Alert / Retirement, Employee Benefits
The votes are counted

The votes are counted – well, at least most of the votes are counted – and the American people have ushered in a new political dynamic by handing Democrats control of the House and reinforcing Republican control of the Senate. The consequences of the 2018 midterm elections will be wide ranging and will certainly impact the future of healthcare and retirement plan policy.

Healthcare policy remains contentious

Healthcare policy has consistently been reported one of the most important, if not the most important, issues in the midterm elections. There are some sharp partisan divides that we expect to continue to be fleshed out over the next two years and beyond. A divided Congress likely makes significant policy changes unlikely, though not impossible, over the next two years.

Nevertheless, Republicans are expected to continue efforts to chip away at the Affordable Care Act (ACA). A divided Congress will make that challenging and will put a microscope on executive actions. To date, President Donald Trump has bet on policies that provide insureds, states and payers of healthcare flexibility to help stabilize and reduce healthcare costs (e.g., expansion of association health plans, short-term limited duration insurance, and health reimbursement arrangements). Notably, this flexibility has given states more power, and we’ll soon know how that transfer of authority is worked out once most state legislative sessions begin in early 2019.

For their part, Democrats will likely continue to push to strengthen the ACA. Policies to fund certain ACA subsidies and reinsure risks taken by insurers in the individual market remain priorities. The big question is how strongly Democrats will push some form of single-payer system. Multiple iterations of expanded government involvement in healthcare have already been proposed, ranging from a true single-payer system to a Medicare-buy-in option for older Americans not yet eligible for the program under current law. The divided government will make actual policy difficult, but the debate bears watching, because it will likely shape Democratic action next time they gain power in both chambers.

Where we may see some bipartisan support is in price transparency and cost containment policies. This may include expanded restrictions on balance billing, increased access to telehealth and limited expansion of health savings accounts.

Retirement policy is more bipartisan, but does it have enough momentum?

While Congress is divided on healthcare policy, surprisingly both Republicans and Democrats generally agree when it comes to retirement policy. There is strong bipartisan support for retirement legislation in both the House and Senate with a good chance to pass in the last months of the current Congress. If there is a hurdle, it will be the GOP itself, which has seen leadership in the Senate clash with leadership in the House on who should drive legislation.

Keep an eye on the Senate’s Retirement Enhancement and Savings Act (RESA) and the House’s Family Savings Act (FSA). Both bills share several common proposals, including open multiple-employer plans, simplified disclosures, annuity safe harbors and tax incentives for plans that encourage savings. But there also are provisions unique to both bills, the most significant being that the FSA calls for the creation of Universal Savings Accounts, which would have a $2,500 contribution limit and would have tax treatment similar to Roths.

With time ticking, the GOP will need to come together and support one of the two bills to get some retirement legislation through before the next Congress. Even if that doesn’t happen, not all is lost. With the Democrats now in control of the House, Rep. Richard Neal, Democrat from Massachusetts, is likely to be chairman of House Ways and Means Committee, and he considers retirement to be one of his biggest priorities. Thus, it appears that retirement policy is a real opportunity for the parties to produce some meaningful legislation early in the next Congress.

Register for our webinar: What a new Congress means for health and retirement plan sponsors

Join us at 2 p.m. CST on Nov. 14 for an expanded discussion on the 2018 midterm elections and how they are likely to affect health and retirement plan sponsors. You can register here.

Scott Behrens, J.D.
Director, Government Relations
Lockton Benefit Group

Sam Henson, J.D.
Director, Legislative and Regulatory Affairs
Lockton Retirement Services

Not Legal Advice: Nothing in this Update should be construed as legal advice. Lockton may not be considered your legal counsel and communications with Lockton's Government Relations group are not privileged under the attorney-client privilege.

The communication is offered solely for discussion purposes. Lockton does not provide legal or tax advice. The services referenced are not a comprehensive list of all necessary components for consideration. You are encouraged to seek qualified legal and tax counsel to assist in considering all the unique facts and circumstances. Additionally, this communication is not intended to constitute US federal tax advice, and is not intended or written to be used, and cannot be used, for the purpose of avoiding penalties under the Internal Revenue Code or promoting, marketing, or recommending any transaction or matter addressed herein to another party.

This document contains the proprietary work product of Lockton Government Relations and is provided on a confidential basis. Any reproduction, disclosure, or distribution to any third party without first securing written permission is expressly prohibited.

Investment advisory services offered through Lockton Investment Advisors, LLC, an SEC-registered investment advisor. For California, Lockton Financial Advisors, LLC, d.b.a. Lockton Insurance Services, LLC, license number 0G13569.

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