Report: Health Law Increases Taxes On Insurers With Big Pay Packages

A new report says a little-noticed provision in the federal health law could drastically reduce insurers’ ability to shield much of that pay from corporate taxes. Last year, insurers owed at least $72 million more to the U.S. treasury as a result. Researchers analyzed the compensation of 57 executives at the 10 largest publicly traded health plans and found that they earned a combined total of $300 million in 2013. Insurers were able to deduct 27 percent of that from their taxes as opposed to before the health law when 96 percent would have been deductible. The 2010 law states that insurers can deduct only the first $500,000 of annual compensation per employee from corporate taxes; the law also requires insurers to include “performance pay,” including stock options which often represent a large portion of an executive’s pay.The report found that on average, insurers owed $1.3 million more in taxes per executive and that the “performance pay” accounted for more than $204 million of the compensation awarded. In 2013 executive pay also rose an average of $5.4 million per person.

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