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Trump administration’s 2020 budget proposal addresses retirement, health care and paid leave

Health and Benefits|Retirement

By Precious Abraham , Ann Marie Breheny , Anu Gogna and William (Bill) Kalten | April 8, 2019

The budget proposes to impose higher PBGC premiums on certain pension plans, expand HSAs, replace parts of the ACA, reform Medicare and establish paid family leave.

The Trump administration submitted its fiscal year 2020 budget proposal to Congress on March 11. The budget proposes to impose higher Pension Benefit Guaranty Corporation (PBGC) premiums on certain pension plans, expand health savings accounts (HSAs), replace parts of the Affordable Care Act (ACA), enact Medicare reforms and establish paid family leave. It also addresses prescription drug costs and surprise medical billing.

The annual budget submission outlines the administration’s policy proposals and priorities for the next fiscal year. Implementation of these proposals generally requires legislative approval, and few items in the 2020 budget proposal are expected to move through the legislative process. Many of the proposals also appeared in the fiscal 2018 and 2019 budget submissions.

PBGC premiums

The budget proposes to “shift the premium burden to underfunded plans” by increasing the cap on variable-rate premiums to $900 per participant in 2020. The 2019 limit is $541. The indexing of premium rates for 2020 would be suspended for well-funded pension plans (the proposal does not define “well-funded”). The indexing freeze is expected to apply only to flat-rate premiums.

The proposal would also impose $18 billion in new premiums on multiemployer pension plans over 10 years, up from $16 billion in last year’s budget proposal. The new premiums would include a variable-rate premium for multiemployer plans (with a per-participant cap) and an exit premium (10 times the cap) for employers that withdraw from a multiemployer plan. The proposal would also authorize the PBGC to provide limited waivers from variable-rate premiums for multiemployer plans that have been terminated or are in critical funded status. The new premiums are projected to keep the agency’s multiemployer program solvent for 20 years, compared with roughly six years under current projections.

Health care

  • ACA. Once again, the budget proposes to replace the ACA with legislation based on a proposal by Senators Lindsay Graham (R-S.C.), Bill Cassidy (R-La.) and other cosponsors. Among other changes, the Graham-Cassidy proposal would convert ACA funding into state block grants. The budget proposes a minimum required premium contribution from participants who use premium tax credits and a shorter grace period for paying premiums for coverage purchased on the ACA exchanges. It also requests an appropriation to pay cost-sharing reductions for some plans purchased on the ACA exchanges.
  • HSAs. The proposal would allow participants covered under a health plan with an actuarial value of up to 70% to contribute to HSAs. In addition, those covered by individual and small group plans that meet the ACA out-of-pocket requirements could contribute to HSAs. Those enrolled in direct primary care arrangements could pay the fees from their HSAs.
  • Other health care. To reduce health care costs and eliminate surprise medical billing, the proposal would try to make health billing more transparent. It also aims to reduce prescription drug costs by accelerating the development of generic alternatives and making other changes. The proposal requests more funding and personnel for the Department of Labor to investigate self-insured association health plans and multiple employer welfare arrangements that, in the agency’s view, show warning signs of possible underfunding, mismanagement or misconduct.
  • Medicare. Some of the proposed Medicare changes (generally carried over from last year’s budget submission) would have implications for employer-sponsored health plans. These proposals would:
    • Permit Medicare beneficiaries with high-deductible health plans (HDHPs) to contribute to HSAs and medical savings accounts (MSAs). Medicare MSA plan participants could contribute up to the annual HSA limit. They could also roll HSA funds to their MSA and roll funds from one MSA to another. Participants in employer-sponsored HDHPs could contribute to HSAs, but Medicare would not cover any of the deductible.
    • Establish an out-of-pocket limit for beneficiaries in the Medicare Part D catastrophic phase.1 Beneficiaries in the catastrophic phase now pay a small copayment or coinsurance for covered drugs but are not protected by an out-of-pocket cap.
    • Exclude manufacturer discounts from the calculation of beneficiary out-of-pocket costs in the Part D coverage gap. This would delay or in some cases prevent beneficiaries from reaching the catastrophic phase.

Paid family leave

The budget proposes to provide six weeks of paid family leave to new parents. Using the unemployment insurance program as a base, states would be required to design and administer paid leave programs.

Links to budget documents

Budget documents are posted on the website of the Office of Management and Budget.

Additional information on the budget provisions are available from the Department of Labor “Budget in Brief” and the Department of Health and Human Services “Budget in Brief.”


  1. Under Medicare Part D, once participants’ out-of-pocket costs reach $5,100 in 2019, they are out of the coverage gap. At that point, participants receive “catastrophic coverage,” ensuring that they pay only a small coinsurance amount or copayment for covered drugs for the rest of the year.
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