A Brief Analysis of Private Sector Health Insurance Business

June 22, 2022

Large, private-sector employers, i.e., companies not owned or operated by the government, have long been an attractive target for health insurance business. There are approximately 123,000 large firms in the private sector, employing anywhere from 100 to upwards of more than 1,000 employees, per the U.S. Bureau of Labor Statistics. The majority offer health and welfare benefits that provide medical, dental, and vision coverage, as well as life and disability benefits for their employees. Large private-sector employers providing health and welfare benefit plans subject to ERISA [1] are required to file the annual Form 5500 with the Internal Revenue Service. Form 5500 is a primary source of employer information about health and welfare benefits, as well as pension plans. This brief presents a high-level overview of health benefit insights gleaned from MFA’s 5500 Employer Health ^Plus product. These observations are based on 79,287 employers that indicated they had active health benefit contracts as of their most recent filings.

Health Benefit Contracts by Participant Pool

A total of 79,287 private-sector employers reported in their most recent filing that they offer some type of health benefit (other than vision or dental) that is subject to ERISA guidelines. As reported, these companies collectively make health benefits available to a universe of about 83.3 million participants. It is important to note that “participants,” per Form 5500 instructions, is defined as the annual count of active and former employees who are eligible for coverage, but not necessarily enrolled. Furthermore, this field is representative of participants across all health and welfare benefits reported by plan employer sponsors, not just health. Nonetheless, this measure provides a general indication of the potential size of health and welfare benefit contracts by employer.

The following table presents private-sector employers that reported more than 500,000 potential plan participants across the spectrum of all health benefit contracts. The top-ranking employer/sponsor is the NEA (National Education Association) Retiree Health Plan. The NEA is a professional organization representing teachers and other personnel employed by public schools nationwide. The second largest is the retail superstore company Walmart. The third largest is the International Brotherhood of Teamsters, a large labor union representing a diverse membership of professional and non-professional workers across many industries. Other top employer/sponsors include Amazon, Target, and AT&T.

As a reminder, Form 5500 definitions and reporting instructions pertaining to health benefits are broad and data are not necessarily indicative of comprehensive medical coverage. For example, a closer look at Amazon’s filings found several health insurers under contract, with Metropolitan Life Insurance providing health coverage for almost 245,000 enrollees. On the other hand, contracts for the largest number of enrolled within the NEA Retiree Health Plan were for life insurance provided by Prudential Insurance Company. Due to filing guidelines and companies with different fiscal year ends, this subset of data generally encompasses filings from 2020 with a smaller amount from 2019 and 2021 to reflect the most recent filings available.

At the individual employer/sponsor filing level, the 5500 Employer Health ^Plus database includes useful observations about plan funding type based on MFA-calculated estimates. An assessment of most recent filings found just under half of all benefit funding arrangements (44%) that included health benefits were fully-insured plans. Forty-eight percent of plans assessed were self-insured while the remaining 8% were mixed funding arrangements. Large health insurers generally offer plans across all funding types. Depending upon an insurer’s market strategy, one might pursue growth by targeting employers that prefer one funding type over another.

Within the Form 5500, Schedules A and C provide important insights about insurance carriers that private sector employers have contracted with for health, welfare benefits, and related services. Please note that these general descriptions of schedules used for reporting of benefit plan details in Form 5500 are intended to provide a broad understanding for the purposes of general market analysis. Refer to the filing instructions and/or consult with an employee benefits expert for in-depth guidance.

Schedule A Observations

Insurance carrier business was analyzed using Schedule A [2] and utilized data for only benefit contract types of health, HMO, and PPO. To provide a high-level overview of the market, the number of insured and total premiums paid were aggregated at the parent company level (Insurer Group) for each health plan/insurance carrier record. The Insured field represents the estimated number of persons covered at the end of the policy year, a field synonymous with covered lives or number of enrolled. The # Filings variable represents the number of filings in which each Insurer Group was reported, generally the same as number of contracts. Total Premiums in the table below are the sum of premiums paid for experience-rated and non-experience-rated contracts.

Kaiser ranked highest with an aggregate total of 4.1 million insured across 10,458 contracts. UnitedHealth ranked second, reporting more than 3.9 million aggregate insured or covered lives. CIGNA, Metropolitan, and CVS were also in the top five insurers. As a reminder, it is important to note that Form 5500 definitions and reporting instructions pertaining to health benefits are broad and data are not necessarily indicative of comprehensive medical coverage.