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Income Taxes | 12 Months Ended
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Dec. 31, 2018
Income Tax Disclosure [Abstract] |
Income Taxes | Income Taxes The consolidated income tax expense consists of the following for the years ended December 31 ($ in millions):
| 2018 |  | 2017 |  | 2016
Current provision |  |  |  |  |
Federal | $ | 498 |  |  | $ | 421 |  |  | $ | 485 |
State and local | 107 |  |  | 14 |  |  | 22 |
Total current provision | 605 |  |  | 435 |  |  | 507 |
Deferred provision | (131 | ) |  | (109 | ) |  | 92 |
Total income tax expense | $ | 474 |  |  | $ | 326 |  |  | $ | 599 |
The reconciliation of the tax provision at the U.S. federal statutory rate to income tax expense for the years ended December 31 is as follows ($ in millions):
| 2018 |  | 2017 |  | 2016
Earnings from operations, before income tax expense | $ | 1,368 |  |  | $ | 1,134 |  |  | $ | 1,160 |
Loss (earnings) attributable to flow through noncontrolling interest | 4 |  |  | 15 |  |  | (8 | )
Earnings from operations, less noncontrolling interest, before income tax expense | 1,372 |  |  | 1,149 |  |  | 1,152 |
Tax provision at the U.S. federal statutory rate | 288 |  |  | 402 |  |  | 402 |
State income taxes, net of federal income tax benefit | 52 |  |  | 11 |  |  | 10 |
Nondeductible compensation | 33 |  |  | 58 |  |  | 23 |
ACA Health Insurer Fee | 149 |  |  | — |  |  | 162 |
Income Tax Reform | — |  |  | (125 | ) |  | — |
Valuation Allowance | (28 | ) |  | 14 |  |  | 10 |
Other, net | (20 | ) |  | (34 | ) |  | (8 | )
Income tax expense | $ | 474 |  |  | $ | 326 |  |  | $ | 599 |
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):
| 2018 |  | 2017
Deferred tax assets: |  |  |
Medical claims liability | $ | 78 |  |  | $ | 46 |
Nondeductible liabilities | 128 |  |  | 41 |
Net operating loss and tax credit carryforwards | 77 |  |  | 94 |
Compensation accruals | 109 |  |  | 129 |
Premium and trade receivables | 76 |  |  | 45 |
Other | 61 |  |  | 11 |
Deferred tax assets | 529 |  |  | 366 |
Valuation allowance | (53 | ) |  | (81 | )
Net deferred tax assets | $ | 476 |  |  | $ | 285 |
Deferred tax liabilities: |  |  |
Intangible assets | $ | 343 |  |  | $ | 342 |
Prepaid assets | 31 |  |  | 23 |
Fixed assets | 132 |  |  | 84 |
Investments in joint ventures | 27 |  |  | 20 |
Deferred revenue | 19 |  |  | 26 |
Other | 6 |  |  | 17 |
Deferred tax liabilities | 558 |  |  | 512 |
Net deferred tax assets (liabilities) | $ | (82 | ) |  | $ | (227 | )
Valuation allowances are provided when it is considered more likely than not that deferred tax assets will not be realized. The valuation allowances primarily relate to future tax benefits on certain federal, state and foreign net operating loss and tax credit carryforwards. The $28 million decrease in valuation allowance relate s to an increase in current taxable income of a subsidiary whose annual net operating loss deduction is limited by law. Federal net operating loss carryforwards of $19 million expire beginning in 2020 through 2038; state net operating loss and tax credit carryforwards of $44 million expire beginning in 2019 through 2038. Substantially all of the non-U.S. tax loss carryforwards have indefinite carryforward periods. The Company maintains a reserve for uncertain tax positions that may be challenged by a tax authority. A rollforward of the beginning and ending amount of uncertain tax positions, exclusive of related interest and penalties, is as follows:
| Year Ended December 31,
| 2018 |  | 2017
Gross unrecognized tax benefits, beginning of period | $ | 257 |  |  | $ | 102 |
Gross increases: |  |  |
Current year tax positions | 7 |  |  | 43 |
Prior year tax positions | 14 |  |  | 113 |
Gross decreases: |  |  |
Statute of limitation lapses | (1 | ) |  | (1 | )
Gross unrecognized tax benefits, end of period | $ | 277 |  |  | $ | 257 |
Uncertain tax positions increased $20 million due to various federal positions. As of December 31, 2018, $248 million of unrecognized tax benefits would impact the Company's effective tax rate in future periods, if recognized. The Company believes it is reasonably possible that its liability for unrecognized tax benefits will decrease in the next twelve months by $15 million as a result of the expiration of statutes of limitations and projected audit settlements in certain jurisdictions. The table above excludes interest, net of related tax benefits, which is treated as income tax expense (benefit) under the Company's accounting policy. For the year ended December 31, 2018, the Company recognized net interest expense related to uncertain positions of $5 million. The Company had $14 million and $9 million of accrued interest and penalties for uncertain tax positions as of December 31, 2018 and 2017, respectively. The Company files tax returns for federal as well as numerous state tax jurisdictions. As of December 31, 2018, Health Net is under federal examination for tax years 2011 through its final return in 2016. Additionally, Centene's tax returns for years 2014 through 2017 are subject to federal examination. The Company has completed its accounting of the effects of the TCJA on current and deferred income taxes. No material changes were made to the tax effects recorded in 2017.

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- Definition The entire disclosure for income taxes. Disclosures may include net deferred tax liability or asset recognized in an enterprise's statement of financial position, net change during the year in the total valuation allowance, approximate tax effect of each type of temporary difference and carryforward that gives rise to a significant portion of deferred tax liabilities and deferred tax assets, utilization of a tax carryback, and tax uncertainties information. + References Reference 1: http://fasb.org/us-gaap/role/ref/legacyRef -Publisher FASB -Name Accounting Standards Codification -Topic 740 -URI http://asc.fasb.org/topic&trid=2144680 + Details
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