President Trump passed the omnibus $1.3 trillion spending bill Friday, avoiding a government shutdown. But just as important as what is in the spending bill is what got left out — and unfortunately for employers, that includes employee benefit provisions that would have helped aim to stabilize the market.
The spending bill did not include changes to health and retirement benefits that the benefits industry would have liked to have seen, including individual market stabilization for the ACA, health savings account improvements and retroactive relief from the Affordable Care Act employer mandate penalties and ACA reporting duties. It also left out the Retirement Enhancement and Savings Act, which, benefits industry experts contend, would have made it easier for individuals to save for retirement.
“The bill does not include legislative priorities we in the benefits community hoped to include in the bill and we are not giving up on pushing for those changes,” says Geoff Manville, principal, government relations in Mercer’s Washington, D.C. office.
The $30 billion market stabilization package—which included appropriations for cost-sharing reduction subsidies, federal money for state reinsurance programs and additional state flexibility under ACA Section 1332 waivers–that was originally included in the spending bill would have had to get both Republicans and Democrats on board to be included but talks fell apart over abortion provisions Democrats did not want included in the bill and the fact that Republicans did not want to prop up the ACA, Manville says.
“The stabilization reforms could come up for a vote in the Senate this year, but frankly it is hard to see both parties achieving a breakthrough,” Manville says. “The individual market outlook is not good. In addition to policy differences, clearly there is political positioning here ahead of the November elections.”
The market stabilization package was introduced as a way to curb premium increases that are expected in 2019. Premiums are expected to rise by about 30% in 2019 if nothing is done. The Section 1332 waivers that would allow states to set up reinsurance funds were one of the ways legislators thought to cap rising rates before insurance carriers set their premiums in May.
One change employers were hoping to see were enhancements to health savings accounts. The Bipartisan HSA Improvements Act that was introduced in March would have revised the rules governing HSAs and high-deductible health plans. It would have allowed HSA plans to offer pre-deductible coverage of health services at onsite employee clinics and retail health clinics; allowed HSA plans to offer pre-deductible coverage for services and medication that manage chronic conditions; would permit the use of HSA dollars toward wellness benefits, including exercise and other expenses associated with physical activity; and clarify that employers can offer “excepted benefits,” like telehealth and second opinion services to employees with an HSA plan.
Currently, health savings accounts, at least for families, have gotten less powerful. The Internal Revenue Service recently lowered the 2018 maximum HSA contribution at the family level by $50, from $6,900 to $6,850.
“This resulted from terms of the federal tax bill enacted last December which changes the indexing formula that is used to measure changes in the consumer price index for a number of purposes under the Internal Revenue Code,” says Leslie Anderson, a partner in Mercer’s Minneapolis office.
Employers need to make sure they are aware of which employees have already maxed out their HSA accounts and find a way to give them back the $50 overpayment to their HSA and any earnings they’ve accrued, she says, otherwise that money will be subject to an excise tax if it stays in the account on an annual basis.
Some in the retirement industry have asked for relief from this rule but “the problem is we don’t know how receptive the IRS will be to transition relief or if there is transition relief, what its scope might be,” Anderson says.
On the retirement side, the Retirement Enhancement and Savings Act was not included in the omnibus spending bill, although industry supporters hoped it would be included. RESA offered a wide-ranging bipartisan package of reforms that actually passed the Senate Finance Committee in 2016, Manville says. The bill was revived in the Senate in March 2018. Opposition to it came from the House because there wasn’t time for Representatives to offer their own changes to the bill before the spending bill was passed.
Some provisions in RESA have been picked up in stand-alone bills, Manville says, including offering nondiscrimination relief to closed pension plans, allowing multiple employer plans and encouraging lifetime income options.
