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Income Taxes | 12 Months Ended
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Dec. 31, 2018
Income Tax Disclosure [Abstract] |
Income Taxes | Income Taxes: On December 22, 2017, the US enacted the 2017 Tax Cuts and Jobs Act (the “Tax Act”). The Tax Act, which is commonly referred to as “US tax reform,” significantly changes US corporate income tax laws by, among other things, reducing the US corporate income tax rate from 35% to 21% starting in 2018. As a result, we recorded a net benefit of $13.6 million during the fourth quarter of 2017. This amount, which is included in Provision for income tax expense in the consolidated statement of operations, consists of three components: (i) a $5.8 million credit resulting from the remeasurement of our net federal deferred tax assets based on the new lower corporate income tax rate, (ii) a $13.8 million credit resulting from the remeasurement of our net state deferred tax assets as a result of the decreased federal benefit implicit in the new lower corporate income tax rate, and (iii) a $5.8 million charge resulting from the remeasurement of our net valuation allowances for state NOLs as a result of the decreased federal benefit implicit in the new lower corporate income tax rate. In addition, we adopted the Tax Act’s provisions allowing for 100% bonus depreciation on qualifying assets placed in service after September 27, 2017, which resulted in additional bonus depreciation deductions of $8.8 million in the fourth quarter of 2017. Certain amounts related to the impact of the Tax Act have been revised due to a correction of an error in our deferred tax assets. See Note 1, Summary of Significant Accounting Policies, “Revision of Previously Issued Financial Statements,” for additional information on this revision. The significant components of the Provision for income tax expense related to continuing operations are as follows (in millions):
| For the Year Ended December 31,
| 2018 |  | 2017 |  | 2016
Current: |  |  |  |  |
Federal | $ | 103.8 |  |  | $ | 72.2 |  |  | $ | 16.1 |
State and other | 24.2 |  |  | 12.8 |  |  | 14.9 |
Total current expense | 128.0 |  |  | 85.0 |  |  | 31.0 |
Deferred: |  |  |  |  |  |  |  |
Federal | (13.7 | ) |  | 58.4 |  |  | 130.5 |
State and other | 4.6 |  |  | 2.4 |  |  | 2.4 |
Total deferred expense | (9.1 | ) |  | 60.8 |  |  | 132.9 |
Total income tax expense related to continuing operations | $ | 118.9 |  |  | $ | 145.8 |  |  | $ | 163.9 |
A reconciliation of differences between the federal income tax at statutory rates and our actual income tax expense on our income from continuing operations, which include federal, state, and other income taxes, is presented below:
| For the Year Ended December 31,
| 2018 |  | 2017 |  | 2016
Tax expense at statutory rate | 21.0 | % |  | 35.0 | % |  | 35.0 | %
Increase (decrease) in tax rate resulting from: |  |  |  |  |  |  |  |
State and other income taxes, net of federal tax benefit | 4.5 | % |  | 3.5 | % |  | 3.8 | %
(Decrease) increase in valuation allowance | (0.4 | )% |  | 0.4 | % |  | 0.1 | %
Nondeductible government, class action, and related settlements | 2.7 | % |  | — | % |  | — | %
Noncontrolling interests | (3.2 | )% |  | (4.6 | )% |  | (4.4 | )%
Share-based windfall tax benefits | (0.4 | )% |  | (1.8 | )% |  | — | %
Tax Act | — | % |  | (2.8 | )% |  | — | %
Other, net | (0.1 | )% |  | (0.3 | )% |  | (0.5 | )%
Income tax expense | 24.1 | % |  | 29.4 | % |  | 34.0 | %
The Provision for income tax expense in 2018 was greater than the federal statutory rate primarily due to: (1) state and other income tax expense and (2) nondeductible settlements offset by (3) the impact of noncontrolling interests. See Note 1, Summary of Significant Accounting Policies, “Income Taxes,” for a discussion of the allocation of income or loss related to pass-through entities, which is referred to as the impact of noncontrolling interests in this discussion. The Provision for income tax expense in 2017 was less than the federal statutory rate primarily due to: (1) the impact of noncontrolling interests, (2) the impact of the Tax Act and (3) share-based windfall tax benefits offset by (4) state and other income tax expense. The Provision for income tax expense in 2016 was less than the federal statutory rate primarily due to: (1) the impact of noncontrolling interests offset by (2) state and other income tax expense. Deferred income taxes recognize the net tax effects of temporary differences between the carrying amounts of assets and liabilities for financial reporting purposes and amounts used for income tax purposes and the impact of available NOLs. The significant components of our deferred tax assets and liabilities are presented in the following table (in millions):
| As of December 31,
| 2018 |  | 2017
Deferred income tax assets: |  |  |
Net operating loss | $ | 66.0 |  |  | $ | 77.3 |
Property, net | 30.8 |  |  | 36.3 |
Insurance reserve | 16.8 |  |  | 19.9 |
Stock-based compensation | 33.0 |  |  | 19.5 |
Revenue reserves | 6.1 |  |  | 14.0 |
Other accruals | 22.5 |  |  | 20.4 |
Tax credits | 4.7 |  |  | 2.8 |
Other | 0.6 |  |  | 0.5 |
Total deferred income tax assets | 180.5 |  |  | 190.7 |
Less: Valuation allowance | (33.7 | ) |  | (35.8 | )
Net deferred income tax assets | 146.8 |  |  | 154.9 |
Deferred income tax liabilities: |  |  |  |  |
Deferred revenue | — |  |  | (28.9 | )
Intangibles | (88.5 | ) |  | (80.0 | )
Carrying value of partnerships | (15.2 | ) |  | (11.4 | )
Other | (0.2 | ) |  | (0.2 | )
Total deferred income tax liabilities | (103.9 | ) |  | (120.5 | )
Net deferred income tax assets | $ | 42.9 |  |  | $ | 34.4 |
We have state NOLs of $66.0 million that expire in various amounts at varying times through 2031. For the years ended December 31, 2018, 2017, and 2016, the net changes in our valuation allowance were $2.1 million, ($7.9) million, and ($0.3) million, respectively. The decrease in our valuation allowance in 2018 related primarily to expirations of state net operating losses. The increase in our valuation allowance in 2017 related primarily to the impact of remeasuring our state NOL deferred tax assets and their corresponding valuation allowances pursuant to the Tax Act. The increase in our valuation allowance in 2016 related primarily to the valuation of our tax credits. As of December 31, 2018, we have a remaining valuation allowance of $33.7 million. This valuation allowance remains recorded due to uncertainties regarding our ability to utilize a portion of our state NOLs and other credits before they expire. The amount of the valuation allowance has been determined for each tax jurisdiction based on the weight of all available evidence including management’s estimates of taxable income for each jurisdiction in which we operate over the periods in which the related deferred tax assets will be recoverable. It is possible we may be required to increase or decrease our valuation allowance at some future time if our forecast of future earnings varies from actual results on a consolidated basis or in the applicable state tax jurisdictions, or if the timing of future tax deductions or credit utilizations differs from our expectations. During the third quarter of 2016, we filed a non-automatic tax accounting method change related to billings denied under pre-payment claims reviews conducted by certain of our Medicare Administrative Contractors. In March 2017, the IRS approved our request resulting in additional cash tax benefits of approximately $51.3 million through December 31, 2017. These benefits are expected to reverse as pre-payment claims denials are settled and collected. This change did not have a material impact on our effective tax rate. The Tax Act included revisions to Internal Revenue Code §451 that may eliminate this deferral of revenue for tax purposes. We are currently evaluating this provision of the Tax Act and its future impact on the method change we received in March 2017. As of January 1, 2016, total remaining gross unrecognized tax benefits were $2.9 million, all of which would have affected our effective tax rate if recognized. The amount of unrecognized tax benefits did not change significantly during 2016. Total remaining gross unrecognized tax benefits were $2.8 million as of December 31, 2016, all of which would have affected our effective tax rate if recognized. The amount of unrecognized tax benefits decreased $2.5 million during 2017, primarily related to the favorable settlement of a federal interest claim. Total remaining gross unrecognized tax benefits were $0.3 million as of December 31, 2017, all of which would have affected our effective tax rate if recognized. The amount of unrecognized tax benefits did not change significantly during 2018. Total remaining gross unrecognized tax benefits were $0.9 million as of December 31, 2018, all of which would affect our effective tax rate if recognized. A reconciliation of the beginning and ending liability for unrecognized tax benefits is as follows (in millions):
| Gross Unrecognized Income Tax Benefits |  | Accrued Interest and Penalties
January 1, 2016 | $ | 2.9 |  |  | $ | — |
Gross amount of increases in unrecognized tax benefits related to prior periods | 0.3 |  |  | — |
Gross amount of decreases in unrecognized tax benefits related to prior periods | (0.4 | ) |  | — |
Gross amount of increases in unrecognized tax benefits related to current period | 0.1 |  |  | — |
Gross amount of decreases in unrecognized tax benefits related to current period | (0.1 | ) |  | — |
December 31, 2016 | 2.8 |  |  | — |
Gross amount of decreases in unrecognized tax benefits related to prior periods | (0.4 | ) |  | — |
Decreases in unrecognized tax benefits relating to settlements with taxing authorities | (2.1 | ) |  | — |
December 31, 2017 | 0.3 |  |  | — |
Gross amount of increases in unrecognized tax benefits related to prior periods | 0.8 |  |  | 0.1 |
Reductions to unrecognized tax benefits as a result of a lapse of the applicable statute of limitations | (0.2 | ) |  | — |
December 31, 2018 | $ | 0.9 |  |  | $ | 0.1 |
Our continuing practice is to recognize interest and penalties related to income tax matters in income tax expense. Interest recorded as part of our income tax provision during 2018, 2017, and 2016 was not material. Accrued interest income related to income taxes as of December 31, 2018 and 2017 was not material. In December 2016, we signed an agreement with the IRS to participate in their Compliance Assurance Process (“CAP”) for the 2017 tax year. CAP is a program in which we and the IRS endeavor to agree on the treatment of significant tax positions prior to the filing of our federal income tax returns. We renewed this agreement in January 2018 for the 2018 tax year and in December 2018 for the 2019 tax year. As a result of these agreements, the IRS is currently examining the 2017, 2018 and 2019 tax years. In May 2018, the IRS issued a no-change Revenue Agent’s Report effectively closing our 2016 tax year audit. The statute of limitations has expired or we have settled federal income tax examinations with the IRS for all tax years through 2016. Our state income tax returns are also periodically examined by various regulatory taxing authorities. We are currently under audit by one state for tax years ranging from 2013 through 2015. For the tax years that remain open under the applicable statutes of limitations, amounts related to unrecognized tax benefits have been considered by management in its estimate of our potential net recovery of prior years’ income taxes. Based on discussions with taxing authorities, we anticipate $0.5 million of our unrecognized tax benefits will be released within the next 12 months. See also Note 1, Summary of Significant Accounting Policies, “Recent Accounting Pronouncements.”

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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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