INCOME TAXES

12 Months Ended

Dec. 31, 2021

Income Tax Disclosure [Abstract]

INCOME TAXES

INCOME TAXES

The provision for income taxes consisted of the following for the years ended December 31, 2021, 2020 and 2019:

	2021		2020		2019
	(in millions)
Current provision:
Federal	$	466	$	1,019	$	560
States and Puerto Rico	4		93		41
Total current provision	470		1,112		601
Deferred expense	15		195		162
Provision for income taxes	$	485	$	1,307	$	763

The provision for income taxes was different from the amount computed using the federal statutory rate for the years ended December 31, 2021, 2020 and 2019 due to the following:

	2021		2020		2019
	(in millions)
Income tax provision at federal statutory rate	$	718	$	982	$	729
States, net of federal benefit, and Puerto Rico	18		63		49
Tax exempt investment income	(3)		(5)		(6)
Nondeductible executive compensation	33		19		25
Non-taxable KAH gain	(264)		—		—
Health insurance industry fee	—		268		—
Other, net	(17)		(20)		(34)
Provision for income taxes	$	485	$	1,307	$	763

Deferred income tax balances reflect the impact of temporary differences between the tax bases of assets or liabilities and their reported amounts in our consolidated financial statements, and are stated at enacted tax rates expected to be in effect when the reported amounts are actually recovered or settled.

Principal components of our net deferred tax balances at December 31, 2021 and 2020 were as follows:

	Assets (Liabilities)
	2021		2020
	(in millions)
Net operating loss carryforward	$	291	$	32
Compensation and other accrued expense	186		171
Benefits payable	67		87
Deferred acquisition costs	33		26
Jobs tax credits	33		—
Other	25		11
Unearned revenues	8		12
Total deferred income tax assets	643		339
Valuation allowance	(65)		(37)
Total deferred income tax assets, net of valuation allowance	578		302
Depreciable property and intangible assets	(1,072)		(449)
Prepaid expenses	(102)		(91)
Investment securities	(98)		(418)
Future policy benefits payable	(4)		(3)
Total deferred income tax liabilities	(1,276)		(961)
Total net deferred income tax liabilities	$	(698)	$	(659)

All deferred tax liabilities and assets are classified as noncurrent in our consolidated balance sheets as other long-term liabilities at December 31, 2021 and 2020.

At December 31, 2021, we had approximately $930 million of federal net operating losses and approximately $1.7 billion of state and Puerto Rico net operating losses to carry forward. A portion of these loss carryforwards, if not used to offset future taxable income, will expire from 2025 through 2038. The balance of the net operating loss carryforwards has no expiration date. Due to limitations and uncertainty regarding our ability to use some of the loss carryforwards and certain other deferred tax assets, a valuation allowance of $65 million was established. For the remainder of the net operating loss carryforwards and other cumulative temporary differences, based on our historical record of producing taxable income and profitability, we have concluded that future operating income will be sufficient to recover these deferred tax assets.

We file income tax returns in the United States and Puerto Rico. The U.S. Internal Revenue Service, or IRS, has completed its examinations of our consolidated income tax returns for 2019 and prior years. Our 2020 tax return is in the post-filing review period under the Compliance Assurance Process, or CAP. Our 2021 tax return is under advance review by the IRS under CAP. With a few exceptions, which are immaterial in the aggregate, we are no longer subject to state, local and foreign tax examinations for years before 2018. We are not aware of any material adjustments that may be proposed as a result of any ongoing or future examinations. We do not have material uncertain tax positions reflected in our consolidated balance sheets.