On January 3, 2019 a new session of Congress (the 116th) will start with new leaders at the helm. Republicans expanded their majority in the Senate, while Democrats gained a majority in the House of Representatives. Because House control will be shifting, there is increased importance to the “lame duck” period (the remaining period of the 115th Congress before retiring or defeated members leave). The current Republican majority has one last chance to try to advance agenda items before the House leadership changes hands. In addition, due to the election, and the retirement of several key legislators, starting in January there will be new chairpersons of several of the committees that impact health and retirement issues. Alight is carefully monitoring ongoing legislative developments to evaluate potential short-and-long term implications to employer-provided benefits.
The lame duck session: what to watch for between now and January 3.
Over the past few months, the (currently) Republican controlled House has moved forward several pieces of legislation that could impact employers and their benefit plans which may be prioritized during the lame duck session.
- In September, the House passed the Family Savings Act (H.R. 6757). This bill overlaps significantly with a Senate bill, the Retirement Enhancement and Savings Act (RESA) (S. 2526), which had bipartisan approval by the Senate Finance Committee. During the lame duck session, Alight anticipates the two versions of the bill may be negotiated between the House and Senate to arrive at a final bill. The provisions likely to appear in the final bill include:
- Open Multiple Employer Plans (MEPs) to allow employers to band together under a single plan in order to expand access to retirement savings by increasing purchasing power and lowering costs of smaller plans. MEPs would primarily appeal to small and mid-sized employers.
- Modified non-discrimination testing for employers with a soft-frozen defined benefit plan.
- Multiple provisions to encourage greater use of products that produce guaranteed income for life.
- For employers with multiemployer pension plan obligations, a final report and proposed legislation arising from the work of the Joint Select Committee on Solvency of Multiemployer Pension Plans are expected on or before November 30, 2018.
- The full House is expected to consider the Save American Workers Act (H.R. 3798), which was moved from the Ways and Means Committee earlier in 2018. A previously scheduled House vote was postponed until after the election. This bill would be significant for employer-provided health benefits because it would:
- Change the threshold for a full-time employee for purposes of the employer mandate from an average of 30-hours to 40-hours per week.
- Create a moratorium on the employer mandate penalty for 2015-2018, negating all associated penalties for those calendar years.
- Further delay the Employer Shared Responsibility Payment (the “Cadillac Tax”) tax one additional year, until 2023.
- The Senate could consider the HSA improvement bills that were passed by the House in July, 2018 with some bipartisan support. These bills would broaden the utility of HSAs and other accounts, for example, by increasing the contribution limits, removing the restriction on over-the-counter drug expenses, and allowing HSA contributions even when a spouse has a general purpose health FSA.
In the New Year: what to expect from the new session of Congress.
With a divided Congress, increased gridlock and intensification of House oversight functions are likely possibilities, which would reduce the potential for sweeping legislation to be passed. However, there could be increased room for targeted legislative efforts with bipartisan support. Key issues to watch during the 116th Congress include:
- Attempts to fully repeal or replace the ACA will likely not take hold, but bipartisan efforts to make incremental changes or improvements are possible. Notably, in recent years, changing the “Cadillac Tax” has garnered bipartisan attention and support, but the trade-off/pay-for proposals are unclear and may include unpopular approaches to raising revenue.
- Proposed cuts to Medicare appear unlikely to advance.
- Bipartisan efforts to reduce cost of prescription drugs are possible.
- Proposals to mandate that employers offer a retirement plan could come from the House, but do not seem likely to move through the Senate.
- If RESA and the Family Savings Act aren’t passed during the lame duck session, several provisions with clear bipartisan support (e.g. open MEPs) could be separately proposed and passed.
Behind the scenes – important committee changes to be aware of.
Below is a review of key Congressional committees and some context for the start of the new session.
|Chamber & Committee||Current Chair||Future Chair (likely)||Comments|
|Senate Finance||Orrin Hatch (R)(retiring)||Mike Crapo (R) or Chuck Grassley (R)—(if he gives up chair of Judiciary Committee)||Sen. Crapo led bipartisan effort to modify Dodd-Frank last year. He has stated that he intends to focus on data and privacy. Proposed legislation that impacts financial organizations holding personal and health data is possible.|
|Senate Health, Education, Labor and Pensions (HELP)||Lamar Alexander (R)||Unchanged||Sen. Alexander and Sen. Murray (ranking member) have crafted important bipartisan healthcare legislation in the past. Their skill and experience may be particularly important over the next Congress.|
|House Ways & Means||Kevin Brady (R)||Richard Neal (D)||Rep. Neal is well-versed in retirement policy and a proponent of sponsor mandates for retirement coverage. He is expected to be very active on retirement issues.|
|House Education and Workforce||Virginia Foxx (R)||Bobby Scott (D)||Rep. Scott is a supporter of the ACA, paid sick time proposals, the DOL’s fiduciary rule, and opposes legislation to ease restriction on employee wellness programs. Given these views, health and welfare matters may be a priority under his leadership.|
The lame duck session and the start of the 116th Congress will undoubtedly prove to be full of action, with retirement and health benefits squarely on the table. Even before the 115th Congress resumes on November 13, Alight will be carefully watching developments and working with Congressional and agency leaders.
If you have any questions or would like to speak with Alight about the impact of this legislation, please contact us below and a representative will be in touch.