Biden Administration to overview guidelines for worker well being and retirement plans
On inauguration day, January 20, the Biden-Harris transition team released a list of more than 100 federal agency regulations that have been approved by the Trump administration since 2017 and which it intends to re-examine. The Congressional Review Act (CRA) allows an incoming Congress to review the final federal agency rules enacted in the last 60 days of the legislature and repeal those rules by simple majority in both houses. Older final rules can be replaced by the introduction of new rules for comments and notices, and more are likely to be scrutinized as new Cabinet Secretaries take office.
The Biden government also announced a freeze on all proposed regulations that are pending review.
SHRM Online has compiled the following articles about some regulations that affect employee benefits that the Biden administration is likely to review and possibly replace.
Final and proposed rules for the health plan
As part of the CRA, Congress could review the recently finalized Trump-era rules that affect health plan coverage. Goals could include a Department of Labor (DOL) and Health and Social Services (HHS) rule that would allow grandfather group plans to have higher cost-sharing requirements. a DOL, Treasury, and HHS (Tri-Agency) rule that requires health insurers and self-insured plans to disclose price and cost-sharing information; and an HHS rule to pass discounts from pharmaceutical companies on to patients at the point of sale.
One of the proposed health care rules that the new administration could re-examine and potentially stop pursuing is an IRS rule that would allow employers to reimburse workers for fees paid to direct first responders and government departments Division of health care to be paid. Critics claim that these options do not provide comprehensive coverage.
Rules rejected by HHS Secretary Becerra
Biden has named California Attorney General Xavier Becerra as HHS secretary. Becerra joined a coalition of 12 attorneys general suing to block a final DOL rule for 2018 that, if implemented, would allow small businesses to join forces through associations’ health plans to offer large group market insurance to their employees which avoids some of the health insurance regulatory requirements that individual states and the Affordable Care Act (ACA) place on small group market plans. The rule is still being negotiated in court.
Becerra also opposes a 2018 three-agency rule that allows insurers to sell short-term, term health insurance that offers coverage for up to three years. These plans don’t cover all of the services and treatments required by the ACA and cost less than ACA-compliant plans.
(Kaiser Health Foundation and SHRM Online)
Final EEOC rules for wellness incentives
The U.S. Equal Employment Opportunity Commission (EEOC) published proposed rules on Jan. 7 that limit the value of incentives employers can use to encourage employee participation in wellness programs that collect employee health data. However, on January 20, the Biden administration withdrew the proposed rules from being published in the federal register until the newly appointed EEOC Chairperson of the President, Charlotte Burrows, reviews and approves the rule.
“Republican candidates currently have a 3-2 lead at the EEOC through at least July 2022,” noted Mathew Parker, partner in the Fisher Phillips office in Columbus, Ohio. “It wouldn’t be particularly surprising if the Biden administration put these new rules on hold until they can be re-evaluated with the majority of the Democrats that make up the EEOC.”
Ben Lupine, senior director in the technical services department for health and social benefits at Willis Towers Watson, thinks it is unlikely that the Biden administration will want to bring things back to first place. “However, the new administration may change certain aspects of the final ruling, if issued, depending on the comments received by the EEOC,” assuming Burrows approve the publication of the proposal in the federal register.
Final Rules for Selecting Pension Plan Investments and Limiting Trustee Proxy Voting
The Biden Transition Team’s list of regulations to review includes a final November 2020 DOL rule requiring pension plan sponsors to evaluate investments based solely on financial risk and return factors, unless non-financial factors are used as the “link” between Similar performing funds use expectations. The rule has been rejected by those who prefer plan trustees who consider environmental, social and governance (ESG) criteria when selecting funds. For example, these criteria may exclude inventory of tobacco, fossil fuel, firearms and defense companies, or require funds to avoid investing in companies that oppose a union organization or pay excessive executive compensation.
Under a related DOL rule passed in December 2020, retirement plan trustees are prohibited from casting proxies of corporate shareholders in favor of social or political positions that do not advance the financial interests of retirement plan participants. When Biden takes office, there will likely be efforts to revise the proxy rule as well.
Policy analysts believe that the next iteration of these guidelines, through the process of creating rules for notices and comments, will provide stakeholders with a new opportunity to influence the political debate.
(The National Law Review)
Final rule for offering advice to plan participants
Another final DOL rule expected to be reviewed by the new administration addresses the escrow requirements for professionals recommending investments to 401 (k) plan participants and allowing advisers to receive compensation from mutual fund providers while doing so be held liable if they do not act in the best interests of whom they advise.
The Democratic Party platform said a Biden administration would “take immediate action to reverse Trump administration rules so financial advisors can prioritize their self-interest over the financial well-being of their clients.” The Biden DOL could postpone the effective date of this regulation on February 16th while it decides on its next steps.
The rules for investment selection, proxy voting, and fiduciary advice were set so late in the Trump administration that they may be overturned by Congress through the rating agency. But Democrats couldn’t unleash the CRA if they wanted the Biden government to set their own rules in key areas like ESG and investment advisory policy. After sinking a regulation, the rating agency does not allow an agency to issue an essentially similar regulation.
(ESG Clarity US and SHRM Online)