XML 56 R32.htm IDEA: XBRL DOCUMENT v3.24.0.1
Income Taxes
 12 Months Ended
Dec. 31, 2023
Income Tax Disclosure [Abstract]  
Income Taxes
Note 23 – Income Taxes
Accounting policy. Deferred income taxes are reflected in the Consolidated Balance Sheets for differences between the financial and income tax reporting bases of the Company's underlying assets and liabilities, and are established based upon enacted tax rates and laws. Deferred income tax assets are recognized when available evidence indicates that realization is more likely than not and a valuation allowance is established to the extent this standard is not met. The deferred income tax provision generally represents the net change in deferred income tax assets and liabilities during the reporting period excluding adjustments to Accumulated other comprehensive income (loss) or amounts recorded in connection with a business combination. The current income tax provision generally represents estimated amounts due on income tax returns for the year reported to various jurisdictions plus the effect of any uncertain tax positions. The Company recognizes a liability for uncertain tax positions if management believes the probability that the positions will be sustained is 50% or less. For uncertain positions that management believes are more likely than not to be sustained, the Company recognizes a liability based upon management's estimate of the most likely settlement outcome with the taxing authority. The liabilities for uncertain tax positions are classified as current when the position is expected to be settled within 12 months or the statute of limitation expires within 12 months.
Income taxes attributable to the Company's foreign operations are generally provided using the respective foreign jurisdictions' tax rate.

A.Income Tax Expense
The components of income taxes were as follows:
For the Years Ended December 31,
(In millions)202320222021
Current taxes
U.S. income taxes$1,459 $1,679 $1,267 
Foreign income taxes161 219 207 
State income taxes180 189 112 
Total current taxes1,800 2,087 1,586 
Deferred taxes (benefits)
U.S. income tax benefits
(533)(275)(163)
Foreign income (tax benefits) taxes
(1,046)(28)69 
State income tax benefits
(80)(169)(122)
Total deferred tax benefits
(1,659)(472)(216)
Total income taxes$141 $1,615 $1,370 
Total income taxes were different from the amount computed using the nominal federal income tax rate for the following reasons:
For the Years Ended December 31,
 202320222021
(In millions)$%$%$%
Tax expense at nominal rate$1,158 21.0 %$1,763 21.0 %$1,426 21.0 %
Impact of sale of businesses— — (37)(0.4)— — 
Impact of businesses held for sale(213)(3.9)— — — — 
Effect of foreign earnings(173)(3.1)(96)(1.2)(33)(0.5)
State income tax (benefit), net of federal income tax benefit
(39)(0.7)16 0.2 (9)(0.1)
Swiss tax attributes(1,674)(30.4)— — — — 
Other foreign tax attributes(153)(2.8)— — — — 
Change in valuation allowance1,290 23.4 — — — — 
Other(55)(0.9)(31)(0.4)(14)(0.2)
Total income taxes$141 2.6 %$1,615 19.2 %$1,370 20.2 %
Consolidated pre-tax income from the Company's foreign operations was approximately 48% of the Company's pre-tax income in 2023, 46% in 2022 and 26% in 2021. The increase over 2022 is primarily driven by an increase to the Company's international pharmaceutical operations, partially offset by a reduction in earnings from the sold entities.
Foreign Jurisdiction Tax Attributes. Impacting the effective tax rate for the year ended December 31, 2023 was the recording of the Company's net deferred tax asset associated with foreign tax law changes and agreements in certain tax jurisdictions. The Company established deferred tax assets of approximately $1.8 billion associated with the foreign tax attributes and a related $772 million valuation allowance against these deferred tax assets based on projections of future earnings and requirements to utilize the assets within certain time periods. It is possible in future periods that the Company may revalue these net deferred tax assets due to modifications in certain assumptions such as forecasted future earnings.
Sale of Medicare Advantage and Related Businesses. The Company recorded $584 million of deferred tax benefits and an equal amount of valuation allowance in connection with the HCSC transaction. The valuation allowance has been recorded due to the uncertainty relative to the recovery of the deferred tax benefits as the Company does not currently have capital gain capacity to offset these capital losses.
B.Deferred Income Taxes
Deferred income tax assets and liabilities were as follows:
(In millions)December 31, 2023December 31, 2022
Deferred tax assets
Employee and retiree benefit plans$217 $189 
Other insurance and contractholder liabilities353 278 
Loss carryforwards200 205 
Deferred loss - sale of business584 — 
Other accrued liabilities244 265 
Policy acquisition expenses39 36 
Unrealized depreciation on investments and foreign currency translation81 159 
Foreign tax attributes1,827 — 
Other242 190 
Deferred tax assets before valuation allowance3,787 1,322 
Valuation allowance for deferred tax assets(1,498)(208)
Deferred tax assets, net of valuation allowance2,289 1,114 
Deferred tax liabilities
Depreciation and amortization371 512 
Acquisition-related basis differences8,105 8,347 
Other— 41 
Total deferred tax liabilities8,476 8,900 
Net deferred income tax liabilities(1)
$(6,187)$(7,786)
(1)Deferred tax liabilities, net in the Consolidated Balance Sheets as of December 31, 2023, excludes $1,055 million reported in Other assets and $69 million reported in liabilities of businesses held for sale.
Management believes that future results will be sufficient to realize a majority of the Company's gross deferred tax assets. As of December 31, 2023, we had approximately $218 million in deferred tax assets ("DTAs") associated with unrealized investment losses that are partially recorded in Accumulated other comprehensive loss. We have determined that a valuation allowance against the DTAs is not currently required based on the Company's ability to carry back losses and our ability and intent to hold certain securities until recovery. We continue to monitor and evaluate the need for any valuation allowance in the future. As of December 31, 2023, we had approximately $1.8 billion in DTAs associated with the foreign tax attributes as discussed above. We have determined that approximately $772 million valuation allowance against these DTAs is required based on the Company's taxable income projections and the requirement to utilize the assets within certain time periods. Additionally, the Company has $584 million of deferred tax assets and a full valuation allowance associated with the HCSC transaction, as discussed above. Valuation allowances are established against deferred tax assets when it is determined that it is more likely than not that the asset will not be recognized. Valuation allowances have been established against certain federal, state and foreign tax attributes. There are multiple expiration dates associated with these tax attributes.
C.Uncertain Tax Positions
Reconciliations of unrecognized tax benefits were as follows:
For the Years Ended December 31,
(In millions)202320222021
Balance at January 1,$1,343 $1,230 $1,210 
(Decrease) / Increase due to prior year positions(26)8 21 
Increase due to current year positions107 137 31 
Reduction related to settlements with taxing authorities(13)(4)(15)
Reduction related to lapse of applicable statute of limitations(12)(28)(17)
Balance at December 31,$1,399 $1,343 $1,230 
Substantially all unrecognized tax benefits would impact Shareholders' net income if recognized.
The Company classifies net interest expense on uncertain tax positions as a component of income tax expense and in Other non-current liabilities in the Consolidated Balance Sheets. In addition to the amounts in the table above, the liability for net interest
expense on uncertain tax positions was approximately $220 million as of December 31, 2023, $176 million as of December 31, 2022 and $148 million as of December 31, 2021.
D.Other Tax Matters
The statutes of limitations for The Cigna Group's consolidated federal income tax returns through 2016 have closed. However, The Cigna Group filed amended returns for both the 2015 and 2016 tax years, which are under review by the Internal Revenue Service ("IRS"). Additionally, the IRS is examining The Cigna Group's returns for 2017 and 2018. The statutes of limitations for Express Scripts' consolidated federal income tax returns through 2012 has closed. However, for 2010 through 2012 tax years, there remains a significant disputed matter. The IRS is also examining Express Scripts' consolidated federal income tax returns for 2013 through 2018. The Company has established adequate reserves for these matters.
The Company conducts business in a number of state and foreign jurisdictions and may be engaged in multiple audit proceedings at any given time. Generally, no further state or foreign audit activity is expected for tax years prior to 2014 for The Cigna Group's entities and 2010 for Express Scripts' entities.

Pillar Two. On December 15, 2022, the European Union ("EU") Member States formally adopted the EU's Pillar Two Directive, which generally provides for a minimum effective tax rate of 15%, as established by the Organization for Economic Co-operation and Development ("OECD") Pillar Two Framework that was supported by over 130 countries worldwide. The EU effective dates are January 1, 2024, and January 1, 2025, for different aspects of the directive. A significant number of other countries are also implementing similar legislation, and the OECD continues to release additional guidance on these rules. The Company is within the scope of the OECD Pillar Two model rules and continues to evaluate the potential impact on future periods of the Pillar Two Framework, pending legislative adoption by additional individual countries but expects the impact to not materially change its results from operations.