Health insurance companies are able to deduct each year, for federal income tax purposes, some of their estimated insurance claim liabilities, even though they are not fixed in amount.
In addition, health insurance companies are also able to defer each year, for federal income tax purposes, the taxability of some of their unearned premiums received in cash.
In both of the above cases, these Health Insurance companies are receiving federal tax benefits that are inconsistent with the general federal income tax principles of not getting federal income tax deductions until they are fixed, and of taxing revenues, for federal income tax purposes, when they are received in cash.
My proposals here are to allow all Big Health Insurance Corps to deduct insurance claims only in the year when they are fixed, and to recognize premium revenues in the year when they are received in cash.
I would not apply my above proposal to smaller Health Insurance companies.
The economic damage to the US Big Health Insurance Corps from this proposal is substantially softened here due to this corporate tax loophole closer being treated as a Temporary Tax Difference under US generally accepted accounting principles. The total federal income tax deductions and revenues from these insurance claims and premiums will be the same over the long run. Thus, there will be no income tax charge to the income statements of these Big Health Insurance Corps from my proposals here.
There should be significantly positive CBO scoring to the US Government from these proposals, for the next 10 years and for many years thereafter.
