Income Taxes

The consolidated income tax expense consists of the following for the years ended December 31 ($ in millions):



	2014			2013			2012
Current provision:
Federal	$	225		$	121		$	47
State and local	13			6			(4		)
Total current provision	238			127			43
Deferred provision	(42		)	(20		)	4
Total provision for income taxes	$	196		$	107		$	47

The reconciliation of the tax provision at the U.S. Federal Statutory Rate to the provision for income taxes for the years ended December 31 is as follows ($ in millions):



	2014			2013			2012
Earnings from continuing operations, before income tax expense	$	457		$	269		$	123
(Earnings) loss attributable to flow through noncontrolling interest	4			(1		)	2
Earnings from continuing operations, less noncontrolling interest, before income tax expense	461			268			125

Tax provision at the U.S. federal statutory rate	162			94			44
State income taxes, net of federal income tax benefit	6			3			(2		)
Nondeductible compensation	1			12			1
Benefit from reversal of prior years impact of 162(m)(6) regulations	(14		)	—			—
ACA Health Insurer Fee	44			—			—
Nondeductible goodwill impairment	—			—			8
Other, net	(3		)	(2		)	(4		)
Income tax expense	$	196		$	107		$	47

The tax effects of temporary differences which give rise to deferred tax assets and liabilities are presented below for the years ended December 31 ($ in millions):



	2014			2013
Deferred tax assets:
Medical claims liability	$	27		$	20
Accrued expenses	11			5
Net operating loss carryforward	21			16
Compensation accruals	53			31
Premium and related receivables	35			20
Other	9			16
Deferred tax assets	156			108
Valuation allowance	(12		)	(8		)
Net deferred tax assets	$	144		$	100

Deferred tax liabilities:
Intangible assets	$	25		$	18
Prepaid assets	6			6
Depreciation and amortization	26			30
Other	4			2
Deferred tax liabilities	61			56

Net deferred tax assets	$	83		$	44

The Company's deferred tax assets include federal and state net operating losses, or NOLs. Accordingly, the total and annual deduction for those NOLs is limited by tax law. The federal NOLs of $5 million were all acquired in business combinations. The Company's federal NOLs expire between the years 2020 and 2033 and the state NOLs expire between the years 2015 and 2035. Valuation allowances are recorded for those NOLs the Company believes are more likely than not to expire unused. During 2014 and 2013, the Company recorded valuation allowance additions in the tax provision of $5 million and $1 million, respectively. The Company recorded valuation allowance reductions of $1 million during the years ended December 31, 2014 and 2013.

As of December 31, 2014 and 2013, the Company maintained reserves for uncertain tax positions of $4 million and $3 million, respectively, that may be challenged by a tax authority. The unrecognized federal tax benefits are related to returns open from 2012 to 2014. The Company files in numerous state jurisdictions with varying statutes of limitation. The unrecognized state tax benefits are related to returns open from 2009 to 2014.

In September 2014, the Internal Revenue Service issued final regulations related to the compensation deduction limitation applicable to certain health insurance issuers. The new regulations provided additional information regarding the definition of a health insurance issuer. Based on the final regulations, the Company no longer believes it is subject to the compensation deduction limitation in 2013 and 2014. As a result of this change in regulation, tax benefits of $14 million related to prior years were recorded during 2014.