Mystery COLI Amendment Defeated In House Budget Committee Vote

Section 809 imposes a tax on mutual life insurance companies by reference to the earnings of stock companies.

Section 815 imposes a tax on policyholder surplus accounts held by stock companies.

In his fiscal year 2004 budget, President Bush proposed repealing Section 809, but not 815.

Jack Dolan, a spokesman for the ACLI, praises H.R. 808. Sections 809 and 815 are both outdated provisions of the tax code, Dolan says, and they will have to be repealed sooner or later.

On the health front, a bipartisan group in the House has introduced industry-backed legislation that would provide tax credits for the purchase of health insurance.

The legislation, called the Securing Access, Value and Equity Act (SAVE), would provide up to $1,000 annually for individuals, $2,000 for married couples and $3,000 for families with children, for the purchase of health insurance among low- and moderate-income workers who do not have employer-provided coverage.

The bill number was not available at press time.

Janet Trautwein, vice president of government affairs for the National Association of Health Underwriters, praises the SAVE Act as an important component to an overall program to increase health care access.

“It is a private-sector solution to a difficult public problem and it encourages personal responsibility by giving people the tools they need to make their own health care decisions,” she says.

President Bush also proposed health insurance tax credits in his fiscal year 2004 budget.

Finally, the General Accounting Office says mutual fund fees may be increasing. In a report to the House Financial Services Committee, GAO says mutual fund expense ratios have increased since 1998.

GAO attributes this largely to declining assets in many stock funds, but says this factor alone does not explain the entire increase.

Committee Chairman Mike Oxley, R-Ohio, questions whether another factor might be lack of proper disclosure.

While investors have become sensitive to certain fees, such as sales loads, he says, other fees are either hidden or opaque, escaping the attention of even savvy fund investors.

“This precludes them from comparison shopping, a strong market influence that would encourage fee-based competition and would likely bring down costs,” Oxley says.

While no legislation has been proposed, Oxley says his committee will continue to study mutual fund fees, as well as issues of corporate governance and the role of independent fund directors.

Reproduced from National Underwriter Edition, March 17, 2003. Copyright 2003 by The National Underwriter Company in the serial publication. All rights reserved. Copyright in this article as an independent work may be held by the author.