Schumer-Manchin Deal May Raise Some Life Insurers' Taxes
That amounts to about 27% of gains from operations, and about 1.7% of the companies’ total premium and investment revenue.
It’s unclear how life insurers’ total adjusted financial statement income would compare with their operating gains and their total revenue.
If a new corporate minimum income tax increased some life insurers’ tax bills, those insurers might increase the cost of some products or realign their operations to reduce the amount of income affected by the new tax rules.
Medicare Provisions
A provision that starts on page 225 of the PDF version of the Schumer-Manchin proposal would make the full Medicare Part D prescription drug coverage subsidy available to Medicare enrollees with income up to 150% of the federal poverty level. Today, only enrollees with income under 135% of the federal poverty level qualify for the subsidy.
Another provision, which starts on page 163 of the proposal, would be more likely to affect the relatively high-income people who use the services of agents and advisors: It would make their annual medical expenses more predictable, capping Medicare Part D coverage users’ out-of-pocket expenses for drugs at $2,000 per year.
Other provisions could affect all Medicare enrollees, and the entire U.S. economy, by letting Medicare program managers negotiate lower prescription drug prices with the manufacturers and creating other incentives for manufacturers to hold down prices.
The Medicare drug price provisions could affect clients by holding down drug prices, but they could also have unpredictable effects on clients’ investment portfolios, by, for example, hurting the performance of mutual funds, annuities and stock portfolios with significant exposure to the performance of pharmaceutical stocks.
Affordable Care Act Premium Tax Credit Provisions
Some clients under age 65, and some agents and advisors, get their health coverage from the Affordable Care Act public exchange system.
Before the COVID-19 pandemic flared in the United States, ACA premium tax credit subsidies were available only to consumers with income under 400% of the federal poverty level.
Since then, Congress has provided emergency rules that make subsidies available to any consumer with health insurance premium bills defined as unaffordable according to federal affordability rules.
The Schumer-Manchin proposal would extend the emergency tax credit eligibility rules to the end of 2025, from the end of 2022.
The ACA section, which starts on page 231 of the PDF version of the proposal, could help you and your clients pay for health insurance.
It could also help the performance of any client investments that involve exposure to the stocks of health insurers, for-profit hospital companies, pharmaceutical companies and other companies that benefit from middle-income people having commercial health coverage.
Tax Incentives
The package could also add estate planning opportunities, by setting up new advanced manufacturing (page 414), clean energy production (page 454) and clean fuel production (page 496) tax credits that appear to be available to estates and trusts.
Pictured: Sen. Joe Manchin, D-W.Va. (Photo: Al Drago/Bloomberg)
