gains on financial instruments						(3)
Futures						Net (losses) gains on financial instruments						10
Total												$	8
Year ended December 31, 2022
Derivatives embedded in convertible securities						Net (losses) gains on financial instruments						$	(3)
Interest rate swaps						Net (losses) gains on financial instruments						(4)
Options (including swaptions)						Net (losses) gains on financial instruments						13
Collars						Net (losses) gains on financial instruments						10
Futures						Net (losses) gains on financial instruments						64
Total												$	80
Year ended December 31, 2021
Interest rate swaps						Net (losses) gains on financial instruments						$	(4)
Options						Net (losses) gains on financial instruments						4
Futures						Net (losses) gains on financial instruments						7
Total												$	7

In January 2023, we made an equity investment that resulted in our minority interest ownership of Project Freedom Holdings, LLC, which is the ultimate parent of LIBERTY Dental Plan Corporation (“Liberty Dental”). Liberty Dental engages in dental insurance and dental health care administration. As part of the Liberty Dental transaction, we entered into a shareholders’ agreement with the majority owners that provides for certain rights and obligations of each party, including certain put and call options. These options could result in our purchase of the units held by the majority owners in 2026 and 2027. We have calculated the fair value of the net put option, which is a Level III measurement (see Note 7, “Fair Value”), using a Monte Carlo simulation, which relies on assumptions, including cash flow projections, risk-free rates, volatility and details specific to the put and call options. Significant changes in assumptions could result in significantly lower or higher fair value measurements. The net put option’s fair value liability of $85, measured at the date of acquisition, is included in “Other noncurrent liabilities.” We have elected to not mark the net put option to market, and the fair value of the net put option will remain on the balance sheet until it's exercised or expires.

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Notes to Consolidated Financial Statements (continued)

7. Fair Value

Assets and liabilities recorded at fair value in the consolidated balance sheets are categorized based upon the level of judgment associated with the inputs used to measure their fair value. Level inputs, as defined by FASB guidance for fair value measurements and disclosures, are as follows:

Level Input:						Input Definition:
Level I						Inputs are unadjusted, quoted prices for identical assets or liabilities in active markets at the measurement date.
Level II						Inputs other than quoted prices included in Level I that are observable for the asset or liability through corroboration with market data at the measurement date.
Level III						Unobservable inputs that reflect management’s best estimate of what market participants would use in pricing the asset or liability at the measurement date.

The following methods, assumptions and inputs were used to determine the fair value of each class of the following assets and liabilities recorded at fair value in the consolidated balance sheets:

Cash equivalents: Cash equivalents primarily consist of highly rated money market funds with maturities of three months or less and are purchased daily at par value with specified yield rates. Due to the short-term nature of the funds, we designate all cash equivalents as Level I.

Fixed maturity securities, available-for-sale: Fair values of available-for-sale fixed maturity securities are based on quoted market prices, where available. These fair values are obtained primarily from third-party pricing services, which generally use Level I or Level II inputs for the determination of fair value to facilitate fair value measurements and disclosures. Level II securities primarily include corporate securities, securities from states, municipalities and political subdivisions, mortgage-backed securities, United States Government securities, foreign government securities, and certain other asset-backed securities. For securities not actively traded, the pricing services may use quoted market prices of comparable instruments or discounted cash flow analyses, incorporating inputs that are currently observable in the markets for similar securities. We have controls in place to review the pricing services’ qualifications and procedures used to determine fair values. In addition, we periodically review the pricing services’ pricing methodologies, data sources and pricing inputs to ensure the fair values obtained are reasonable. Inputs that are often used in the valuation methodologies include, but are not limited to, broker quotes, benchmark yields, credit spreads, default rates and prepayment speeds. We also have certain fixed maturity securities, primarily collateralized loan obligation securities, rated note securities and corporate debt securities, that are designated Level III securities. For these securities, the valuation methodologies may incorporate broker quotes, net asset value of underlying loans or discounted cash flow analyses using assumptions for inputs such as expected cash flows, benchmark yields, credit spreads, default rates and prepayment speeds that are not observable in the markets.

Equity securities: Fair values of equity securities are generally designated as Level I and are based on quoted market prices. For certain equity securities, quoted market prices for the identical security are not always available, and the fair value is estimated by reference to similar securities for which quoted prices are available. These securities are designated Level II. We also have certain equity securities, including private equity securities, for which the fair value is estimated based on each security’s current condition and future cash flow projections. Such securities are designated Level III. The fair values of these private equity securities are generally based on either broker quotes or discounted cash flow projections using assumptions for inputs such as the weighted-average cost of capital, long-term revenue growth rates and earnings before interest, taxes, depreciation and amortization, and/or revenue multiples that are not observable in the markets.

Securities lending collateral: Fair values of securities lending collateral are based on quoted market prices, where available. These fair values are obtained primarily from third-party pricing services, which generally use Level I or Level II inputs for the determination of fair value, to facilitate fair value measurements and disclosures.

Derivatives: Fair values are generally based on the quoted market prices by the financial institution that is the counterparty to the derivative transaction. We independently verify prices provided by the counterparties using valuation models that incorporate market observable inputs for similar derivative transactions. These derivatives are designated as Level II securities. Fair values of certain derivatives where market observable inputs are not available are estimated using

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Elevance Health, Inc.

Notes to Consolidated Financial Statements (continued)

assumptions such as cash flow projections, risk-free rates, volatility and details specific to the derivative contract. These derivatives are designated as Level III securities.

In addition, the following methods and assumptions were used to determine the fair value of each class of pension benefit plan assets and other benefit plan assets not defined above (see Note 11, “Retirement Benefits,” for fair values of benefit plan assets):

Mutual funds: Fair values are based on quoted market prices, which represent the net asset value (“NAV”) of shares held.

Partnership investments: Fair values are estimated based on the plan’s ownership share of the partnerships’ net assets, as reported in their periodic capital statements, and are valued using NAV as a practical expedient. The partnerships primarily consist of a real estate investment fund which acquires investments in real estate entities, and an energy fund which invests in public and private oil and gas companies principally through privately issued securities.

Collective investment trusts (“CITs”): Fair values are based on the NAV of the units held by the plan at year end and are valued using NAV as a practical expedient. The CITs are passive index funds that seek investment results that generally correspond to the performance of the Bloomberg U.S. Intermediate Treasury Index.

Commingled fund: Fair value is based on NAV per fund share and is valued using NAV as a practical expedient. The fund primarily invests in publicly traded equity securities of issuers within the fund’s benchmark. The objective of the fund is to produce returns in excess of the relevant benchmark over rolling five-year periods.

Insurance company contracts: Fair value is based on the fair value of the underlying investments of the account as determined by the insurance company.

Investment in DOL 103-12 trust: Fair value is based on the plan’s proportionate share of the fair value of investments held by the trust, qualified as a Department of Labor Regulation 2520.103-12 entity (“DOL 103-12 trust”) as reported in the audited financial statements of the trust, where the trustee applies fair value measurements to the underlying investments of the trust.

Life insurance contracts: Fair value is based on the cash surrender value of the policies as reported by the insurance carriers.

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Elevance Health, Inc.

Notes to Consolidated Financial Statements (continued)

A summary of fair value measurements by level for assets and liabilities measured at fair value on a recurring basis at December 31, 2023 and 2022 is as follows:

			Level I						Level II						Level III						Total
December 31, 2023
Assets:
Cash equivalents			$	2,210					$	—					$	—					$	2,210
Fixed maturity securities, available-for-sale:
United States Government securities			—						1,844						—						1,844
Government sponsored securities			—						110						—						110
Foreign government securities			—						4						—						4
States, municipalities and political subdivisions, tax-exempt			—						3,902						—						3,902
Corporate securities			—						14,532						46						14,578
Residential mortgage-backed securities			—						3,830						2						3,832
Commercial mortgage-backed securities			—						2,047						—						2,047
Other asset-backed securities			—						3,634						539						4,173
Total fixed maturity securities, available-for-sale			—						29,903						587						30,490
Equity securities:
Exchange traded funds			106						—						—						106
Common equity securities			12						33						—						45
Private equity securities			—						—						78						78
Total equity securities			118						33						78						229
Other invested assets - common equity securities			111						—						—						111
Securities lending collateral			—						2,382						—						2,382
Derivatives - other assets			—						10						—						10
Total assets			$	2,439					$	32,328					$	665					$	35,432
Liabilities:
Derivatives - other liabilities			$	—					$	(40)					$	—					$	(40)
Total liabilities			$	—					$	(40)					$	—					$	(40)
December 31, 2022
Assets:
Cash equivalents			$	3,567					$	—					$	—					$	3,567
Fixed maturity securities, available-for-sale:
United States Government securities			—						1,401						—						1,401
Government sponsored securities			—						78						—						78
Foreign government securities			—						274						—						274
States, municipalities and political subdivisions, tax-exempt			—						4,143						—						4,143
Corporate securities			—						12,392						137						12,529
Residential mortgage-backed securities			—						2,663						—						2,663
Commercial mortgage-backed securities			—						1,878						—						1,878
Other asset-backed securities			—						3,382						356						3,738
Total fixed maturity securities, available-for-sale			—						26,211						493						26,704
Equity securities:
Exchange traded funds			822						—						—						822
Common equity securities			2						41						—						43
Private equity securities			—						—						88						88
Total equity securities			824						41						88						953
Other invested assets - common equity securities			103						—						—						103
Securities lending collateral			—						2,457						—						2,457
Derivatives - other assets			—						3						—						3
Total assets			$	4,494					$	28,712					$	581					$	33,787
Liabilities:
Derivatives - other liabilities			$	—					$	(60)					$	—					$	(60)
Total liabilities			$	—					$	(60)					$	—					$	(60)

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Elevance Health, Inc.

Notes to Consolidated Financial Statements (continued)

A reconciliation of the beginning and ending balances of assets measured at fair value on a recurring basis using Level III inputs for the years ended December 31, 2023, 2022 and 2021 is as follows:

			Corporate Securities						Residential Mortgage- backed Securities												Other Asset-Backed Securities						Equity Securities						Total
Year ended December 31, 2023
Beginning balance at January 1, 2023			$	137					$	—											$	356					$	88					$	581
Total gains (losses):
Recognized in net income			(10)						—												—						(4)						(14)
Recognized in accumulated other comprehensive income			6						—												3						—						9
Purchases			38						—												191						15						244
Sales			(88)						—												(17)						(21)						(126)
Settlements			(21)						—												—						—						(21)
Transfers into Level III			6						2												6						—						14
Transfers out of Level III			(22)						—												—						—						(22)
Ending balance at December 31, 2023			$	46					$	2											$	539					$	78					$	665
Change in unrealized gains or losses included in net income related to assets still held at December 31, 2023			$	—					$	—											$	—					$	(6)					$	(6)
Year ended December 31, 2022
Beginning balance at January 1, 2022			$	336					$	5											$	19					$	89					$	449
Total gains (losses):
Recognized in net income			—						—												(1)						—						(1)
Recognized in accumulated other comprehensive income			(1)						—												(16)						—						(17)
Purchases			56						—												370						17						443
Sales			(210)						—												(14)						(18)						(242)
Settlements			(41)						—												—						—						(41)
Transfers into Level III			9						—												—						—						9
Transfers out of Level III			(12)						(5)												(2)						—						(19)
Ending balance at December 31, 2022			$	137					$	—											$	356					$	88					$	581
Change in unrealized gains or losses included in net income related to assets still held at December 31, 2022			$	—					$	—											$	—					$	—					$	—
Year ended December 31, 2021
Beginning balance at January 1, 2021			$	325					$	2											$	5					$	60					$	392
Total gains (losses):
Recognized in net income			2						—												—						17						19
Recognized in accumulated other comprehensive income			3						—												—						—						3
Purchases			179						4												17						16						216
Sales			(18)						—												—						(4)						(22)
Settlements			(157)						—												—						—						(157)
Transfers into Level III			3						—												—						—						3
Transfers out of Level III			(1)						(1)												(3)						—						(5)
Ending balance at December 31, 2021			$	336					$	5											$	19					$	89					$	449
Change in unrealized gains or losses included in net income related to assets still held at December 31, 2021			$	—					$	—											$	—					$	18					$	18

There were no individually material transfers into or out of Level III during the years ended December 31, 2023, 2022 or 2021.

Certain assets and liabilities are measured at fair value on a nonrecurring basis; that is, the instruments are not measured at fair value on an ongoing basis but are subject to fair value adjustments only in certain circumstances. As disclosed in Note 3, “Business Acquisitions and Divestitures,” we completed our acquisition of BioPlus in 2023 and our acquisition of Integra

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Elevance Health, Inc.

Notes to Consolidated Financial Statements (continued)

in 2022. The net assets acquired in these acquisitions and resulting goodwill and other intangible assets were recorded at fair value primarily using Level III inputs. The majority of assets acquired and liabilities assumed were recorded at their carrying values as of the respective date of acquisition, as their carrying values approximated their fair values due to their short-term nature. The fair values of goodwill and other intangible assets acquired in our acquisitions of BioPlus and Integra were estimated based on the income approach. The income approach estimates fair value based on the present value of the cash flows that the assets could be expected to generate in the future. We developed internal estimates for the expected cash flows and discount rate in the present value calculation. Also in 2023, we entered into a shareholders’ agreement which included certain put and call options associated with our minority interest ownership of Liberty Dental. The resulting net put option liability was recorded at its fair value measured at the date of acquisition using Level III inputs with an election not to mark the derivative to market, which is further discussed and disclosed in Note 6, “Derivatives”. Other than the assets acquired and liabilities assumed in our acquisitions of BioPlus and Integra and the net put option on Liberty Dental described above, there were no material assets or liabilities measured at fair value on a nonrecurring basis during the years ended December 31, 2023 or 2022.

Our valuation policy is determined by members of our treasury and accounting departments. Whenever possible, our policy is to obtain quoted market prices in active markets to estimate fair values for recognition and disclosure purposes. Where quoted market prices in active markets are not available, fair values are estimated using discounted cash flow analyses, broker quotes, unobservable inputs or other valuation techniques. These techniques are significantly affected by our assumptions, including discount rates and estimates of future cash flows. The use of assumptions for unobservable inputs for the determination of fair value involves a level of judgment and uncertainty. Changes in assumptions that reasonably could have been different at the reporting date may result in a higher or lower determination of fair value. Changes in fair value measurements, if significant, may affect performance of cash flows.

Potential taxes and other transaction costs are not considered in estimating fair values. Our valuation policy is generally to obtain quoted prices for each security from third-party pricing services, which are derived through recently reported trades for identical or similar securities making adjustments through the reporting date based upon available market observable information. As we are responsible for the determination of fair value, we perform analysis on the prices received from the pricing services to determine whether the prices are reasonable estimates of fair value. This analysis is performed by our internal treasury personnel who are familiar with our investment portfolios, the pricing services engaged and the valuation techniques and inputs used. Our analysis includes procedures such as a review of month-to-month price fluctuations and price comparisons to secondary pricing services. There were no adjustments to quoted market prices obtained from the pricing services during the years ended December 31, 2023, 2022 or 2021.

In addition to the preceding disclosures on assets recorded at fair value in the consolidated balance sheets, FASB guidance also requires the disclosure of fair values for certain other financial instruments for which it is practicable to estimate fair value, whether or not such values are recognized in the consolidated balance sheets.

Non-financial instruments such as property and equipment, other current assets, deferred income taxes, intangible assets and certain financial instruments, such as policy liabilities, are excluded from the fair value disclosures. Therefore, the fair value amounts cannot be aggregated to determine our underlying economic value.

The carrying amounts reported in the consolidated balance sheets for cash, premium receivables, self-funded receivables, other receivables, unearned income, accounts payable and accrued expenses, and certain other current liabilities approximate fair value because of the short-term nature of these items. These assets and liabilities are not listed in the table below.

The following methods and assumptions were used to estimate the fair value of each class of financial instrument that is recorded at its carrying value on the consolidated balance sheets:

Other invested assets: Other invested assets primarily include our investments in limited partnerships, joint ventures and other non-controlled corporations and mortgage loans, as well as the cash surrender value of corporate-owned life insurance policies. Investments in limited partnerships, joint ventures and other non-controlled corporations are carried at our share in the entities’ undistributed earnings, which approximates fair value. Mortgage loans are carried at amortized cost net of loss allowance. The fair value of mortgage loans is measured using discounted cash flows benchmarked against the 10-year U.S. Treasury yield plus a market rate spread. The carrying value of corporate-owned life insurance policies represents the cash surrender value as reported by the respective insurer, which approximates fair value.

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Elevance Health, Inc.

Notes to Consolidated Financial Statements (continued)

Short-term borrowings: The fair value of our short-term borrowings is based on quoted market prices for the same or similar debt, or if no quoted market prices were available, on the current market interest rates estimated to be available to us for debt of similar terms and remaining maturities.

Long-term debt—commercial paper: The carrying amount for commercial paper approximates fair value, as the underlying instruments have variable interest rates at market value.

Long-term debt—senior unsecured notes and surplus notes: The fair values of our notes are based on quoted market prices in active markets for the same or similar debt, or, if no quoted market prices are available, on the current market observable rates estimated to be available to us for debt of similar terms and remaining maturities.

Long-term debt—convertible debentures: The fair value of our convertible debentures was based on the quoted market price in the active private market in which the convertible debentures traded.

A summary of the estimated fair values by level of each class of financial instrument that is recorded at its carrying value on our consolidated balance sheets at December 31, 2023 and 2022 is as follows:

			Carrying Value						Estimated Fair Value
			Level I						Level II						Level III						Total
December 31, 2023
Assets:
Other invested assets			$	5,996					$	—					$	—					$	5,972					$	5,972
Liabilities:
Debt:
Short-term borrowings			225						—						225						—						225
Notes			24,895						—						23,569						—						23,569
December 31, 2022
Assets:
Other invested assets			$	5,582					$	—					$	—					$	5,558					$	5,558
Liabilities:
Debt:
Short-term borrowings			265						—						265						—						265
Notes			23,786						—						21,861						—						21,861
Convertible debentures			63						—						463						—						463

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Elevance Health, Inc.

Notes to Consolidated Financial Statements (continued)

8. Income Taxes

The components of deferred income taxes at December 31, 2023 and 2022 are as follows:

			2023						2022
Deferred income tax assets:
Accrued expenses			$	553					$	379
Bad debt reserves			415						301
Insurance reserves			178						166
Lease liabilities			172						200
Retirement liabilities			132						173
Deferred compensation			44						34
Federal and state carryforwards			455						328
Investment basis			31						340
Other			166						131
Subtotal			2,146						2,052
Less: valuation allowance			(271)						(187)
Total deferred income tax assets			1,875						1,865
U.S. federal and state intangible assets			2,070						2,059
Foreign (including Puerto Rico) intangible assets			330						380
Capitalized software			485						601
Depreciation and amortization			54						62
Retirement assets			319						317
Lease right-of-use assets			110						123
Prepaid expenses			249						201
Total deferred income tax liabilities			3,617						3,743
Net deferred income tax liabilities			$	1,742					$	1,878

We recognized $228 and $137 of deferred tax asset under the caption “Other noncurrent assets” at December 31, 2023 and 2022, respectively. We recognized $1,970 and $2,015 of deferred tax liability under the caption “Deferred tax liabilities, net” at December 31, 2023 and 2022.

As of December 31, 2023, we have established U.S. deferred taxes for undistributed earnings from certain non-U.S. subsidiaries, which are included in the Investment basis component above, consistent with prior years.

Significant components of the provision for income taxes for the years ended December 31, 2023, 2022 and 2021 consist of the following:

			2023						2022						2021
Current tax expense:
Federal			$	1,899					$	1,455					$	1,468
Foreign (including Puerto Rico)			95						98						47
State and local			420						244						165
Total current tax expense			2,414						1,797						1,680
Deferred tax expense (benefit)			(690)						(85)						166
Total income tax expense			$	1,724					$	1,712					$	1,846

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Elevance Health, Inc.

Notes to Consolidated Financial Statements (continued)

State and local current tax expense is reported gross of federal benefit in the preceding table, and includes amounts related to audit settlements, uncertain tax positions, state tax credits and true up of prior years’ tax. Such items are included on a net of federal tax basis in multiple lines in the following rate reconciliation table.

A reconciliation of income tax expense recorded in the consolidated statements of income and amounts computed at the statutory federal income tax rate for the years ended December 31, 2023, 2022 and 2021 is as follows:

			2023												2022												2021
			Amount						Percent						Amount						Percent						Amount						Percent
Amount at statutory rate			$	1,620					21.0		%				$	1,596					21.0		%				$	1,679					21.0		%
State and local income taxes net of federal tax expense/benefit			124						1.6						190						2.5						201						2.5
Tax exempt interest and dividends received deduction			(15)						(0.2)						(19)						(0.3)						(22)						(0.3)
Change in valuation allowance			84						1.1						51						0.7						81						1.0
Other, net			(89)						(1.2)						(106)						(1.4)						(93)						(1.1)
Total income tax expense			$	1,724					22.3		%				$	1,712					22.5		%				$	1,846					23.1		%

During the year ended December 31, 2023, we recognized income tax expense of $1,724, or $7.26 per diluted share. The decrease in effective income tax rate for 2023 compared to 2022 was primarily due to the impact of geographic changes in the mix of 2023 earnings.

During the year ended December 31, 2022, we recognized income tax expense of $1,712, or $7.05 per diluted share. The decrease in effective income tax rate for 2022 compared to 2021 was primarily due to the impact of geographic changes in the mix of 2022 earnings.

During the year ended December 31, 2021, we recognized income tax expense of $1,846, or $7.48 per diluted share.

The change in the carrying amount of gross unrecognized tax benefits from uncertain tax positions for the years ended December 31, 2023 and 2022 is as follows:

			2023						2022
Balance at January 1			$	349					$	271
Additions based on:
Tax positions related to current year			19						22
Tax positions related to prior years			119						57
Reductions based on:
Tax positions related to prior years			(19)						(1)
Balance at December 31			$	468					$	349

The table above excludes interest, net of related tax benefits, which is treated as income tax expense (benefit) under our accounting policy. The interest is included in the amounts described in the following paragraph.

The amount of unrecognized tax benefits that would impact our effective tax rate in future periods, if recognized, was $450 and $328 at December 31, 2023 and 2022, respectively. Also included in the table above, at December 31, 2023, is $2 that would be recognized as an adjustment to additional paid-in capital, which would not affect our effective tax rate.

For the years ended December 31, 2023, 2022 and 2021 we recognized net interest expense of $24, $13 and $9, respectively. We had accrued approximately $79 and $55 for the payment of interest at December 31, 2023 and 2022, respectively.

As of December 31, 2023, as further described below, certain tax years remain open to examination by the Internal Revenue Service (“IRS”) and various state, local and foreign authorities. As a result of these examinations and discussions

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Elevance Health, Inc.

Notes to Consolidated Financial Statements (continued)

with taxing agencies, we have recorded amounts for uncertain tax positions. It is anticipated that the amount of unrecognized tax benefits will change in the next twelve months due to possible settlements of audits and changes in temporary items. However, the ultimate resolution of these items is dependent on the completion of negotiations with various taxing authorities. While it is difficult to determine when other tax settlements will actually occur, it is reasonably possible that one could occur in the next twelve months and our unrecognized tax benefits could be reduced within a range of approximately $111 to $217.

We are a member of the IRS Compliance Assurance Process (“CAP”). The objective of CAP is to reduce taxpayer burden and uncertainty while assuring the IRS of the accuracy of tax returns prior to filing, thereby reducing or eliminating the need for post-filing examinations.

As of December 31, 2023, the IRS examination of our 2023 and 2022 tax years continues to be in process.

In certain states, we pay premium taxes in lieu of state income taxes. Premium taxes are reported in operating expense.

At December 31, 2023, we had federal net operating loss carryforwards of $192, of which $69 will expire beginning 2032 through 2043 and $123 have an indefinite carryforward period. State and foreign net operating loss carryforwards expire beginning 2024 through 2042, with some having an indefinite carryforward period.

Income taxes receivable totaled $543 and $440 at December 31, 2023 and 2022, respectively. We recognize the income tax receivable as an asset under the caption “Other current assets” in our consolidated balance sheets.

During 2023, 2022 and 2021, federal income taxes paid totaled $1,936, $1,594 and $1,299, respectively.

9. Property and Equipment

A summary of property and equipment at December 31, 2023 and 2022 is as follows:

			2023						2022
Computer software, purchased and internally developed			$	6,195					$	5,604
Computer equipment, furniture and other equipment			955						828
Leasehold improvements			715						648
Building and improvements			37						38
Land and improvements			1						1
Property and equipment, gross			7,903						7,119
Accumulated depreciation and amortization			(3,544)						(2,803)
Property and equipment, net			$	4,359					$	4,316

Depreciation expense for 2023, 2022 and 2021 was $107, $123 and $136, respectively. Amortization expense on computer software and leasehold improvements for 2023, 2022 and 2021 was $765, $661 and $532, respectively, which includes amortization expense on computer software, both purchased and internally developed, for 2023, 2022 and 2021 of $685, $599 and $485, respectively. Capitalized costs related to the internal development of software of $5,870 and $5,354 at December 31, 2023 and 2022, respectively, are reported with computer software.

Impairment of property and equipment for the years ended December 31, 2023, 2022 and 2021 was $446, $7, and $73, respectively, which is included in operating expense and primarily related to our activities disclosed in Note 4, “Business Optimization Initiatives.”

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Elevance Health, Inc.

Notes to Consolidated Financial Statements (continued)

10. Goodwill and Other Intangible Assets

A summary of the change in the carrying amount of goodwill for our segments (see Note 20, “Segment Information”) for 2023 and 2022 is as follows:

									Health Benefits						CarelonRx						Carelon Services						Total
Balance as of January 1, 2022									$	21,942					$	59					$	2,227					$	24,228
Acquisitions and adjustments									146						—						9						155
Balance as of December 31, 2022									22,088						59						2,236						24,383
Acquisitions and adjustments									16						898						20						934
Balance as of December 31, 2023									$	22,104					$	957					$	2,256					$	25,317
Accumulated impairment as of December 31, 2023									$	—					$	—					$	—					$	—

As required by FASB guidance, we completed annual impairment tests of existing goodwill and other intangible assets with indefinite lives during 2023, 2022 and 2021. We perform these annual impairment tests during the fourth quarter. FASB guidance also requires interim impairment testing to be performed when potential impairment indicators exist. These tests involve the use of estimates related to the fair value of goodwill and intangible assets with indefinite lives and require a significant degree of management judgment and the use of subjective assumptions. Qualitative testing procedures include assessing our financial performance, macroeconomic conditions, industry and market considerations, various asset specific factors and entity specific events. For quantitative testing, the fair values are estimated using the projected income and market valuation approaches, incorporating Level III internal estimates for inputs, including, but not limited to, revenue projections, income projections, cash flows and discount rates. We did not incur any impairment losses in 2023, 2022 or 2021, as the estimated fair values of our reporting units were substantially in excess of their carrying values.

The components of other intangible assets as of December 31, 2023 and 2022 are as follows:

			2023																		2022
Gross Carrying Amount						Accumulated Amortization						Net Carrying Amount						Gross Carrying Amount						Accumulated Amortization						Net Carrying Amount
Intangible assets with finite lives:
Customer relationships			$	6,263					$	(3,817)					$	2,446					$	5,791					$	(3,693)					$	2,098
Provider and hospital relationships			326						(164)						162						326						(146)						180
Other			242						(44)						198						1,010						(440)						570
Total			6,831						(4,025)						2,806						7,127						(4,279)						2,848
Intangible assets with indefinite lives:
Blue Cross and Blue Shield and other trademarks			5,991						—						5,991						5,991						—						5,991
State Medicaid licenses			1,476						—						1,476						1,476						—						1,476
Total			7,467						—						7,467						7,467						—						7,467
Other intangible assets			$	14,298					$	(4,025)					$	10,273					$	14,594					$	(4,279)					$	10,315

In 2023, additions to the gross carrying amount of customer relationships relate to the acquisition of BioPlus. The decrease in the gross and net carrying amount of intangible assets with finite lives—other primarily related to the accelerated amortization of certain trade names in connection with the new branding strategy, which was substantially completed in 2023.

Intangible assets, along with the related accumulated amortization, are removed from the table above at the end of the fiscal year in which they become fully amortized.

As of December 31, 2023, the estimated amortization expense for each of the five succeeding years is as follows: 2024, $438; 2025, $374; 2026, $318; 2027, $277; and 2028, $236.

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Elevance Health, Inc.

Notes to Consolidated Financial Statements (continued)

11. Retirement Benefits

We sponsor various non-contributory employee defined benefit plans through certain subsidiaries.

The Elevance Health Cash Balance Plan A and the Elevance Health Cash Balance Plan B are cash balance pension plans covering certain eligible employees of the affiliated companies that participate in these plans. Effective January 1, 2006, benefits were curtailed, with the result that most participants stopped accruing benefits but continue to earn interest on benefits accrued prior to the curtailment. Certain participants subject to collective bargaining and certain other participants who met grandfathering rules continued to accrue benefits. Participants who did not receive credits and/or benefit accruals were included in the Elevance Health Cash Balance Plan A, while employees who were still receiving credits and/or benefits participated in the Elevance Health Cash Balance Plan B. Effective January 1, 2019, benefits under the Elevance Health Cash Balance Plan B were curtailed. All grandfathered participants no longer have pay credits added to their accounts but continue to earn interest on existing account balances. Participants continue to earn years of pension service for vesting purposes. Several pension plans acquired through various corporate mergers and acquisitions were merged into these plans in prior years.

The Employees’ Retirement Plan of Blue Cross of California (the “BCC Plan”) is a defined benefit pension plan that covers eligible employees of Blue Cross of California who are covered by a collective bargaining agreement. Effective January 1, 2007, benefits were curtailed under the BCC Plan with the result that no Blue Cross of California employees hired or rehired after December 31, 2006 are eligible to participate in the BCC Plan.

All of the plans’ assets consist primarily of equity securities, fixed maturity securities, investment funds and cash. The funding policies for all plans are to contribute amounts at least sufficient to meet the minimum funding requirements set forth in the Employee Retirement Income Security Act of 1974, as amended (“ERISA”), as further amended by the Pension Protection Act of 2006, and in accordance with income tax regulations, plus such additional amounts as are necessary to provide assets sufficient to meet the benefits to be paid to plan participants.

The following tables disclose consolidated “pension benefits,” which include the defined benefit pension plans described above, and consolidated “other benefits,” which include postretirement health and welfare benefits including medical, vision and dental benefits offered to certain employees. Calculations were computed using assumptions at the December 31 measurement dates.

The reconciliation of the benefit obligation is as follows:

			Pension Benefits												Other Benefits
			2023						2022						2023						2022
Benefit obligation at beginning of year			$	1,415					$	1,859					$	277					$	343
Interest cost			68						52						14						7
Plan participant contributions			—						—						16						17
Actuarial (gain) loss			40						(362)						(12)						(54)
Settlements			(27)						(74)						—						—
Benefits paid			(103)						(60)						(40)						(36)
Benefit obligation at end of year			$	1,393					$	1,415					$	255					$	277

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Elevance Health, Inc.

Notes to Consolidated Financial Statements (continued)

The changes in the fair value of plan assets are as follows:

			Pension Benefits												Other Benefits
			2023						2022						2023						2022
Fair value of plan assets at beginning of year			$	1,734					$	2,216					$	299					$	371
Actual return on plan assets			199						(352)						42						(61)
Employer contributions			4						4						—						—
Plan participant contributions			—						—						16						17
Settlements			(27)						(74)						—						—
Benefits paid			(103)						(60)						(44)						(28)
Fair value of plan assets at end of year			$	1,807					$	1,734					$	313					$	299

The net amount included in the consolidated balance sheets is as follows:

			Pension Benefits												Other Benefits
			2023						2022						2023						2022
Noncurrent assets			$	459					$	363					$	58					$	22
Current liabilities			(7)						(6)						—						—
Noncurrent liabilities			(38)						(38)						—						—
Net amount at December 31			$	414					$	319					$	58					$	22

The net amounts included in accumulated other comprehensive income (loss) that have not been recognized as components of net periodic benefit costs are as follows:

			Pension Benefits												Other Benefits
			2023						2022						2023						2022
Net actuarial (loss) gain			$	(625)					$	(672)					$	38					$	5
Prior service credit			—						—						2						3
Net amount before tax at December 31			$	(625)					$	(672)					$	40					$	8

The accumulated benefit obligation for the defined benefit pension plans was $1,391 and $1,413 at December 31, 2023 and 2022, respectively.

As of December 31, 2023, certain pension plans had accumulated benefit obligations in excess of plan assets. Such plans had accumulated benefit obligation and fair value of plan assets of $44 and $0, respectively. In addition, certain plans had projected benefit obligations in excess of plan assets. Such plans had projected benefit obligation and fair value of plan assets of $44 and $0, respectively.

The weighted-average assumptions used in calculating the benefit obligations for all plans are as follows:

			Pension Benefits												Other Benefits
			2023						2022						2023						2022
Discount rate			4.91		%				5.18		%				4.83		%				5.12		%
Rate of compensation increase			3.00		%				3.00		%				3.00		%				3.00		%
Expected rate of return on plan assets			6.47		%				6.58		%				6.64		%				6.57		%
Interest crediting rate			4.50		%				4.25		%				4.50		%				3.89		%

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Elevance Health, Inc.

Notes to Consolidated Financial Statements (continued)

The components of net periodic benefit credit included in the consolidated statements of income are as follows:

			2023						2022						2021
Pension Benefits
Interest cost			$	68					$	52					$	34
Expected return on assets			(127)						(101)						(134)
Recognized actuarial loss			9						16						25
Settlement loss			7						28						26
Net periodic benefit credit			$	(43)					$	(5)					$	(49)
Other Benefits
Service cost			$	—					$	—					$	1
Interest cost			14						7						5
Expected return on assets			(21)						(26)						(26)
Amortization of prior service credit			(2)						(4)						(4)
Net periodic benefit credit			$	(9)					$	(23)					$	(24)

During the years ended December 31, 2023, 2022 and 2021, we incurred total settlement losses of $7, $28 and $26, respectively, as lump-sum payments exceeded the service cost and interest cost components of net periodic benefit cost for certain of our plans.

The weighted-average assumptions used in calculating the net periodic benefit cost for all plans are as follows:

			2023						2022						2021
Pension Benefits
Discount rate			5.18		%				2.70		%				2.24		%
Rate of compensation increase			3.00		%				3.00		%				3.00		%
Expected rate of return on plan assets			6.58		%				5.02		%				6.72		%
Interest crediting rate			4.25		%				3.82		%				3.82		%
Other Benefits
Discount rate			5.12		%				2.49		%				1.99		%
Rate of compensation increase			3.00		%				3.00		%				3.00		%
Expected rate of return on plan assets			6.57		%				6.43		%				6.60		%
Interest crediting rate			3.89		%				1.56		%				0.87		%

The assumed healthcare cost trend rates used to measure the expected cost of pre-Medicare (those who are not currently eligible for Medicare benefits) other benefits at our December 31, 2023 measurement date was 8.00% for 2024, with a gradual decline to 4.50% by the year 2035. The assumed healthcare cost trend rates used to measure the expected cost of post-Medicare (those who are currently eligible for Medicare benefits) other benefits at our December 31, 2023 measurement date was 6.50% for 2024, with a gradual decline to 4.50% by the year 2035. These estimated trend rates are subject to change in the future.

Plan assets include a diversified mix of equity securities, investment grade fixed maturity securities and other types of investments across a range of sectors and levels of capitalization to maximize long-term return for a prudent level of risk. The weighted-average target allocation for pension benefit plan assets is 34% equity securities, 61% fixed maturity securities, and 5% to all other types of investments. Equity securities primarily include a mix of domestic securities, foreign securities and mutual funds invested in equities. Fixed maturity securities primarily include corporate bonds, treasury securities and asset-backed investments issued by corporations and the U.S. government. Other types of investments include insurance contracts designed specifically for employee benefit plans, an investment in a DOL 103-12 trust and certain alternative investments.

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Elevance Health, Inc.

Notes to Consolidated Financial Statements (continued)

As of December 31, 2023, there were no significant concentrations of investments in the pension benefit assets or other benefit assets. No plan assets were invested in Elevance Health common stock.

Pension benefit assets and other benefit assets recorded at fair value are categorized based upon the level of judgment associated with the inputs used to measure their fair value. In accordance with FASB guidance, certain alternative investments that are measured at fair value using the NAV per share (or its equivalent) as a practical expedient have not been classified in the fair value hierarchy. The fair value amounts presented are intended to permit reconciliation of the fair value hierarchy to the total plan assets.

The fair values of our pension benefit assets and other benefit assets by asset category and level inputs at December 31, 2023, excluding cash, investment income receivable and amounts due to/from brokers, resulting in a net asset of $43, and excluding estimated claims settlements to be paid from other benefit assets of $(23), are as follows (see Note 7, “Fair Value,” for additional information regarding the definition of level inputs):

			Level I						Level II						Level III						Total
December 31, 2023
Pension Benefit Assets:
Cash equivalents			$	2					$	—					$	—					$	2
Equity securities:
U.S. securities			390						—						—						390
Foreign securities			94						—						—						94
Mutual funds			42						—						—						42
Fixed maturity securities:
Government securities			—						70						—						70
Corporate securities			—						522						—						522
Asset-backed securities			—						2						—						2
Other types of investments:
Insurance company contracts			—						—						143						143
Total pension benefit assets at fair value			$	528					$	594					$	143					1,265
Alternative investments																					500
Total pension benefit assets																					$	1,765
Other Benefit Assets:
Equity securities:
U.S. securities			$	7					$	—					$	—					$	7
Foreign securities			2						—						—						2
Mutual funds			17						—						—						17
Other types of investments:
Life insurance contracts			—						—						289						289
Investment in DOL 103-12 trust			—						9						—						9
Total other benefit assets at fair value			$	26					$	9					$	289					324
Alternative investments																					11
Total other benefit assets																					$	335

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Elevance Health, Inc.

Notes to Consolidated Financial Statements (continued)

The fair values of our pension benefit assets and other benefit assets by asset category and level inputs at December 31, 2022, excluding cash, investment income receivable and amounts due to/from brokers, resulting in a net asset of $36, and excluding estimated claims settlements to be paid from other benefit assets of $(17), are as follows:

			Level I						Level II						Level III						Total
December 31, 2022
Pension Benefit Assets:
Equity securities:
U.S. securities			$	489					$	—					$	—					$	489
Foreign securities			145						—						—						145
Mutual funds			39						—						—						39
Fixed maturity securities:
Government securities			—						247						—						247
Corporate securities			—						275						—						275
Asset-backed securities			—						185						—						185
Other types of investments:
Insurance company contracts			—						—						154						154
Total pension benefit assets at fair value			$	673					$	707					$	154					1,534
Alternative investments																					164
Total pension benefit assets																					$	1,698
Other Benefit Assets:
Equity securities:
U.S. securities			$	7					$	—					$	—					$	7
Foreign securities			1						—						—						1
Mutual funds			17						—						—						17
Fixed maturity securities:
Government securities			—						3						—						3
Corporate securities			—						3						—						3
Asset-backed securities			—						3						—						3
Other types of investments:
Life insurance contracts			—						—						270						270
Investment in DOL 103-12 trust			—						10						—						10
Total other benefit assets at fair value			$	25					$	19					$	270					314
Alternative investments																					2
Total other benefit assets																					$	316

In order to conform with current year presentation, the table above includes a reclassification of the commingled fund from Level II into alternative investments measured using NAV as a practical expedient. This reclassification did not have any impact on total plan assets.

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Elevance Health, Inc.

Notes to Consolidated Financial Statements (continued)

The following table provides additional information on the alternative investments that are measured using NAV as a practical expedient:

			Fair Value as of December 31												Unfunded Commitments as of December 31, 2023						Redemption Frequency (if applicable)						Redemption Notice Period
			2023						2022
Collective investment trusts:
Pension benefit assets			$	346					$	—
Other benefit assets			9						—
Total CITs			355						—						$	—					Daily						2 days
Commingled fund:
Pension benefit assets			84						93
Other benefit assets			2						2
Total commingled fund			86						95						—						1st & 15th of the month						7 business days
Partnership investments			70						71						1						Not Applicable						Not Applicable
Total alternative investments			$	511					$	166					$	1

A reconciliation of the beginning and ending balances of plan assets measured at fair value using Level III inputs for the years ended December 31, 2023, 2022 and 2021 is as follows:

															Insurance Company Contracts						Life Insurance Contracts						Total
Year ended December 31, 2023
Beginning balance at January 1, 2023															$	154					$	270					$	424
Actual return on plan assets relating to assets still held at the reporting date															3						37						40
Purchases															6						—						6
Sales															(20)						(18)						(38)
Ending balance at December 31, 2023															$	143					$	289					$	432
Year ended December 31, 2022
Beginning balance at January 1, 2022															$	179					$	338					$	517
Actual return on plan assets relating to assets still held at the reporting date															(22)						(53)						(75)
Purchases															9						—						9
Sales															(12)						(15)						(27)
Ending balance at December 31, 2022															$	154					$	270					$	424
Year ended December 31, 2021
Beginning balance at January 1, 2021															$	189					$	323					$	512
Actual return on plan assets relating to assets still held at the reporting date															(6)						26						20
Purchases															5						—						5
Sales															(9)						(11)						(20)
Ending balance at December 31, 2021															$	179					$	338					$	517

There were no other transfers into or out of Level III during the years ended December 31, 2023, 2022 or 2021.

Our current funding strategy is to fund an amount at least equal to the minimum required funding as determined under ERISA with consideration of maximum tax deductible amounts. We may elect to make discretionary contributions up to the

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Elevance Health, Inc.

Notes to Consolidated Financial Statements (continued)

maximum amount deductible for income tax purposes. For the years ended December 31, 2023, 2022 and 2021, no material contributions were necessary to meet ERISA required funding levels. However, during each of the years ended December 31, 2023, 2022 and 2021, we made tax deductible discretionary contributions to the pension benefit plans of $4, $4, and $7, respectively. Employer contributions to other benefit plans represent discretionary contributions and do not include payments to retirees for current benefits.

Our estimated future payments for pension benefits and other benefits, which reflect expected future service, as appropriate, are as follows:

			Pension Benefits						Other Benefits
2024			$	125					$	29
2025			120						28
2026			119						27
2027			115						25
2028			113						24
2029 - 2033			492						99

In addition to the defined benefit plans, we maintain the Elevance Health 401(k) Plan, which is a qualified defined contribution plan covering substantially all employees. Voluntary employee contributions are matched by us subject to certain limitations. Contributions made by us totaled $316, $275 and $241 during 2023, 2022 and 2021, respectively.

12. Medical Claims Payable

A reconciliation of the beginning and ending balances for medical claims payable for the years ended December 31, 2023, 2022 and 2021 is as follows:

			2023						2022						2021
Gross medical claims payable, beginning of year			$	15,348					$	13,282					$	11,135
Ceded medical claims payable, beginning of year			(6)						(21)						(46)
Net medical claims payable, beginning of year			15,342						13,261						11,089
Business combinations and purchase adjustments			—						133						420
Net incurred medical claims:
Current year			121,798						113,414						100,440
Prior years redundancies			(1,571)						(869)						(1,703)
Total net incurred medical claims			120,227						112,545						98,737
Net payments attributable to:
Current year medical claims			107,146						98,997						88,156
Prior years medical claims			12,565						11,600						8,829
Total net payments			119,711						110,597						96,985
Net medical claims payable, end of year			15,858						15,342						13,261
Ceded medical claims payable, end of year			7						6						21
Gross medical claims payable, end of year			$	15,865					$	15,348					$	13,282

Amounts incurred related to prior years vary from previously estimated liabilities as the claims are ultimately settled. Liabilities at any period-end are continually reviewed and re-estimated as information regarding actual claims payments, or runout, becomes known. This information is compared to the originally established year end liability. Negative amounts reported for incurred medical claims related to prior years result from claims being settled for amounts less than originally estimated. The prior year redundancy of $1,571 shown above for the year ended December 31, 2023 represents an estimate based on paid claim activity from January 1, 2023 to December 31, 2023. Medical claim liabilities are usually described as

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Elevance Health, Inc.

Notes to Consolidated Financial Statements (continued)

having a “short tail,” which means that they are generally paid within twelve months of the member receiving service from the provider. Accordingly, the majority of the $1,571 redundancy relates to claims incurred in calendar year 2022.

The following table provides a summary of the two key assumptions having the most significant impact on our incurred but not paid liability estimates for the years ended December 31, 2023, 2022 and 2021, which are the completion and trend factors. These vital assumptions can be affected by variables such as utilization levels, unit costs, mix of business, benefit plan designs, provider reimbursement levels, processing system conversions and changes, claim inventory levels, claim processing and submission patterns, and operational changes resulting from business combinations. We had increased estimation uncertainty on our incurred but not reported liability at December 31, 2022, 2021 and 2020. Slowdowns in claims submission patterns and increases in utilization levels for COVID-19 testing and treatment are the primary factors that led to the increased estimation uncertainty.

			Favorable Developments by Changes in Key Assumptions
			2023						2022						2021
Assumed trend factors			$	(895)					$	(859)					$	(1,429)
Assumed completion factors			(676)						(10)						(274)
Total			$	(1,571)					$	(869)					$	(1,703)

The favorable development recognized in 2023 resulted primarily from trend factors in late 2022 developing more favorably than originally expected. Favorable development in the completion factors in late 2022 also contributed to the favorable development in 2023.

The favorable development recognized in 2022 resulted primarily from trend factors in late 2021 developing more favorably than originally expected as well as a smaller contribution from completion factor development.

The favorable development recognized in 2021 resulted primarily from trend factors in late 2020 developing more favorably than originally expected as well as a smaller but significant contribution from completion factor development.

The reconciliation of net incurred medical claims to benefit expense included in the consolidated statements of income is as follows:

						Years Ended December 31
						2023						2022						2021
Total net incurred medical claims						$	120,227					$	112,545					$	98,737
Quality improvement and other claims expense						4,103						4,097						3,834
Benefit expense						$	124,330					$	116,642					$	102,571

Incurred claims development, net of reinsurance, for the years ended December 31, 2023, 2022 and 2021 is as follows:

						Cumulative Incurred Claims and Allocated Claim Adjustment Expenses, Net of Reinsurance
						2021						2022						2023
Claim Years						(Unaudited)						(Unaudited)
2021 & Prior						$	110,247					$	109,378					$	109,542
2022												113,546						111,812
2023																		121,798
Total																		$	343,152

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Elevance Health, Inc.

Notes to Consolidated Financial Statements (continued)

Paid claims development, net of reinsurance, for the years ended December 31, 2023, 2022 and 2021 is as follows:

						Cumulative Paid Claims and Allocated Claim Adjustment Expenses, Net of Reinsurance
						2021						2022						2023
Claim Years						(Unaudited)						(Unaudited)
2021 & Prior						$	96,986					$	108,586					$	109,179
2022												98,997						110,969
2023																		107,146
Total																		$	327,294

At December 31, 2023, the total of incurred but not reported liabilities plus expected development on reported claims was $363, $843 and $14,652 for the claim years 2021 and prior, 2022 and 2023, respectively.

At December 31, 2023, the cumulative number of reported claims was 480, 462 and 430 for the claim years 2021 and prior, 2022 and 2023, respectively.

The information about incurred claims development, paid claims development and cumulative number of reported claims for the years ended December 31, 2021 and 2022 is unaudited and presented as supplementary information.

The cumulative number of reported claims for each claim year has been developed using historical data captured by our claim payment systems. The provided claim amounts are not a precise tool for understanding utilization of medical services. They could be impacted by a variety of factors, including changes in provider billing practices, provider reimbursement arrangements, mix of services, benefit design or processing systems. The cumulative number of reported claims has been provided to comply with FASB accounting standards and is not used by management in its claims analysis. Our cumulative number of reported claims may not be comparable to similar measures reported by other health benefits companies.

The reconciliation of incurred and paid claims development information for the three years ended December 31, 2023, reflected in the tables above, to the consolidated ending balance for medical claims payable included in the consolidated balance sheet, as of December 31, 2023, is as follows:

			Total
Cumulative incurred claims and allocated claim adjustment expenses, net of reinsurance			$	343,152
Less: Cumulative paid claims and allocated claim adjustment expenses, net of reinsurance			327,294
Net medical claims payable, end of year			15,858
Ceded medical claims payable, end of year			7
Insurance lines other than short duration			246
Gross medical claims payable, end of year			$	16,111

13. Debt

Short-term Borrowings

We are a member, through certain subsidiaries, of the Federal Home Loan Bank of Indianapolis, the Federal Home Loan Bank of Cincinnati, the Federal Home Loan Bank of Atlanta and the Federal Home Loan Bank of New York (collectively, the “FHLBs”). As a member we have the ability to obtain short-term cash advances, subject to certain minimum collateral requirements. At December 31, 2023 and 2022, $225 and $265, respectively, were outstanding under our short-term FHLB borrowings. Outstanding short-term FHLB borrowings at December 31, 2023 had fixed interest rates of 5.460%.

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Elevance Health, Inc.

Notes to Consolidated Financial Statements (continued)

Long-term Debt

The carrying value of our long-term debt at December 31, 2023 and 2022 consists of the following:

			2023						2022
Senior unsecured notes:
3.300%, due 2023			$	—					$	1,000
0.450%, due 2023			—						500
3.350%, due 2024			850						849
3.500%, due 2024			799						798
2.375%, due 2025			1,251						1,252
5.350%, due 2025			399						398
1.500%, due 2026			747						746
4.900%, due 2026			496						—
3.650%, due 2027			1,595						1,592
4.101%, due 2028			1,236						1,234
2.875%, due 2029			821						820
2.250%, due 2030			1,075						1,071
2.550%, due 2031			972						968
4.100%, due 2032			595						595
5.500%, due 2032			658						644
4.750%, due 2033			992						—
5.950%, due 2034			335						334
5.850%, due 2036			397						396
6.375%, due 2037			364						364
5.800%, due 2040			114						114
4.625%, due 2042			860						859
4.650%, due 2043			975						974
4.650%, due 2044			768						767
5.100%, due 2044			548						548
4.375%, due 2047			1,388						1,388
4.550%, due 2048			840						840
3.700%, due 2049			813						812
3.125%, due 2050			988						988
3.600%, due 2051			1,233						1,233
4.550%, due 2052			689						689
6.100%, due 2052			742						741
5.125%, due 2053			1,083						—
4.850%, due 2054			247						247
Surplus note:
9.000%, due 2027			25						25
Senior convertible debentures:
2.750%, due 2042			—						63
Total long-term debt			24,895						23,849
Current portion of long-term debt			(1,649)						(1,500)
Long-term debt, less current portion			$	23,246					$	22,349

Elevance Health, Inc.

Notes to Consolidated Financial Statements (continued)

All debt is a direct obligation of Elevance Health, Inc., except for the surplus note and the FHLB borrowings.

We generally issue senior unsecured notes (“Notes”) for long-term borrowing purposes. Certain of these Notes may have a call feature that allows us to redeem the Notes at any time at our option and/or a put feature that allows a Note holder to redeem the Notes upon the occurrence of both a change in control event and a downgrade of the Notes below an investment grade rating.

On February 8, 2023, we issued $500 aggregate principal amount of 4.900% Notes due 2026 (the “2026 Notes”), $1,000 aggregate principal amount of 4.750% Notes due 2033 (the “2033 Notes”), and $1,100 aggregate principal amount of 5.125% Notes due 2053 (the “2053 Notes”) under our shelf registration statement. Interest on the 2026 Notes is payable semi-annually in arrears on February 8 and August 8 of each year, commencing August 8, 2023. Interest on the 2033 Notes and 2053 Notes is payable semi-annually in arrears on February 15 and August 15 of each year, commencing August 15, 2023. We used the net proceeds for working capital and general corporate purposes, including, but not limited to, the funding of acquisitions, repayment of short-term and long-term debt and the repurchase of our common stock pursuant to our share repurchase program.

On January 17, 2023, we repaid, at maturity, the $1,000 outstanding balance of our 3.300% senior unsecured notes. On March 15, 2023, we repaid, at maturity, the $500 outstanding balance of our 0.450% senior unsecured notes.

On December 1, 2022, we repaid, at maturity, the $750 outstanding balance of our 2.950% senior unsecured notes.

On November 4, 2022, we issued $400 aggregate principal amount of 5.350% Notes due 2025, $650 aggregate principal amount of 5.500% Notes due 2032 and $750 aggregate principal amount of 6.100% Notes due 2052 under our shelf registration statement. Interest on these notes is payable semi-annually in arrears on April 15 and October 15 of each year, commencing April 15, 2023. We used the net proceeds for working capital and general corporate purposes, such as the funding of acquisitions, repayment of short-term and long-term debt and the repurchase of our common stock pursuant to our share repurchase program.

On May 16, 2022, we repaid, at maturity, the $850 outstanding balance of our 3.125% senior unsecured notes.

On April 29, 2022, we issued $600 aggregate principal amount of 4.100% Notes due 2032 and $700 aggregate principal amount of 4.550% Notes due 2052 under our shelf registration statement. Interest on these notes is payable semi-annually in arrears on May 15 and November 15 of each year, commencing November 15, 2022. We used the net proceeds for working capital and general corporate purposes, such as the funding of acquisitions, repayment of short-term and long-term debt and the repurchase of our common stock pursuant to our share repurchase program.

On May 15, 2021, we redeemed the $700 outstanding principal balance of our 3.700% Notes due August 15, 2021 at a redemption price equal to 100% of the aggregate principal amount of the notes being redeemed, plus accrued and unpaid interest.

On March 17, 2021, we issued $500 aggregate principal amount of 0.450% Notes due 2023, $750 aggregate principal amount of 1.500% Notes due 2026, $1,000 aggregate principal amount of 2.550% Notes due 2031 and $1,250 aggregate principal amount of 3.600% Notes due 2051 under our shelf registration statement. Interest on these notes is payable semiannually in arrears on March 15 and September 15 of each year, commencing September 15, 2021. We used the net proceeds for working capital and general corporate purposes, such as the funding of acquisitions, repayment of short-term and long-term debt and the repurchase of our common stock pursuant to our share repurchase program.

Additionally, during the year ended December 31, 2021, we repurchased $52 of outstanding principal amount of certain other senior unsecured notes, plus applicable premium for early redemption plus accrued and unpaid interest, for cash totaling $67. We recognized a loss on extinguishment of debt of $15 for the repurchase of these notes.

The surplus note is an unsecured obligation of Anthem Insurance Companies, Inc. (“Anthem Insurance”), a wholly owned subsidiary, and is subordinate in right of payment to all of Anthem Insurance’s existing and future indebtedness. Any payment of interest or principal on the surplus note may be made only with the prior approval of the Indiana Department of Insurance (“IDOI”) and only out of capital and surplus funds of Anthem Insurance that the IDOI determines to be available for the payment under Indiana insurance laws.

Elevance Health, Inc.

Notes to Consolidated Financial Statements (continued)

We have a senior revolving credit facility (the “5-Year Facility”) with a group of lenders for general corporate purposes. The 5-Year Facility provides credit of up to $4,000 and matures in April 2027. Our ability to borrow under the 5-Year Facility is subject to compliance with certain covenants, including covenants requiring us to maintain a defined debt-to-capital ratio of not more than 60%, subject to increase in certain circumstances set forth in the credit agreement for the 5-Year Facility. As of December 31, 2023, our debt-to-capital ratio, as defined and calculated under the 5-Year Facility, was 38.9%. We do not believe the restrictions contained in our 5-Year Facility covenants materially affect our financial or operating flexibility. As of December 31, 2023, we were in compliance with all of our debt covenants under the 5-Year Facility. There were no amounts outstanding under the 5-Year Facility at any time during the years ended December 31, 2023 or 2022.

We have an authorized commercial paper program of up to $4,000, the proceeds of which may be used for general corporate purposes. At December 31, 2023 and 2022, we had $0 outstanding under our commercial paper program. Beginning in 2023, we have reclassified our commercial paper balances from long-term debt to short-term debt as our intent is to not replace short-term commercial paper outstanding at expiration with additional short-term commercial paper for an uninterrupted period extending for more than one year.

Convertible Debentures

On March 15, 2023, we redeemed all of our outstanding senior unsecured convertible debentures due 2042 (the “Debentures”), pursuant to the indenture dated as of October 9, 2012 (the “Indenture”) between us and The Bank of New York Mellon Trust Company, N.A., as trustee. The Debentures were redeemed at a redemption price equal to 100% of the principal amount of the Debentures plus accrued and unpaid interest to, but excluding, the date of redemption for cash totaling $5. During the three months ended March 31, 2023, $59 of aggregate principal amount of the Debentures was surrendered for conversion by certain holders in accordance with the terms and conditions of the Indenture. We elected to settle the excess of the principal amount of the conversions with cash for total payments during the three months ended March 31, 2023 of $404.

During the year ended December 31, 2022, $41 aggregate principal amount of the Debentures was surrendered for conversion by certain holders in accordance with the terms and provisions of the Indenture. We elected to settle the excess of the principal amount of the conversion with cash for total payments of $299. During the year ended December 31, 2021, $54 aggregate principal amount of the Debentures was surrendered for conversion by certain holders in accordance with the terms and provisions of the Indenture. We elected to settle the excess of the principal amount of the conversions with cash for total payments of $302. We recognized a loss on the extinguishment of debt related to the Debentures of $6, based on the fair values of the debt on the conversion settlement dates.

Prior to 2022, we accounted for these Debentures in accordance with the FASB cash conversion guidance for debt with conversion and other options at the time of issue. As a result, the value of the embedded conversion option, net of deferred taxes and equity issuance costs, was bifurcated from its debt host and recorded as a component of additional paid-in capital in our consolidated balance sheets. We adopted ASU 2020-06 on January 1, 2022 using the modified retrospective transition method, eliminating the bifurcation of the embedded conversion option. For additional information, see Note 2, “Basis of Presentation and Significant Accounting Policies.”

During the years ended December 31, 2023, 2022 and 2021, we recognized $0, $2 and $4, respectively, of interest expense related to the Debentures, of which $0, $2 and $3, respectively, represented interest expense recognized at the stated interest rate of 2.750% and $0, $0 and $1, respectively, represented interest expense resulting from amortization of the debt discount.

Interest paid on our total outstanding debt during 2023, 2022 and 2021 was $1,032, $878, and $822, respectively.

We were in compliance with all applicable covenants under all of our outstanding debt agreements at December 31, 2023 and 2022.

Future maturities of all long-term debt outstanding at December 31, 2023 are as follows: 2024, $1,649; 2025, $1,650; 2026, $1,243; 2027, $1,595; 2028, $1,236 and thereafter, $17,522.

Elevance Health, Inc.

Notes to Consolidated Financial Statements (continued)

14. Commitments and Contingencies

Litigation and Regulatory Proceedings

We are defendants in, or parties to, a number of pending or threatened legal actions or proceedings. To the extent a plaintiff or plaintiffs in the following cases have specified in their complaint or in other court filings the amount of damages being sought, we have noted those alleged damages in the descriptions below.

Where available information indicates that it is probable that a loss has been incurred as of the date of the consolidated financial statements and we can reasonably estimate the amount of that loss, we accrue the estimated loss by a charge to income. In many proceedings, however, it is difficult to determine whether any loss is probable or reasonably possible. In addition, even where loss is possible or probable or an exposure to loss exists in excess of the liability already accrued with respect to a previously identified loss contingency, it is not always possible to reasonably estimate the amount of the possible or probable loss or range of losses in excess of the amount, if any, accrued, for various reasons, including but not limited to some or all of the following: (i) there are novel or unsettled legal issues presented, (ii) the proceedings are in early stages, (iii) there is uncertainty as to the likelihood of a class being certified or decertified or the ultimate size and scope of the class, (iv) there is uncertainty as to the outcome of pending appeals or motions, (v) there are significant factual issues to be resolved, and/or (vi) in many cases, the plaintiffs have not specified damages in their complaint or in court filings.

With respect to the cases described below, we contest liability and/or the amount of damages in each matter, and we believe we have meritorious defenses. We do not believe the outcome of any known pending or threatened legal actions or proceedings will, in the aggregate, have a material impact on our financial position. However, unanticipated outcomes do sometimes occur, which could result in liabilities in excess of our accruals and could have a material adverse effect on our consolidated financial position or results of operations.

In addition to the lawsuits described below, we are also involved in other pending and threatened litigation of the character incidental to our business and are from time to time involved as a party in various governmental investigations, audits, reviews and administrative proceedings (“government actions”). These government actions include routine and special inquiries by and disclosures to state insurance departments, state attorneys general, U.S. Regulatory Agencies, the U.S. Attorney General and subcommittees of the U.S. Congress. Such government actions could result in the imposition of civil or criminal fines, penalties, other sanctions and additional rules, regulations or other restrictions on our business operations. Any liability that may result from any one of these government actions, or in the aggregate, could have a material adverse effect on our consolidated financial position or results of operations.

Blue Cross Blue Shield Antitrust Litigation

We are a defendant in multiple lawsuits that were initially filed in 2012 against the BCBSA and Blue Cross and/or Blue Shield licensees (the “Blue plans”) across the country. Cases filed in twenty-eight states were consolidated into a single, multi-district proceeding captioned In re Blue Cross Blue Shield Antitrust Litigation that is pending in the U.S. District Court for the Northern District of Alabama (the “Court”). Generally, the suits allege that the BCBSA and the Blue plans have conspired to horizontally allocate geographic markets through license agreements, best efforts rules that limit the percentage of non-Blue revenue of each plan, restrictions on acquisitions, rules governing the BlueCard® and National Accounts programs and other arrangements in violation of the Sherman Antitrust Act (“Sherman Act”) and related state laws. The cases were brought by two putative nationwide classes of plaintiffs, health plan subscribers and providers.

In April 2018, the Court issued an order on the parties’ cross motions for partial summary judgment, determining that the defendants’ aggregation of geographic market allocations and output restrictions are to be analyzed under a per se standard of review, and the BlueCard® program and other alleged Section 1 Sherman Act violations are to be analyzed under the rule of reason standard of review. With respect to whether the defendants operate as a single entity with regard to the enforcement of the Blue Cross Blue Shield trademarks, the Court found that summary judgment was not appropriate due to the existence of genuine issues of material fact. In April 2019, the plaintiffs filed motions for class certification, which defendants opposed.

The BCBSA and Blue plans approved a settlement agreement and release with the subscriber plaintiffs (the “Subscriber Settlement Agreement”), which agreement required the Court’s approval to become effective. The Subscriber Settlement Agreement requires the defendants to make a monetary settlement payment and contains certain terms imposing non-monetary obligations including (i) eliminating the “national best efforts” rule in the BCBSA license agreements (which rule

Elevance Health, Inc.

Notes to Consolidated Financial Statements (continued)

limits the percentage of non-Blue revenue permitted for each Blue plan) and (ii) allowing for some large national employers with self-funded benefit plans to request a bid for insurance coverage from a second Blue plan in addition to the local Blue plan.

In November 2020, the Court issued an order preliminarily approving the Subscriber Settlement Agreement, following which members of the subscriber class were provided notice of the Subscriber Settlement Agreement and an opportunity to opt out of the class. A small number of subscribers submitted valid opt-outs by the opt-out deadline.

In August 2022, the Court issued a final order approving the Subscriber Settlement Agreement (the “Final Approval Order”). The Court amended its Final Approval Order in September 2022, further clarifying the injunctive relief that may be available to subscribers who submitted valid opt-outs. In compliance with the Subscriber Settlement Agreement, we paid $506 into an escrow account in September 2022, for an aggregate and full settlement payment by us of $596, which was accrued in 2020.

Four notices of appeal of the Final Approval Order were filed prior to the September 2022 appeal deadline. Those appeals were heard by a panel of the United States Court of Appeals for the Eleventh Circuit in September 2023. In October 2023, the Eleventh Circuit affirmed the Court’s Final Approval Order approving the subscriber settlement. Petitions for rehearing filed by certain appellants in November 2023 and December 2023 remain pending. In the event that all appellate rights are exhausted in a manner that affirms the Court’s Final Approval Order, the defendants’ payment and non-monetary obligations under the Subscriber Settlement Agreement will become effective and the funds held in escrow will be distributed in accordance with the Subscriber Settlement Agreement.

In October 2020, after the Court lifted the stay as to the provider litigation, provider plaintiffs filed a renewed motion for class certification, which defendants opposed. In March 2021, the Court issued an order terminating the pending motion for class certification until the Court determined the standard of review applicable to the providers’ claims. In response to that order, the parties filed renewed standard of review motions in May 2021. In June 2021, the parties filed summary judgment motions not critically dependent on class certification. In February 2022, the Court issued orders (i) granting certain defendants’ motion for partial summary judgment against the provider plaintiffs who had previously released claims against such defendants, and (ii) granting the provider plaintiffs’ motion for partial summary judgment, determining that Ohio v. American Express Co. does not affect the standard of review in this case. In August 2022, the Court issued orders (i) granting in part the defendants’ motion regarding the antitrust standard of review, holding that for the period of time after the elimination of the “national best efforts” rule, the rule of reason applies to the provider plaintiffs’ market allocation conspiracy claims, and (ii) denying the provider plaintiffs’ motion for partial summary judgment on the standard of review, reaffirming its prior holding that the provider groups’ boycott claims are subject to the rule of reason. In December 2023, the Court denied defendants’ motion for summary judgment on providers’ damage claims as time-barred and speculative and provider plaintiffs’ motion for partial summary judgment on the defendants’ single entity defense due to the existence of genuine issues of material fact. Providers plaintiffs’ motion for class certification, filed in October 2020, remains pending. We intend to continue to vigorously defend the provider litigation, which we believe is without merit; however, its ultimate outcome cannot be presently determined.

A number of follow-on cases involving entities that opted out of the Subscriber Settlement Agreement have been filed. Those actions are: Alaska Air Group, Inc., et al. v. Anthem, Inc., et al., No. 2:21-cv-01209-AMM (N.D. Ala.) (“Alaska Air”); JetBlue Airways Corp., et al. v. Anthem, Inc., et al., No. 2:22-cv-00558-GMB (N.D. Ala.) (“Jet Blue”); Metropolitan Transportation Authority v. Blue Cross and Blue Shield of Alabama et al., No. 2:22-cv-00265-RDP (N.D. Ala.) (dismissed without prejudice in June 2023); Bed Bath & Beyond Inc. v. Anthem, Inc., No. 2:22-cv-01256-SGC (N.D. Ala.); Hoover, et al. v. Blue Cross Blue Shield Association, et al., No. 2:22-cv-00261-RDP (N.D. Ala.); and VHS Liquidating Trust v. Blue Cross of California, et al., No. RG21106600 (Cal. Super.) (“VHS”). In February 2023, the Court denied the defendants’ motion to dismiss based on a statute of limitations defense in Alaska Air and Jet Blue. In September 2023, the California court presiding over the VHS case, upheld its prior order granting in part defendants’ motion to strike based on the statute of limitations. We intend to continue to vigorously defend these follow-on cases, which we believe are without merit; however, their ultimate outcome cannot be presently determined.

Elevance Health, Inc.

Notes to Consolidated Financial Statements (continued)

Express Scripts, Inc. PBM Litigation

In March 2016, we filed a lawsuit against Express Scripts, Inc. (“Express Scripts”), our vendor at the time for PBM services, captioned Anthem, Inc. v. Express Scripts, Inc., in the U.S. District Court for the Southern District of New York (the “District Court”). The lawsuit sought to recover over $14,800 in damages for pharmacy pricing that is higher than competitive benchmark pricing under the agreement between the parties (the “ESI Agreement”), over $158 in damages related to operational breaches, as well as various declarations under the ESI Agreement, including that Express Scripts: (i) breached its obligation to negotiate in good faith and to agree in writing to new pricing terms (the “Pricing Claim”); (ii) was required to provide competitive benchmark pricing to us through the term of the ESI Agreement; (iii) has breached the ESI Agreement; and (iv) is required under the ESI Agreement to provide post-termination services, at competitive benchmark pricing, for one year following any termination.

Express Scripts disputed our contractual claims and it sought declaratory judgments: (i) regarding the timing of the periodic pricing review under the ESI Agreement, and (ii) that it has no obligation to ensure that we receive any specific level of pricing, that we have no contractual right to any change in pricing under the ESI Agreement and that its sole obligation is to negotiate proposed pricing terms in good faith. In the alternative, Express Scripts claimed that we have been unjustly enriched by its payment of $4,675 at the time we entered into the ESI Agreement. In March 2017, the District Court granted our motion to dismiss Express Scripts’ counterclaims for (i) breach of the implied covenant of good faith and fair dealing, and (ii) unjust enrichment with prejudice. After such ruling, Express Scripts’ only remaining claims were for breach of contract and declaratory relief. In August 2021, Express Scripts filed a motion for summary judgment, which we opposed. In March 2022, the District Court granted in part and denied in part Express Scripts’ motion for summary judgment. The District Court dismissed our declaratory judgment claim, our breach of contract claim for failure to prove damages and most of our operational breach claims. As a result of the summary judgment decision, the only remaining claims as of the filing of this Annual Report on Form 10-K were (i) our operational breach claim based on Express Scripts’ prior authorization processes and (ii) Express Scripts’ counterclaim for breach of the market check provision of the ESI Agreement. Express Scripts filed a second motion for summary judgment in June 2022, challenging our remaining operational breach claims, which the District Court denied in March 2023. In November 2023, the District Court issued a final judgment ending the lawsuit in the District Court after the parties settled and stipulated to dismiss the only remaining claim that had not been disposed of by the court order or stipulation. In December 2023, we filed a notice of appeal with the United States Court of Appeal for the Second Circuit (the “Second Circuit”), regarding the Pricing Claim. The Second Circuit has ordered the parties to mediate the Pricing Claim in February 2024. The ultimate outcome of this appeal cannot be presently determined.

Medicare Risk Adjustment Litigation

In March 2020, the U.S. Department of Justice (“DOJ”) filed a civil lawsuit against Elevance Health, Inc. in the U.S. District Court for the Southern District of New York (the “New York District Court”) in a case captioned United States v. Anthem, Inc. The DOJ’s suit alleges, among other things, that we falsely certified the accuracy of the diagnosis data we submitted to the Centers for Medicare and Medicaid Services (“CMS”) for risk-adjustment purposes under Medicare Part C and knowingly failed to delete inaccurate diagnosis codes. The DOJ further alleges that, as a result of these purported acts, we caused CMS to calculate the risk-adjustment payments based on inaccurate diagnosis information, which enabled us to obtain unspecified amounts of payments in Medicare funds in violation of the False Claims Act. The DOJ filed an amended complaint in July 2020, alleging the same causes of action but revising some of its factual allegations. In September 2020, we filed a motion to transfer the lawsuit to the Southern District of Ohio, a motion to dismiss part of the lawsuit, and a motion to strike certain allegations in the amended complaint, all of which the New York District Court denied in October 2022. In November 2022, we filed an answer. In March 2023, discovery commenced, and an initial case management conference was held in April 2023. The Court entered a scheduling order requiring fact discovery to be completed by June 2024 and expert discovery to be completed by February 2025. We intend to continue to vigorously defend this suit, which we believe is without merit; however, the ultimate outcome cannot be presently determined.

Investigations of CareMore and HealthSun

With the assistance of outside counsel, we are conducting investigations of risk-adjustment practices involving data submitted to CMS (unrelated to our retrospective chart review program) at CareMore Health Plans, Inc. (“CareMore”), one of our California subsidiaries, and HealthSun Health Plans, Inc. (“HealthSun”), one of our Florida subsidiaries. Our CareMore investigation has resulted in the termination of CareMore’s relationship with one contracted provider in California. Our

Elevance Health, Inc.

Notes to Consolidated Financial Statements (continued)

HealthSun investigation has focused on risk adjustment practices initiated prior to our acquisition of HealthSun in December 2017 that continued after the acquisition. We have voluntarily self-disclosed the existence of both of our investigations to CMS and the Criminal and Civil Divisions of the DOJ. We cooperated with the investigations of the Criminal and Civil Divisions of the DOJ related to these risk adjustment practices, and have submitted corrected data to CMS related to these investigations. In an action filed in the Delaware Court of Chancery, we also asserted indemnity claims for escrowed funds under the HealthSun purchase agreement for, among other things, breach of healthcare and financial representation provisions, based on the conduct discovered during our investigation. The litigation related to our indemnity claims has been resolved. In October 2023, the DOJ declined to prosecute HealthSun. HealthSun agreed to repay, and has now repaid, CMS approximately $53.

Other Contingencies

From time to time, we and certain of our subsidiaries are parties to various legal proceedings, many of which involve claims for coverage encountered in the ordinary course of business. We, like Health Maintenance Organizations (“HMOs”) and health insurers generally, exclude certain healthcare and other services from coverage under our HMO, Preferred Provider Organizations and other plans. We are, in the ordinary course of business, subject to the claims of our enrollees arising out of decisions to restrict or deny reimbursement for uncovered services. The loss of even one such claim, if it results in a significant punitive damage award, could have a material adverse effect on us. In addition, the risk of potential liability under punitive damage theories may increase significantly the difficulty of obtaining reasonable reimbursement of coverage claims.

Contractual Obligations and Commitments

In March 2020, we entered into an agreement with a vendor for information technology infrastructure and related management and support services through June 2025. The agreement superseded certain prior agreements for such services and includes provisions for additional services not provided under those agreements. Our remaining commitment under this agreement at December 31, 2023 is approximately $481. We will have the ability to terminate the agreement upon the occurrence of certain events, subject to early termination fees.

We formed CarelonRx, to market and offer pharmacy services to our affiliated health plan customers, as well as to external customers outside of the health plans we own, starting in the second quarter of 2019. The comprehensive pharmacy services portfolio includes all core pharmacy services, such as home delivery and specialty pharmacies, claims adjudication, formulary management, pharmacy networks, rebate administration, a prescription drug database and member services. CarelonRx delegates certain core pharmacy services to CaremarkPCS Health, L.L.C., which is a subsidiary of CVS Health Corporation, pursuant to an agreement, that is set to terminate on December 31, 2025.

Vulnerability from Concentrations

Financial instruments that potentially subject us to concentrations of credit risk consist primarily of cash equivalents, investment securities, premium receivables and instruments held through hedging activities. All investment securities are managed by professional investment managers within policies authorized by our Board of Directors. Such policies limit the amounts that may be invested in any one issuer and prescribe certain investee company criteria. Concentrations of credit risk with respect to premium receivables are limited due to the large number of employer groups that constitute our customer base in the states in which we conduct business. As of December 31, 2023, there were no significant concentrations of financial instruments in a single investee, industry or geographic location.

15. Capital Stock

Stock Incentive Plan****s

Our Board of Directors has adopted the 2017 Elevance Health Incentive Compensation Plan (the “2017 Incentive Plan”) which has been approved by our shareholders. The term of the 2017 Incentive Plan is such that no awards may be granted on or after May 18, 2027. The 2017 Incentive Plan gives authority to the Compensation Committee of the Board of Directors to make incentive awards to our non-employee directors, employees and consultants, consisting of stock options, stock, restricted stock, restricted stock units, cash-based awards, stock appreciation rights, performance shares and performance

Elevance Health, Inc.

Notes to Consolidated Financial Statements (continued)

units. The 2017 Incentive Plan limits the number of available shares for issuance to 37.5 shares, subject to adjustment as set forth in the 2017 Incentive Plan.

Stock options are granted for a fixed number of shares with an exercise price at least equal to the fair value of the shares at the grant date. Stock options vest over three years in equal annual installments and generally have a term of ten years from the grant date.

Certain option grants contain provisions whereby the employee continues to vest in the award subsequent to termination due to retirement. Our attribution method for newly granted awards considers all vesting and other provisions, including retirement eligibility, in determining the requisite service period over which the fair value of the awards will be recognized.

Awards of restricted stock or restricted stock units are issued at the fair value of the stock on the grant date and may also include one or more performance measures that must be met for the award to vest. For restricted stock or restricted stock units without performance measures, the restrictions lapse in three equal annual installments. Restricted stock or restricted stock units with performance measures vest in three year installments. Performance units issued in 2023 will vest in 2026, based on certain revenue and earnings targets over the three year period of 2023 to 2025. Performance units issued in 2022 will vest in 2025, based on certain revenue and earnings targets over the three year period of 2022 to 2024. Performance units issued in 2021 will vest in 2024, based on certain revenue and earnings targets over the three year period of 2021 to 2023.

For the years ended December 31, 2023, 2022 and 2021, we recognized share-based compensation expense of $289, $264 and $255, respectively, as well as related tax benefits of $73, $66 and $65, respectively.

A summary of stock option activity for the year ended December 31, 2023 is as follows:

			Number of Shares						Weighted-Average Option Price per Share						Weighted-Average Remaining Contractual Life (Years)						Aggregate Intrinsic Value
Outstanding at January 1, 2023			2.8						$	293.28
Granted			0.6						468.48
Exercised			(0.3)						261.93
Forfeited or expired			(0.1)						403.22
Outstanding at December 31, 2023			3.0						327.14						5.96						$	431
Exercisable at December 31, 2023			1.9						267.05						4.82						$	393

The intrinsic value of options exercised during the years ended December 31, 2023, 2022 and 2021 amounted to $69, $120 and $121, respectively. We recognized tax benefits of $18, $31 and $32 during the years ended December 31, 2023, 2022 and 2021, respectively, from option exercises and disqualifying dispositions. During the years ended December 31, 2023, 2022 and 2021, we received cash of $87, $120 and $148, respectively, from exercises of stock options.

The total fair value of restricted stock awards that vested during the years ended December 31, 2023, 2022 and 2021 was $285, $261 and $287, respectively.

A summary of the status of nonvested restricted stock activity, including restricted stock units and performance units, for the year ended December 31, 2023 is as follows:

			Restricted Stock Shares and Units						Weighted-Average Grant Date Fair Value per Share
Nonvested at January 1, 2023			1.2						$	357.21
Granted			0.6						467.79
Vested			(0.6)						302.76
Forfeited			(0.1)						419.21
Nonvested at December 31, 2023			1.1						423.94

Elevance Health, Inc.

Notes to Consolidated Financial Statements (continued)

During the year ended December 31, 2023, we granted approximately 0.2 restricted stock units that are contingent upon us achieving certain revenue and earnings targets over the three year period of 2023 to 2025. These grants have been included in the activity shown above, but will be subject to adjustment at the end of 2025, based on results in the three year period.

As of December 31, 2023, the total remaining unrecognized compensation expense related to nonvested stock options and restricted stock, including restricted stock units and performance units, amounted to $39 and $200, respectively, which will be amortized over the weighted-average remaining requisite service periods of 10 months and 12 months, respectively.

As of December 31, 2023, there were approximately 11.8 shares of common stock available for future grants under the 2017 Incentive Plan.

Fair Value

We use a binomial lattice valuation model to estimate the fair value of all stock options granted. Expected volatility assumptions used in the binomial lattice model are based on an analysis of implied volatility of publicly traded options on our stock and historical volatility of our stock price. The risk-free interest rate is derived from the U.S. Treasury strip rates at the time of the grant. The expected term of the options was derived from the outputs of the binomial lattice model, which incorporates post-vesting forfeiture assumptions based on an analysis of historical data. The dividend yield was based on our estimate of future dividend yields. Similar groups of employees that have dissimilar exercise behavior are considered separately for valuation purposes. We utilize the multiple-grant approach for recognizing compensation expense associated with each separately vesting portion of the share-based award.

The following weighted-average assumptions were used to estimate the fair values of options granted during the years ended December 31, 2023, 2022 and 2021:

			2023						2022						2021
Risk-free interest rate			3.95		%				1.97		%				1.44		%
Volatility factor			29.00		%				29.00		%				30.00		%
Dividend yield (annual)			1.30		%				1.10		%				1.50		%
Weighted-average expected life (years)			4.40						5.10						5.50

The following weighted-average fair values per share were determined for the years ending December 31, 2023, 2022 and 2021:

			2023						2022						2021
Options granted during the year			$	126.90					$	116.92					$	79.91
Restricted stock awards granted during the year			467.79						453.70						317.70

The binomial lattice option-pricing model requires the input of subjective assumptions including the expected stock price volatility. Because our stock option grants have characteristics significantly different from those of traded options, and because changes in the subjective input assumptions can materially affect the fair value estimate, in our opinion, existing models do not necessarily provide a reliable single measure of the fair value of our stock option grants.

Employee Stock Purchase Plan

We have registered 14.0 shares of common stock for the Employee Stock Purchase Plan (the “Stock Purchase Plan”), which is intended to provide a means to encourage and assist employees in acquiring a stock ownership interest in Elevance Health. Pursuant to the terms of the Stock Purchase Plan, an eligible employee is permitted to purchase no more than $25,000 (actual dollars) worth of stock in any calendar year, based on the fair value of the stock at the end of each plan quarter. Employees become participants by electing payroll deductions from 1% to 15% of gross compensation. Once purchased, the stock is accumulated in the employee’s investment account. The Stock Purchase Plan allows participants to purchase shares of our common stock at a discounted price per share of 90% of the fair value of a share of common stock on the lower of the first or last trading day of the plan quarter purchase period. The Stock Purchase Plan discount was recognized as compensation expense for the year ended December 31, 2023, based on GAAP guidance. During the years ended

Elevance Health, Inc.

Notes to Consolidated Financial Statements (continued)

December 31, 2023, 2022 and 2021, we issued 0.1, 0.1 and 0.1 shares, respectively, under the Stock Purchase Plan, and we received cash of $65, $62 and $55, respectively, for such shares. As of December 31, 2023, 4.2 shares were available for issuance under the Stock Purchase Plan.

Use of Capital and Stock Repurchase Program

We regularly review the appropriate use of capital, including acquisitions, common stock and debt security repurchases and dividends to shareholders. The declaration and payment of any dividends or repurchases of our common stock or debt is at the discretion of our Board of Directors and depends upon our financial condition, results of operations, future liquidity needs, regulatory and capital requirements and other factors deemed relevant by our Board of Directors.

A summary of the cash dividend activity for the years ended December 31, 2023 and 2022 is as follows:

Declaration Date						Record Date						Payment Date						Cash Dividend per Share						Total
Year ended December 31, 2023
January 24, 2023						March 10, 2023						March 24, 2023						$	1.48					$	351
April 18, 2023						June 9, 2023						June 23, 2023						1.48						350
July 18, 2023						September 8, 2023						September 22, 2023						1.48						348
October 17, 2023						December 6, 2023						December 21, 2023						1.48						346
Year ended December 31, 2022
January 25, 2022						March 10, 2022						March 25, 2022						$	1.28					$	309
April 19, 2022						June 10, 2022						June 24, 2022						1.28						309
July 19, 2022						September 9, 2022						September 23, 2022						1.28						306
October 18, 2022						December 5, 2022						December 21, 2022						1.28						305

On January 23, 2024, our Audit Committee declared a quarterly cash dividend to shareholders of $1.63 per share on the outstanding shares of our common stock. This quarterly dividend is payable on March 22, 2024 to the shareholders of record as of March 8, 2024.

Under our Board of Directors’ authorization, we maintain a common stock repurchase program. On January 24, 2023, our Audit Committee, pursuant to authorization granted by the Board of Directors, authorized a $5,000 increase to our common stock repurchase program. No duration has been placed on our common stock repurchase program, and we reserve the right to discontinue the program at any time. We intend to utilize this authorization over a multi-year period, subject to market and industry conditions. Repurchases may be made from time to time at prevailing market prices, subject to certain restrictions on volume, pricing and timing. The repurchases are affected from time to time in the open market, through negotiated transactions, including accelerated share repurchase agreements, and through plans designed to comply with Rule 10b5-1 under the Securities Exchange Act of 1934, as amended. Our stock repurchase program is discretionary, as we are under no obligation to repurchase shares. We repurchase shares under the program when we believe it is a prudent use of capital. The excess cost of the repurchased shares over par value is charged on a pro rata basis to additional paid-in capital and retained earnings.

A summary of common stock repurchases for the years ended December 31, 2023 and 2022 is as follows:

									Years Ended December 31
			2023						2022
Shares repurchased									5.8						4.8
Average price per share									$	463.53					$	478.99
Aggregate cost									$	2,676					$	2,316
Authorization remaining at end of year									$	4,200					$	1,876

Elevance Health, Inc.

Notes to Consolidated Financial Statements (continued)

We expect to utilize the remaining authorized amount over a multi-year period, subject to market and industry conditions.

For additional information regarding the use of capital for debt security repurchases, see Note 13, “Debt.”

Elevance Health, Inc.

Notes to Consolidated Financial Statements (continued)

16. Accumulated Other Comprehensive (Loss) Income

A reconciliation of the components of accumulated other comprehensive (loss) income at December 31, 2023, 2022, and 2021 is as follows:

			2023						2022						2021
Net unrealized investment gains:
Beginning of year balance			$	(1,755)					$	494					$	949
Other comprehensive income (loss) before reclassifications, net of tax (expense) benefit of $(218), $926, and $121, respectively			760						(2,614)						(357)
Amounts reclassified from accumulated other comprehensive income, net of tax benefit (expense) of $(113), $(94), and $27, respectively			357						354						(100)
Other comprehensive (loss) income			1,117						(2,260)						(457)
Other comprehensive loss attributable to noncontrolling interests, net of tax benefit (expense) of $1, $(3), and $1, respectively			6						11						2
End of year balance			(632)						(1,755)						494
Non-credit components of impairments on investments:
Beginning of year balance			(3)						—						(2)
Other comprehensive income, net of tax benefit (expense) of $0, $0,and $(1), respectively			—						(3)						2
End of year balance			(3)						(3)						—
Net cash flow hedges:
Beginning of year balance			(229)						(239)						(250)
Other comprehensive income, net of tax benefit (expense) of $6, $(6), and $(3), respectively			18						10						11
End of year balance			(211)						(229)						(239)
Pension and other postretirement benefits:
Beginning of year balance			(499)						(429)						(552)
Other comprehensive income (loss), net of tax expense of $(39), $(23), and $(36), respectively			40						(70)						123
End of year balance			(459)						(499)						(429)
Future policy benefits:
Beginning of year balance			13						(19)						—
Adoption of ASU 2018-12			—						—						(12)
Other comprehensive (loss) income, net of tax benefit (expense) of $1, $(10), and $2, respectively			(3)						32						(7)
End of year balance			10						13						(19)
Foreign currency translation adjustments:
Beginning of year balance			(17)						(4)						5
Other comprehensive loss, net of tax benefit of $1, $6, and $2			(1)						(13)						(9)
End of year balance			(18)						(17)						(4)
Total:
Total beginning of year accumulated other comprehensive (loss) income			(2,490)						(197)						150
Adoption of ASU 2018-12			—						—						(12)
Total other comprehensive income (loss), net of tax (expense) benefit of $(362), $799, and $112, respectively			1,171						(2,304)						(337)
Total other comprehensive loss attributable to noncontrolling interests, net of tax benefit (expense) of $1, $(3), and $1, respectively			6						11						2
Total end of year accumulated other comprehensive loss			$	(1,313)					$	(2,490)					$	(197)

Elevance Health, Inc.

Notes to Consolidated Financial Statements (continued)

17. Reinsurance

We reinsure certain risks with other companies and assume risk from other companies. We remain primarily liable to policyholders under ceded insurance contracts and are contingently liable for amounts recoverable from reinsurers in the event that such reinsurers do not meet their contractual obligations.

A summary of direct, assumed and ceded premiums earned for the years ended December 31, 2023, 2022 and 2021 is as follows:

									2023												2022												2021
Direct									$	136,927											$	127,788											$	112,265
Assumed									5,988												5,505												5,182
Ceded									(61)												(64)												(74)
Net premiums									$	142,854											$	133,229											$	117,373
Percentage—assumed to net premiums									4.2		%										4.1		%										4.4		%

The table above includes certain reclassifications between direct and assumed premiums for 2022 and 2021. These reclassifications did not impact any amounts presented in the consolidated financial statements. The difference between written premiums and earned premiums is immaterial in each of the years presented above.

A summary of net premiums earned by segment (see Note 20, “Segment Information”) for the years ended December 31, 2023, 2022 and 2021 is as follows:

									2023												2022												2021
Reportable segments:
Health Benefits									$	141,515											$	131,964											$	115,725
Carelon Services									1,679												1,499												1,786
Eliminations									(340)												(234)												(138)
Net premiums									$	142,854											$	133,229											$	117,373

The effect of reinsurance on benefit expense for the years ended December 31, 2023, 2022 and 2021 is as follows:

			2023						2022						2021
Direct			$	119,409					$	112,061					$	98,211
Assumed			4,984						4,633						4,441
Ceded			(63)						(52)						(81)
Net benefit expense			$	124,330					$	116,642					$	102,571

The table above includes certain reclassifications between direct and assumed benefit expense for 2022 and 2021. These reclassifications did not impact any amounts presented in the consolidated financial statements.

Elevance Health, Inc.

Notes to Consolidated Financial Statements (continued)

18. Leases

We lease office space and certain computer and related equipment using noncancelable operating leases. Our leases have remaining lease terms of 1 year to 12 years.

The information related to our leases is as follows:

			Balance Sheet Location						December 31, 2023						December 31, 2022
Operating Leases
ROU assets			Other noncurrent assets						$	584					$	604
Lease liabilities, current			Other current liabilities						164						181
Lease liabilities, noncurrent			Other noncurrent liabilities						685						751

			Years Ended December 31
			2023						2022						2021
Lease Expense
Operating lease expense			$	155					$	143					$	261
Short-term and variable lease expense			43						35						45
Sublease income			(5)						(3)						(4)
Total lease expense			$	193					$	175					$	302

Our activities as disclosed in Note 4, “Business Optimization Initiatives,” include reducing our office space footprint. As a result, we performed an interim impairment test during the years ended December 31, 2023, 2022 and 2021, and recorded impairment charges of $23, $34 and $136, respectively, for impairment and abandonment of ROU assets which are included in the operating lease expense shown above.

												Years Ended December 31
												2023						2022
Other information
Operating cash paid for amounts included in the measurement of lease liabilities, operating leases												$	206					$	204
ROU assets obtained in exchange for new lease liabilities, operating leases												$	59					$	113
Weighted average remaining lease term in years, operating leases												6						7
Weighted average discount rate, operating leases												3.66		%				2.98		%

At December 31, 2023, future lease payments for noncancelable operating leases with initial or remaining terms of one year or more are as follows:

2024			$	195
2025			167
2026			133
2027			105
2028			89
Thereafter			267
Total future minimum payments			956
Less imputed interest			(107)
Total lease liabilities			$	849

Elevance Health, Inc.

Notes to Consolidated Financial Statements (continued)

19. Shareholders’ Earnings per Share

The denominator for basic and diluted shareholders’ earnings per share at December 31, 2023, 2022 and 2021 is as follows:

			2023						2022						2021
Denominator for basic shareholders’ earnings per share—weighted-average shares			235.9						240.0						243.8
Effect of dilutive securities—employee stock options, non-vested restricted stock awards and convertible debentures			1.5						2.8						3.0
Denominator for diluted shareholders’ earnings per share			237.4						242.8						246.8

During the years ended December 31, 2023, 2022 and 2021, weighted-average shares related to certain stock options of 0.8, 0.4 and 0.2, respectively, were excluded from the denominator for diluted shareholders’ earnings per share because the stock options were anti-dilutive.

During the years ended December 31, 2023, 2022 and 2021, we issued approximately 0.2, 0.2 and 0.3 restricted stock units, respectively, of which vesting was contingent upon us meeting certain earnings targets. Contingent restricted stock units are excluded from the denominator for diluted shareholders’ earnings per share and are included only if and when the contingency is met. The 2023 contingent restricted stock units are being measured over the three year period of 2023 through 2025, the 2022 contingent restricted stock units are being measured over the three year period of 2022 through 2024 and the 2021 contingent restricted stock units are being measured over the three year period of 2021 through 2023. Contingent restricted stock units generally vest in March of the year following each measurement period.

20. Segment Information

As discussed in Note 1, “Organization,” we are reorganizing our brand portfolio into three core go-to-market brands. Our branding strategy reflects the evolution of our business from a traditional health insurance company to a lifetime, trusted health partner. Given this evolution, we reviewed and modified how we manage our business, monitor our performance and allocate resources, and made changes to our reportable segments beginning in the first quarter of 2023. We now report our results of operations in the following four reportable segments: Health Benefits (aggregates our previously reported Commercial & Specialty Business and Government Business segments), CarelonRx, Carelon Services (previously included in our Other segment) 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). During the fourth quarter of 2023, we moved our Carelon Global Solutions international businesses from the Corporate & Other reportable segment to the Carelon Services reportable segment. All prior period reportable segment information has been reclassified for comparability to conform to the current presentation.

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 FEHB program members. Our Health Benefits segment also includes our National Government Services business. The Health Benefits segment offers health products on a full-risk basis; provides a broad array of administrative managed care services to our fee-based customers; and provides a variety of specialty and other insurance products and services such as stop loss, dental, vision, life, disability and supplemental health insurance benefits.

Our CarelonRx segment includes our pharmacy services business. CarelonRx markets and offers pharmacy services to our affiliated health plan customers, as well as to external customers outside of the health plans we own. CarelonRx offers a comprehensive pharmacy services portfolio, which includes all core pharmacy services, such as home delivery and specialty pharmacies, claims adjudication, formulary management, pharmacy networks, rebate administration, a prescription drug database and member services.

Our Carelon Services segment integrates physical, behavioral, social and pharmacy services to deliver whole health affordably through creating value by offering market-competitive services, powered by analytics. Carelon Services offers a broad array of healthcare related services and capabilities to internal and external customers including utilization management, behavioral health, integrated care delivery, palliative care, payment integrity services and subrogation services,

Elevance Health, Inc.

Notes to Consolidated Financial Statements (continued)

as well as health and wellness programs. At the end of 2023, Carelon Services integrated Carelon Global Solutions into the Carelon family of offerings. The companies under Carelon Global Solutions have been providing services related to data management, information technology, and business operations since 2019 and were previously included within our Corporate & Other segment.

Our Corporate and 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.

We define operating revenues to include premiums, product revenue and service fees. Operating revenues are derived from premiums and fees received, primarily from the sale and administration of health benefits and pharmacy products and services. Operating gain is calculated as total operating revenue less benefit expense, cost of products sold and operating expense.

Affiliated revenues represent revenues or costs for services provided to our subsidiaries by CarelonRx and Carelon Services, in addition to certain administrative and other services provided by our international businesses, which are recorded at cost or management’s estimate of fair market value. These affiliated revenues are eliminated in consolidation. For segment reporting, we present all capitation risk arrangements on a gross basis; therefore, eliminations also include adjustments for capitated risk arrangements that are recognized on a net basis under GAAP.

Through our participation in various federal government programs, we generated approximately 29% of our total consolidated revenues from agencies of the U.S. government for the year ended December 31, 2023, and 28% for each of the years ended December 31, 2022 and 2021. The majority of these revenues are contained in our Health Benefits segment. An immaterial amount of our total consolidated revenues is derived from activities outside of the U.S. and Puerto Rico.

The accounting policies of the segments are consistent with those described in the summary of significant accounting policies in Note 2, “Basis of Presentation and Significant Accounting Policies,” except that all capitation risk arrangements are reported on a gross basis with an adjustment included in eliminations for capitated risk arrangements that are presented on a net basis under GAAP. We evaluate performance of the reportable segments based on operating gain or loss as defined above. We evaluate net investment income, net gains (losses) on financial instruments, interest expense, amortization expense, gain or loss on extinguishment of debt, income taxes and assets and liabilities on a consolidated basis, as these items are managed in a corporate shared service environment and are not the responsibility of segment operating management.

Elevance Health, Inc.

Notes to Consolidated Financial Statements (continued)

Financial data by reportable segment for the years ended December 31, 2023, 2022 and 2021 is as follows:

									Carelon
			Health Benefits						CarelonRx						Carelon Services						Total						Corporate & Other						Eliminations						Total
Year Ended December 31, 2023
Premiums			$	141,515					$	—					$	1,679					$	1,679					$	—					$	(340)					$	142,854
Product revenue			—						19,452						—						19,452						—						—						19,452
Service fees			7,056						6						813						819						28						—						7,903
Operating revenue - unaffiliated			148,571						19,458						2,492						21,950						28						(340)						170,209
Operating revenue - affiliated			—						14,377						11,655						26,032						451						(26,483)						—
Operating revenue - total			$	148,571					$	33,835					$	14,147					$	47,982					$	479					$	(26,823)					$	170,209
Operating gain (loss)			$	6,888					$	1,975					$	680					$	2,655					$	(1,044)					$	—					$	8,499
Depreciation and amortization of property and equipment			$	—					$	—					$	—					$	—					$	872					$	—					$	872
Year Ended December 31, 2022 (Restated)
Premiums			$	131,964					$	—					$	1,499					$	1,499					$	—					$	(234)					$	133,229
Product revenue			—						14,978						—						14,978						—						—						14,978
Service fees			6,520						—						889						889						44						—						7,453
Operating revenue - unaffiliated			138,484						14,978						2,388						17,366						44						(234)						155,660
Operating revenue - affiliated			—						13,548						10,472						24,020						355						(24,375)						—
Operating revenue - total			$	138,484					$	28,526					$	12,860					$	41,386					$	399					$	(24,609)					$	155,660
Operating gain (loss)			$	6,022					$	1,868					$	535					$	2,403					$	(142)					$	—					$	8,283
Depreciation and amortization of property and equipment			$	—					$	—					$	—					$	—					$	784					$	—					$	784
Year Ended December 31, 2021 (Restated)
Premiums			$	115,725					$	—					$	1,786					$	1,786					$	—					$	(138)					$	117,373
Product revenue			—						12,657						—						12,657						—						—						12,657
Service fees			6,003						—						844						844						66						—						6,913
Operating revenue - unaffiliated			121,728						12,657						2,630						15,287						66						(138)						136,943
Operating revenue - affiliated			—						12,774						7,500						20,274						29						(20,303)						—
Operating revenue - total			$	121,728					$	25,431					$	10,130					$	35,561					$	95					$	(20,441)					$	136,943
Operating gain (loss)			$	5,850					$	1,684					$	187					$	1,871					$	(162)					$	—					$	7,559
Depreciation and amortization of property and equipment			$	—					$	—					$	—					$	—					$	668					$	—					$	668

Elevance Health, Inc.

Notes to Consolidated Financial Statements (continued)

Asset, liability and equity details by reportable segment have not been disclosed, as we do not internally report such information.

A reconciliation of reportable segments’ operating revenue to the amounts of total revenues included in our consolidated statements of income for the years ended December 31, 2023, 2022 and 2021 is as follows:

			2023						2022						2021
Reportable segments’ operating revenues			$	170,209					$	155,660					$	136,943
Net investment income			1,825						1,485						1,378
Net (losses) gains on financial instruments			(694)						(550)						318
Total revenues			$	171,340					$	156,595					$	138,639

A reconciliation of reportable segments’ operating gain to income before income tax expense included in our consolidated statements of income for the years ended December 31, 2023, 2022 and 2021 is as follows:

			2023						2022						2021
Income before income tax expense			$	7,715					$	7,600					$	7,995
Net investment income			(1,825)						(1,485)						(1,378)
Net losses (gains) on financial instruments			694						550						(318)
Interest expense			1,030						851						798
Amortization of other intangible assets			885						767						441
Loss on extinguishment of debt			—						—						21
Reportable segments’ operating gain			$	8,499					$	8,283					$	7,559

21. Related Party Transactions

We have an equity investment in APC Passe, LLC, which offers Medicaid products in Arkansas. During the years ended December 31, 2023, 2022 and 2021, in the normal course of business, we assumed premiums of $481, $501 and $462, respectively, from APC Passe, LLC, which is included in our total assumed premiums (see Note 17, “Reinsurance”).

In January 2023, we made an equity investment that resulted in our minority interest ownership of Liberty Dental. During the year ended December 31, 2023, in the normal course of business, Liberty Dental recognized $426 in revenue for administrative services provided to our members, primarily for those members in our Medicare Advantage plans.

22. Statutory Information

The majority of our insurance and HMO subsidiaries report their accounts in conformity with accounting practices prescribed or permitted by state insurance regulatory authorities, commonly referred to as statutory accounting, which vary in certain respects from GAAP. However, certain of our insurance and HMO subsidiaries, including Blue Cross of California, Blue Cross of California Partnership Plan, Inc., Golden West Health Plan, Inc., Beacon Health Options of California, Inc. and CareMore Health Plan are regulated by the California Department of Managed Health Care (“DMHC”) and report their accounts in conformity with GAAP (these entities are collectively referred to as the “DMHC regulated entities”). Typical differences of GAAP reporting as compared to statutory reporting are the recognition of all assets including those that are non-admitted for statutory purposes and recognition of all deferred tax assets without regard to statutory limits. The National Association of Insurance Commissioners (“NAIC”) developed a codified version of the statutory accounting principles, designed to foster more consistency among the states for accounting guidelines and reporting. Prescribed statutory accounting practices are set forth in a variety of publications of the NAIC as well as state laws, regulations and general administrative rules.

Our statutory basis insurance and HMO subsidiaries are subject to risk-based capital (“RBC”) requirements. RBC is a method developed by the NAIC to determine the minimum amount of statutory capital appropriate for an insurance company or HMO to support its overall business operations in consideration of its size and risk profile. The formula for determining the amount of RBC specifies various factors, weighted based on the perceived degree of risk, which are applied to certain

Elevance Health, Inc.

Notes to Consolidated Financial Statements (continued)

financial balances and financial activity. Below minimum RBC requirements are classified within certain levels, each of which requires specified corrective action. Additionally, the DMHC regulated entities are subject to capital and solvency requirements as prescribed by the DMHC. As of December 31, 2023 and 2022, all of our regulated subsidiaries exceeded the minimum applicable mandatory RBC requirements and/or capital and solvency requirements of their applicable governmental regulator.

The statutory RBC necessary to satisfy regulatory requirements of our statutory basis insurance and HMO subsidiaries was approximately $7,800 and $7,900 as of December 31, 2023 and 2022, respectively. The tangible net equity required for the DMHC regulated entities was approximately $950 and $710 as of December 31, 2023 and 2022, respectively. Statutory basis capital and surplus of our insurance and HMO subsidiaries and capital and surplus of our other regulated subsidiaries, excluding the DMHC regulated entities, was $19,808 and $19,048 at December 31, 2023 and 2022, respectively. GAAP equity of the DMHC regulated entities was $3,975 and $3,795 at December 31, 2023 and 2022, respectively.

Our ability to pay dividends and credit obligations is significantly dependent on receipt of dividends from our subsidiaries. The payment of dividends to us by our insurance and HMO subsidiaries without prior approval of the insurance departments of each subsidiary’s domiciliary jurisdiction is limited by formula. Dividends in excess of these amounts are subject to prior approval by the respective state insurance departments or the DMHC. During 2023, our insurance and HMO subsidiaries paid aggregate cash dividends of $4,909 to the parent company, including cash dividends which required prior approval from regulatory authorities. We currently estimate that approximately $4,400 of dividends will be paid to the parent company in 2024.