Monthly LRA Update: July 2022

TAX DEVELOPMENTS

Biden Tax Policy Update

News reports on June 29 indicate that Senate Majority Leader, Chuck Schumer (D-NY), and Senator Joe Manchin (D-WV) have made progress in private negotiations to revive aspects of the Biden Administration’s Build Back Better legislation.

According to a Bloomberg article, the two are close to agreeing on an overall plan that would increase taxes by roughly $1 trillion. The plan would include ~$500 billion of new spending programs, and the remainder of the tax increases would be used to reduce the deficit.

The tax increases would be focused on corporations and the wealthy. It appears that a 15% minimum tax on GAAP income remains under consideration.

NBC News reported that there appears to be broad democratic support for a provision that would allow Medicare to directly negotiate prescription drug prices along with other related measures.

Senate Democrats have until the end of September to pass legislation under the previously authorized Budget Reconciliation process.

JUDICIAL DEVEOPMENTS

Voya Settles Class Action Regarding COI Increases

On June 9 the US District Court for the Southern District of New York approved a class action settlement relating to a Cost of Insurance increase by Voya. The Settlement Class will receive over $118 million in total value. According to the court filings, the settlement fund (~$92 million) is equal to 76% of the alleged COI overcharges collected through May 31, 2021.

The other $26 million of value was attributed to non-monetary benefits, including a guarantee by Voya and Lincoln (the current administrator of the policies) not to impose a new COI rate increase for five years, unless a state regulatory body requires it.

The settlement applies to 46,000 universal life insurance policies. The contested COI increases were implemented in 2016 at the recommendation of Lincoln (the reinsurer and administrative agent).

Class Counsel requested $30.5 million in legal fees.

Docket: Hanks v. Voya Retirement Insurance and Annuity Company, Case No. 16-cv-06399 (PKC)