BCBS Settlement Payments

by Roxie Hixson · Jun 15, 2026

In 2012, a class action lawsuit was filed against the Blue Cross Blue Shield Association (BCBSA) and its member companies alleging that they violated federal antitrust laws by limiting competition in the market for commercial health insurance and administrative services. Plaintiffs claimed that the BCBSA plans agreed not to compete with one another in certain geographic areas and engaged in other practices that restricted competition.

In October 2020, BCBSA agreed to a settlement that included both monetary relief and business practice changes. After several appeals and additional court proceedings, the settlement received final approval and became effective in 2022.

The settlement provided approximately $2.67 billion in monetary relief to eligible individuals, employers, and other entities that purchased or were enrolled in certain Blue Cross Blue Shield (BCBS) health plans during the applicable class periods. In addition to the monetary payment, the settlement required BCBSA and its member plans to implement changes designed to increase competition and provide greater flexibility for certain self-funded employers.

Following completion of the claims administration process, settlement payments are now being distributed to approved claimants.

Key Provisions of the Settlement

Business Practice Changes

Under the settlement, BCBSA and its member plans agreed to implement several measures intended to increase competition in the health insurance marketplace. Among other changes, eligible national self-funded employers gained the ability to request a competitive bid from another BCBS plan through the “Second Blue Bid” program. The settlement also established an independent monitoring process to oversee compliance with the injunctive relief provisions for a specified period.

Monetary Relief

The settlement created a $2.67 billion fund to compensate eligible claimants. After payment of attorneys’ fees, administrative costs, and other approved expenses, the remaining settlement funds were allocated among approved claimants that timely filed valid claims.

Payments were generally calculated using information provided by the Blue Cross Blue Shield plans and were based on factors such as premiums paid for fully-insured coverage or administrative fees paid for self-funded coverage during the applicable class periods.

Eligibility Claimants

Settlement payments are being made to claimants from the following classes who timely submitted valid claims:

Individuals that purchased or were enrolled in a BCBS health insurance or administrative services plan between February 7, 2008 – October 16, 2020;
Insured groups (and their employees) that purchased or were enrolled in a BCBS health insurance or administrative services plan between February 7, 2008 – October 16, 2020; and
Self-funded accounts (and their employees) that purchased or were enrolled in a BCBS health insurance or administrative services plan between September 1, 2015 – October 16, 2020.

Settlement Distribution

After payment of attorneys’ fees, notice and administration expenses, and other court-approved costs, approximately $1.9 billion remained available for distribution to approved claimants. The net settlement amount was split into two funds, with $1.78 billion allocated to individuals and insured groups (and their employees) and $120 million allocated to self-funded accounts (and their employees).

Settlement payments were calculated using information provided by the BCBS member plans and generally reflected the amount paid for coverage during the applicable class periods.

For fully-insured plans, payments were based on premiums paid for commercial health benefit products, including medical, prescription drug, vision, and dental coverage. When both an employer and an employee submitted claims, the settlement allocated premiums between them using default contribution assumptions of:

15% employee / 85% employer for single coverage; or
34% employee / 66% employer for family coverage.

For self-funded plans, payments were based on administrative fees paid for commercial health benefit products, including medical, prescription drug, vision, and dental plan administration, as well as amounts paid for stop-loss coverage. When both an employer and an employee submitted claims, the settlement allocated administrative fees between them using default contribution assumptions of:

18% employee / 82% employer for single coverage; or
25% employee / 75% employer for family coverage.

Employers and employees were permitted to provide alternative contribution information when filing a claim if the default allocation percentages did not accurately reflect the actual cost-sharing arrangement.

Handling Employer Settlement Payments

General Plan Asset Considerations

When employees contribute toward the cost of a group health plan, those contributions are generally considered plan assets for ERISA purposes. As a result, a portion of any litigation settlement proceeds may be viewed as traceable to employee contributions and therefore may also constitute plan assets that must be shared with plan participants, similar to the analysis applied to Medical Loss Ratio (MLR) rebates.

In many cases, this requires determining the percentage of plan costs paid by the employer versus employees during the relevant period and allocating the settlement proceeds accordingly. Employees collectively may be entitled to a share of the proceeds equal to the percentage they contributed, unless the plan documents clearly provide that the employer is entitled to retain such amounts.

Unique Structure of the BCBS Settlement

The BCBS settlement is somewhat different because employees who were enrolled in their employer’s BCBS plan during the class period had the opportunity to submit their own claims directly. The total settlement amount attributable to a given contract was allocated between the employer and any employees who filed claims based on their respective contributions to the plan.

For allocation purposes, the settlement assumed employees contributed certain percentages toward the cost of coverage by default, although both employers and employees could submit evidence establishing a different contribution percentage. As a result, the amount received by an employer depended in part on whether employees filed their own claims. In many cases, employers may have received the entire settlement amount attributable to the contract because no employees filed claims.

Conservative Approach

The key question is whether the employees’ ability to file individual claims changes the analysis of whether settlement proceeds received by the employer can be traced back to employee contributions. Because this settlement structure is highly unusual, there is no clear answer.

The most conservative approach would be to treat at least a portion of the employer’s recovery as plan assets and share that portion with plan participants. After all, in some cases, employees may receive none of the settlement proceeds directly while the employer receives the entire recovery, suggesting that a portion of those proceeds may still be attributable to employee contributions.

Alternative Position

That said, there is a reasonable argument that only the portion of the settlement fund allocated to employee claims is traceable to employee contributions, while the portion allocated to employer claims is not. Under that view, the employer’s recovery would not constitute plan assets and would not need to be shared with employees.

Counsel for the parties in the class action appear to endorse this position. FAQ #39 states that employers are not required to share their settlement proceeds with employees because employees had the opportunity to file their own claims. While that view is not binding on the Department of Labor or any court, it provides persuasive support for the argument that employers may retain their share of the proceeds.

Practical Considerations

Finally, as a practical matter, the amounts involved are generally quite small. As a result, the likelihood of an employer’s decision to retain the proceeds being challenged appears low.