Treasury officials met here with representatives from the National Association of Insurance Commissioners earlier this month and asked whether the tax code is giving life insurers a subsidy.
Georgia Insurance Commissioner John Oxendine talked about the hour-long visit here during the tax policy working group session at the NAIC’s summer meeting.
The Treasury meeting, held June 6, included Oxendine; NAIC Washington staffer Brett Palmer; Eric Solomon, a deputy assistant secretary at Treasury; Kim Reed, assistant to outgoing Treasury Secretary John Snow; and a Treasury technical staff person.
Treasury officials at the meeting did not take a position on any of the issues discussed, but they seemed to show more interest in hearing about insurance issues than they did during a previous meeting over a year ago, Oxendine said.
In the past, a presidential tax reform advisory panel has talked about the use of life insurance as a savings vehicle and suggested taxing some of the gains that build up inside policies.
Treasury officials asked during the June meeting if life insurers were being given a subsidy in the tax code and whether that is something that should continue to be done, Oxendine said.
Oxendine said he told the Treasury officials present that there is no subsidy and the existing treatment should continue.
Oxendine said the NAIC hopes to meet three more times with Treasury after a new Treasury secretary is in place to discuss life, health and property-casualty issues.
The Treasury officials assured the NAIC officials that the tax reform panel’s conclusions will be part of discussions at Treasury after a new secretary is in office, Oxendine said.
Another topic that came up at the June 6 meeting was the tax status of personal health accounts.
Oxendine said NAIC officials asked about ways for employers to pass money tax-free to employees, so that employees could use employers’ money to buy their own health coverage.
Treasury officials said there would be two transactions: a tax-free passage of cash to the employer and then to the employee, Oxendine reported.
The Treasury officials reasoned that a “double tax break” would be received, Oxendine said.
Oxendine said he tried to argue that if a dollar is passed on tax-free, it is still a dollar whether it is passed on once or twice.
Oxendine noted the Treasury officials also asked about the topic of “stranger-owned life insurance” and a proposal by the American Council of Life Insurers, Washington, to impose a high excise tax on policyholders who sell policies soon after purchasing the policies.