Insurers socked with $72M in extra taxes under healthcare reform


The 10 largest publicly traded insurers paid their top executives a combined $300 million in compensation last year. But because of a little-discussed provision in the Affordable Care Act, they also had to pay $72 million more than the year before in taxes, amounting to an additional $1.3 million in taxes per executive, according to a new report from the Institute for Policy Studies.

Analyzing compensation for 57 top execs at the 10 insurers, IPS found that insurers actually increased the amount they paid their executives, rising from $5.1 million per person in 2012 to $5.4 million in 2013. In fact, the average pay for Fortune 500 insurer CEOs grew from $11.6 million in 2012 to $13.9 million in 2013, FierceHealthPayer previously reported. 

But the ACA provision--which only allows insurers to deduct the first $500,000 of each employee's annual compensation from corporate taxes instead of the previously allowed $1 million--lowered the amount they could deduct from 96 percent in 2012 to 27 percent last year.

UnitedHealth (NYSE: UNH) paid the most taxes among the 10 analyzed insurers as CEO Stephen Hemsley earned about $28 million in 2013. His compensation accounted for almost $6 million of UnitedHealth's $19 million total taxes.

What's more, IPS predicts that insurers will be paying even more taxes for their exec's compensation in the future. As millions of uninsured consumers enroll in health plans, insurers will likely see a boost in their share prices, which will then increase the value of their executives' stock and option awards.

"They're paying more in taxes just to protect these pay packages," Sarah Anderson, director of the Institute's global economy project, told Kaiser Health News.

To learn more:
- here's the Institute for Policy Studies report
- read the Kaiser Health News article

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