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Income Taxes
 12 Months Ended
Dec. 31, 2023
Income Tax Disclosure [Abstract]  
Income Taxes Income Taxes
Income tax expense for continuing operations consisted of the following:
Year Ended December 31,
202320222021
(In millions)
Current:
Federal$349 $297 $209 
State55 40 31 
Total current404 337 240 
Deferred:
Federal(28)(66)(17)
State(3)— (7)
Total deferred(31)(66)(24)
Income tax expense$373 $271 $216 
A reconciliation of the U.S. federal statutory income tax rate to the combined effective income tax rate for continuing operations is as follows:
Year Ended December 31,
202320222021
Statutory federal tax (benefit) rate21.0 %21.0 %21.0 %
State income provision (benefit), net of federal benefit2.8 3.0 2.2 
Nondeductible compensation1.4 1.8 1.5 
Other0.3 (0.3)— 
Effective tax expense rate25.5 %25.5 %24.7 %
Our effective tax rate is based on expected income, statutory tax rates, and tax planning opportunities available to us in the various jurisdictions in which we operate. Management estimates and judgments are required in determining our effective tax rate. We are routinely under audit by federal, state, or local authorities regarding the timing and amount of deductions, nexus of income among various tax jurisdictions, and compliance with federal, state, foreign, and local tax laws.
Deferred tax assets and liabilities are classified as non-current. Significant components of our deferred tax assets and liabilities as of December 31, 2023 and 2022 were as follows:
December 31,
20232022
(In millions)
Accrued expenses and reserve liabilities$94 $77 
Other accrued medical costs26 24 
Net operating losses7 9 
Unearned premiums19 16 
Lease liabilities87 88 
Unrealized losses26 49 
Fixed assets and intangibles24 9 
Tax credit carryover5 5 
Other6 5 
Valuation allowance(24)(18)
Total deferred income tax assets, net of valuation allowance 270 264 
Right-of-use assets(29)(29)
Prepaid expenses (14)(15)
Total deferred income tax liabilities (43)(44)
Net deferred income tax asset$227 $220 
At December 31, 2023, we had state net operating loss carryforwards of $53 million, which begin expiring in 2036.
At December 31, 2023, we had foreign net operating loss carryforwards of $11 million, which begin expiring in 2031.
At December 31, 2023, we had foreign tax credit carryovers of $5 million, which expire in 2030.
We evaluate the need for a valuation allowance taking into consideration the ability to carry back and carry forward tax credits and losses, available tax planning strategies and future income, including reversal of temporary differences. We have determined that as of December 31, 2023, $24 million of deferred tax assets did not satisfy the recognition criteria. Therefore, we increased our valuation allowance by $6 million, from $18 million at December 31, 2022, to $24 million as of December 31, 2023.
We recognize tax benefits only if the tax position is more likely than not to be sustained. We are subject to income taxes in the United States, Puerto Rico, and numerous state jurisdictions. Significant judgment is required in evaluating our tax positions and determining our provision for income taxes. During the ordinary course of business, there are many transactions and calculations for which the ultimate tax determination is uncertain. We establish reserves for tax-related uncertainties based on estimates of whether, and the extent to which, additional taxes will be due. These reserves are established when we believe that certain positions might be challenged despite our belief that our tax return positions are fully supportable. We adjust these reserves in light of changing facts and circumstances, such as the outcome of tax audits. The provision for income taxes includes the impact of reserve provisions and changes to reserves that are considered appropriate.
The roll forward of our unrecognized tax benefits is as follows:
Year Ended December 31,
202320222021
(In millions)
Gross unrecognized tax benefits at beginning of period$(5)$(15)$(20)
Settlements — — 5 
Lapse in statute of limitations— 10 — 
Gross unrecognized tax benefits at end of period$(5)$(5)$(15)
The total amount of unrecognized tax benefits at December 31, 2023, 2022 and 2021 that, if recognized, would affect the effective tax rates is $5 million, $5 million, and $15 million, respectively. We expect that during the next 12 months it is reasonably possible that unrecognized tax benefit liabilities may decrease by $5 million due to
resolution of a state refund claim. The state refund claim will not result in a cash payment for income taxes if our claim is denied.
Our continuing practice is to recognize interest and/or penalties related to unrecognized tax benefits in income tax expense. Amounts accrued for the payment of interest and penalties as of December 31, 2023, 2022 and 2021 were insignificant.
We may be subject to examination by the IRS for calendar years after 2019. With a few exceptions, which are immaterial in the aggregate, we no longer are subject to state, local, and Puerto Rico tax examinations for years before 2019.