Possible Outcomes of the Rocky Legislative Session

ERISA attorneys and practice leaders give their take on the intense political grappling that has become the norm in Washington under a Republican majority.

By John Manganaro | October 06, 2017
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One phrase that comes up time and again during conversations with plan sponsors, advisers and providers is “lasting regulatory and legislative uncertainty,” and there seems to be little sense that the theme will soon recede.

On a recent webcast hosted by Mercer, four of the firm’s on-staff attorneys outlined the huge amount of uncertainty facing sponsors and advisers. They cited diverse sources such as the Department of Labor (DOL)’s pending fiduciary rule reforms, the ongoing discussion about repealing and replacing the Patient Protection and Affordable Care Act (ACA), the potential for wholesale tax reform and the reversal of overtime compensation rules—to name just a few of the intersecting forces shaping the conversation in Washington.  

The list of regulatory and legislative challenges affecting employers and their retirement plan consultants can seem endless, and when linked to the increasingly active Employee Retirement Income Security Act (ERISA) plaintiffs’ bar, the Mercer attorneys agreed, it can seem impossible to reach “a point of comfortability.” One simply has to consider the “repeal and replace” effort that has played out regarding the ACA. Republicans, in the majority on Capitol Hill, have attempted twice now to quickly push through unilateral approaches to health care reform, and while both efforts failed outright, the Mercer attorneys anticipate that the “repeal and replace issue will continue to simmer on the back burner and could boil over again at any time.”

Whatever happens on health care—even if nothing at all—the Mercer attorneys felt comfortable wagering that the future for health savings accounts (HSAs) “is already bright and getting brighter.” There is a recognition that these accounts can help change the health care system to be more cost efficient and more consumer-directed, they argued.

The Mercer attorneys went on to observe that another complicating factor here is that some federal courts have recently ruled that federal agencies are providing too little reasoning and justification for their promulgation of new rules and regulations. Perhaps most notably, the U.S. District Court for the District of Columbia recently ruled in favor of the AARP’s challenge to two regulations promulgated by the U.S. Equal Employment Opportunity Commission (EEOC) related to incentives and employer-sponsored wellness programs.

Crucially, the court determined that: “It is far from clear that it would be possible to restore the status quo ante if the rules were vacated; rather, it may well end up punishing those firms—and employees—who acted in reliance on the rules.” In doing so, the court has not vacated the rules but instead “remanded” them to the EEOC for reform and/or elucidation. It is hard to predict what will happen here, the attorneys agreed, or with any of the other issues mentioned.

NEXT: Confluence of challenges