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2020 presidential candidates’ employee benefit and other workforce proposals

Benefits Administration and Outsourcing|Executive Compensation|Health and Benefits|Retirement|Total Rewards
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By Precious Abraham and Ann Marie Breheny | September 23, 2020

A summary of candidate proposals on health care, taxes and other issues that could shape future workplace benefit and compensation policy.

The results of the 2020 presidential and congressional elections will carry important implications for employer-provided benefit, compensation and other workforce programs. Proposals from the two major party presidential candidates, President Donald Trump and former Vice President Joe Biden, address health care, taxes and other issues that will affect workplace benefits and programs; their approaches to these issues could shape benefit and compensation policy over the next four years.

ACA: A continuing focus of the health care agenda

More than a decade after its enactment, the Affordable Care Act (ACA) remains a central focus of the health care agenda. In 2016, President Trump campaigned on repealing the ACA, and Congress attempted repeal during his first year in office. After the repeal attempt failed, President Trump and his administration took steps to amend and reinterpret the law, issuing rules to expand the availability of plans that are exempt from some ACA requirements, expand state flexibility and make other changes. President Trump also signed legislative changes to the ACA, including a tax reform law that repealed the individual mandate penalty and sparked new litigation seeking to nullify the law. During his campaign for a second term, President Trump has said he would protect individuals with preexisting conditions but has not issued specific proposals.

Mr. Biden was vice president when the ACA was enacted and continues to support the law. He proposes to expand the law’s premium tax credits. Households with income over 400% of the federal poverty level could receive premium tax credits, and households receiving the credits would not pay more than 8.5% of household income toward their premiums (under current law, the limit is 9.78% in 2020). In addition, the credits would be based on the cost of gold plan coverage rather than the less generous silver plan coverage under the current benchmark. In addition, Mr. Biden proposes to establish a public option, which could be purchased by any enrollee through the ACA marketplaces and would be available without premiums to qualifying low-income households in states that have not expanded coverage.

Health care beyond the ACA

The candidates have issued proposals addressing prescription drug costs, surprise medical bills, cost and quality transparency, and other health care issues.

Prescription drug costs

Both candidates support policies intended to reduce the cost of prescription drugs. During his term, President Trump and his administration issued a policy blueprint, executive orders and regulations targeting prescription drug costs. The policy blueprint, called American Patients First, outlined steps the administration could take to lower prescription drug costs, such as improved competition, better negotiation and incentives for lower list prices. President Trump signed executive orders addressing importation of prescription drugs from other countries, the use of international pricing (sometimes referred to as “most favored nation” pricing) for Medicare and other prescription drug issues. The administration issued a regulation requiring that pharmaceutical advertisements disclose a drug’s price; however, it was struck down by a federal court. The administration also issued guidance to implement international reference pricing for certain Medicare drugs, which has not yet been published, and to permit limited importation of prescription drugs.

Mr. Biden has also issued proposals addressing prescription drug costs. He would permit the secretary of Health and Human Services to negotiate Medicare drug prices directly with the pharmaceutical manufacturers. In addition, he would allow the importation of prescription drugs as long as the secretary of Health and Human Services certifies that the drugs are safe. Launch prices for new drugs that lack market competition would be limited, using a process under which an independent review board would determine a reasonable price for the drug. As a condition of participating in Medicare, drug price increases generally would be limited to the rate of general inflation. Mr. Biden would also support the development of generic drugs and eliminate the tax deduction for prescription drug advertising.

Surprise medical billing and other issues

Both candidates support solutions to surprise medical billing. President Trump issued principles intended to guide surprise billing legislation. According to the principles, 1) patients should not incur out-of-network charges for emergency care, 2) patients should receive a notice informing them about the network status of providers and an estimate of their expected out-of-pocket costs before they receive scheduled medical care, 3) patients should not receive balance or surprise bills from providers they do not choose, and 4) surprise billing legislation should not increase federal health expenditures. In addition, the administration prohibited surprise medical bills as a condition of COVID-19 provider relief. Mr. Biden proposes that providers would be prohibited from balance billing in cases when patients cannot choose their providers.

President Trump has supported price and quality transparency. Under an executive order he signed, the administration issued regulations aimed at improving transparency. One regulation proposes that health plans give participants personalized cost-sharing estimates for scheduled care and post rates they have negotiated for in-network providers along with the amounts they allow for out-of-network providers. Another regulation requires transparency in prices negotiated between health insurers and hospitals. The administration also issued guidance expanding health savings accounts and health reimbursement accounts.

Mr. Biden has suggested allowing individuals to opt into Medicare at age 60. He has said he would ensure enforcement of state and federal mental health parity requirements and use the government’s antitrust authority to address industry consolidation.

Retirement savings

During President Trump’s term, important retirement legislation was signed into law, and other retirement policy changes were authorized through administrative and regulatory action. The Setting Every Community Up for Retirement Enhancement (SECURE) Act enacted a range of provisions aimed at increasing retirement savings, expanding retirement plan sponsorship and easing some administrative burdens for plan sponsors, among others. President Trump also signed the Coronavirus Aid, Relief, and Economic Security Act, which included retirement provisions aimed at assisting plan sponsors and participants who experienced financial difficulty as a result of the COVID-19 public health emergency. In addition, he issued an executive order on retirement security that directed regulators to address multiple employer plans, electronic disclosure and mortality assumptions for lump sum distributions, which were subsequently implemented through regulations and guidance. In several budget proposals, President Trump proposed raising the cap on Pension Benefit Guaranty Corporation variable rate premiums for single-employer pension plans as well as establishing a variable rate premium for multiemployer pension plans and an exit premium for employers that leave multiemployer pension plans.

In his retirement savings proposals, Mr. Biden proposes to “equalize” defined contribution tax incentives and broaden access to retirement savings. Mr. Biden’s campaign documentation does not offer details about how this would be accomplished, but it could involve replacing the current tax exclusion with tax deductions or credits or capping the exclusion. In addition, he proposes “automatic 401(k) plans” under which employees who do not have access to pension or retirement savings benefits through their employment would have access to payroll-deduction retirement savings vehicles. He also proposes providing tax incentives to encourage small businesses to sponsor retirement savings programs and enroll their employees, providing benefits for unpaid caregivers to save for retirement, and granting survivors of domestic and sexual violence access to their retirement savings.

Paid leave, overtime and other workforce policies

Both candidates have expressed support for some paid leave policies. In annual budget submissions, President Trump has included proposals to provide six weeks of paid leave following the birth or adoption of a child. He also signed the Families First Coronavirus Response Act, under which some employers must provide emergency paid sick leave and paid public health emergency leave. Mr. Biden supports both paid sick leave and paid family and medical leave. He supports paid sick leave based on the Healthy Families Act, legislation that would provide one hour of paid sick leave for each 30 hours worked, up to 56 hours of paid sick leave per year. On paid family leave, Mr. Biden supports the FAMILY Act, which would establish a program to provide partially paid family and medical leave funded by employer and employee payroll taxes. In addition, Mr. Biden proposes a childcare tax credit of up to $8,000 ($16,000 for two or more children) to cover up to 50% of eligible expenses. The full credit would be available to families making up to $125,000 and would phase out for families with income between $125,000 and $400,000.

Mr. Biden supports expanding the overtime protections. Overtime rules issued under former President Obama would have expanded eligibility to those with wages up to $913 per week (from $455 per week) and made other changes, but those rules were blocked by a federal court. To replace those rules, the Trump administration issued overtime rules that generally provide overtime eligibility to workers with wages up to $684 per week. Mr. Biden could seek to expand eligibility for overtime compensation and has pledged stronger enforcement of the overtime rules.

In addition to expanding overtime, Mr. Biden supports increasing the federal minimum wage to $15 per hour and proposes a broad definition of the word “employee” as well as tough enforcement against worker misclassification. Mr. Biden supports the Paycheck Fairness Act, which would limit an employer’s ability to use “bona fide factors other than sex” to defend against claims of gender-based wage discrimination and prevent employers from prohibiting employee discussions about salary, among other changes.

Tax proposals

The campaigns have markedly different approaches to the corporate and individual tax rates and payroll taxes.

President Trump signed the Tax Cuts and Jobs Act (TCJA) and supports additional tax cuts. Among other provisions, the TCJA restructured tax brackets for individuals and families, lowering the top tax rate to 37% and the corporate tax rate to 21%. The individual tax provisions in the act expire in 2025; President Trump would seek to extend these provisions during a second term. President Trump also said he would seek additional tax cuts during a second term.

In August 2020, President Trump issued a memorandum allowing the deferral of payroll taxes that would otherwise be paid during the time period of September to December 2020. The deferred taxes would have to be repaid before May 2021, but President Trump has said he would prefer that the taxes be forgiven and would seek to end payroll taxes during a second term.

Mr. Biden proposes repealing some provisions of the TCJA. For example, he proposes to reinstate the 39.6% top tax rate for individuals and families. For corporations, he would increase the tax rate to 28% and establish a minimum rate of 15%. In addition, he has proposed taxing long-term capital gains at ordinary income rates for taxpayers with income exceeding $1 million. Mr. Biden supports imposing payroll taxes on income exceeding $400,000. In addition, the FAMILY Act, which he supports as a vehicle for paid family leave, would include new, additional payroll taxes.

No clear outlook for changes following November elections

Election victory alone will not guarantee that campaign proposals or promises become public policy; the outcome of the congressional elections will play an important role in the legislative outlook for 2021 and 2022. Other issues, such as trade, education and energy, will also be on the agenda.

Legislative procedures will also affect the legislative outlook after the elections. If the elections result in a split outcome, where one political party wins the White House and another controls one or both chambers of Congress, legislation would be difficult to enact. If the election outcome results in a one-party sweep, where the same political party controls the White House, House and Senate, the legislative path may be easier; however, obstacles would remain because current Senate rules generally require a 60-vote majority to enact most legislation. A one-party sweep in November could prompt lawmakers to eliminate or reform these rules so that it is easier to enact legislation with a simple 51-vote majority, but such a change could face its own challenges.

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