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Legislative Outlook for 2015
Drew Crouch, JD, LLM and Nancy Vary, JD Knowledge Resource Center January 29, 2015
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Agenda
I. Introduction of our speakers
II. Overview of the year ahead
• Health plans and the Affordable Care Act
• Employment and Labor
• Tax Reform
• Retirement Plans
III. Comments on retirement policy by
Preston Rutledge
IV. Q&A
January 29, 2015 Proprietary 3
Speakers
January 29, 2015 Proprietary 4
Tami Simon, JD
Managing Director
Knowledge Resource Center and Career Practice
Drew Crouch, JD, LLM
Director of Government Affairs
Knowledge Resource Center
Nancy Vary, JD
Director, Labor and Employment
Knowledge Resource Center
Preston Rutledge, JD, LLM
Tax and Benefits Counsel
Senate Finance Committee
Overview of the Year Ahead for Health Plans and the Affordable Care Act, Employment and Labor, Tax Reform, and Retirement Plans
The Year Ahead for Employer-Sponsored Health Plans and the ACA
• The Affordable Care Act will continue to dominate the Congressional
agenda
• Three types of legislation and a significant court case lie ahead
− Full ACA repeal attempts
− Technical modifications/targeted repeal
− Reconciliation
− King v. Burwell
January 29, 2015 Proprietary 6
Full ACA Repeal Attempts
• Full repeal of the ACA will pass the House
of Representatives
• Full repeal legislation is likely to be
filibustered in the Senate
• Even if the Senate could pass repeal
legislation, the president would veto
January 29, 2015 Proprietary 7
Technical Modifications/Targeted Repeal
• A number of technical modifications and targeted repeal attempts are
likely in 2015, such as:
− Changing the definition of full-time employee from 30 hours per week to 40
− And repeal of the follow provisions
• Individual mandate and employer shared responsibility requirement
• Insurance company risk stabilization programs, including the transitional
reinsurance fee
• PCORI fee
• Medical device excise tax
• Health insurance industry fee
• Chances for enactment as stand-alone bills are slim; chances improve
if included in must-pass legislation
January 29, 2015 Proprietary 8
Reconciliation
• Congress may attempt to repeal the
ACA through budget reconciliation
− Advantage of such legislation is no
filibustering in the Senate
− Disadvantage is that full repeal is not
possible
• Measure is likely to be vetoed, but it will
be noteworthy because:
− Could provide a guide to the Republican
replacement plan for the ACA
− Would likely be the basis for ACA repeal
if a Republican wins the White House in
2016
January 29, 2015 Proprietary 9
King Decision
The Supreme Court is likely to issue a
decision in King v. Burwell in June
• Case challenges the availability of tax
credits for the purchase of health
coverage in the 34 federal marketplace
states
• A decision disallowing the credits
would likely disrupt the individual
markets in those states
• Congress and the White House would
probably try to reach a legislative
solution – although if a solution is not
reached by the end of 2015, the
decision and its consequences would
probably become part of the 2016
presidential election
January 29, 2015 Proprietary 10
Labor and Employment Issues Before Congress in 2015
• Expect more agency oversight
− DOL
− Wage & Hour Division (WHD)
− NLRB
− EEOC
− OFCCP
• Increased scrutiny and pushback against regulatory initiatives and Executive Orders
− Overtime regulations
− FMLA regulations
− Federal contractors
• Minimum wage increase (EO 13658)
• Fair Pay and Safe Workplaces (EO 13673)
• Non-retaliation for disclosing compensation
• Paid sick leave
− Immigration
January 29, 2015 Proprietary 11
Labor and Employment Issues Before Congress in 2015 (cont.)
• Much of the activity in 2015 will be at the committee level
− Education and the Workforce Committee in the House of Representatives –
Chairman John Kline (R-MN)
− Senate Health, Education, Labor & Pensions Committee – Chairman Lamar
Alexander (R-TN)
• Several key labor and employment issues are likely to attract
Congressional attention
− EEOC litigation practices
− Pregnancy discrimination/accommodation requirements
− NLRB governance and the rules that apply to representation elections
− FLSA/wage & hour concerns
− Employment-based immigration
− Medical marijuana
January 29, 2015 Proprietary 12
EEOC Guidance and Enforcement
• EEOC overreach is likely to be the subject of Congressional activity in
the year ahead
− Increasing transparency on the cases brought by EEOC
− Requiring the agency to engage in good faith conciliation efforts before filing
suit
− Requiring commission level approval of suits involving multiple plaintiffs or
allegations of systemic discrimination
− Providing a safe harbor for the use of criminal background checks by
employers
• EEOC is expected to focus much of its energy on wellness plans and
the ADA
• Stand-alone bills on these issues are not likely to be enacted; however,
inclusion of some measures in must-pass legislation – such as
appropriations riders – might result in enactment
January 29, 2015 Proprietary 13
NLRB issues likely to be front and center
• Labor issues that are likely to be the subject of Congressional activity in the year ahead
− Reversing (or defunding) expedited election rules
− Reforming the NLRA’s representation election procedures – such as requiring secret
balloting and new elections if a bargaining unit’s composition significantly changes
− Limiting splintered bargaining units
− Hiring strike replacements
− Requiring employees to join union as a condition of employment
− Arbitration and class action waivers
− Expanded definitions of employer and employee
• Joint employer standard including franchises
• Unionization of student-athletes
− Employer email systems
− Social media and concerted activity
− Composition of the NLRB
• Stand-alone bills on these issues are not likely to be enacted; however, inclusion in must-
pass legislation – such as appropriations riders – might result in enactment
January 29, 2015 Proprietary 14
FLSA Issues to Watch
Several key wage & hour matters are
likely to be of interest to Congress in
the year ahead
• Increased enforcement activity by the
DOL’s Wage and Hour Division
• WHD fissured industry initiative
• Revised overtime rules
• Compensatory time off in lieu of
overtime pay for private-sector
employees
• Pay gaps and wage transparency
• Minimum wage
January 29, 2015 Proprietary 15
Prospects for Tax Reform in 2015
Tax reform is unlikely to pass the finish
line this year
• Both sides are looking for common ground
for a policy victory
• Neither, however, is likely to agree to the
other’s general goals for tax reform
• Tax reform is still important to watch:
legislation is iterative; and individual
provisions that raise money may be
recycled for other legislation
January 29, 2015 Proprietary 16
The Need for Revenue in Tax Reform
Even revenue neutral tax reform
will require raising revenue to pay
for rate reductions and other
reforms, for example:
• Repeal of the AMT for individuals
costs $1.4 trillion
• Moving to a three tier rate
structure with a top rate of 35%
costs $544 billion
January 29, 2015 Proprietary 17
Employee Benefits in Tax Reform
Favorable tax rules for employee benefits are likely to be viewed as a
source for revenue
• The tax exclusions for employer provided retirement and health coverage are
among the largest tax expenditures according to CBO and JCT
• Retired Chairman Dave Camp (R-MI) released a tax reform plan in 2014 that
gives an example of the types of changes for employee benefits
− Roth treatment of 401k contributions in excess of half of the contribution limit - $144
billion
− Freezing retirement plan contribution and benefit limit COLAs for ten years - $63
billion
− Stricter rules on when nonqualified deferred compensation is recognized as income
and restrictions on deductions for top executive pay - $25 billion
January 29, 2015 Proprietary 18
Process for Tax Reform
Much of the activity in 2015 will be at the
committee level
• Committee on Ways and Means in the
House of Representatives – Chairman Paul
Ryan (R-WI)
• Senate Finance Committee – Chairman
Orrin Hatch (R-UT)
January 29, 2015 Proprietary 19
The Year Ahead for Retirement Plans
Four key areas to watch in Congress
in 2015 for retirement plans
1. Multiemployer pension plan legislation
2. PBGC premium hikes
3. Revenue needs
4. Senator Orrin Hatch’s reform proposal
January 29, 2015 Proprietary 20
Multiemployer Pension Plan Legislation
Congress enacted the Multiemployer Pension Reform Act of 2014 in
December
• Among the changes made by the Act are rules permitting certain critical status
plans to suspend benefits
• Less than a week elapsed between the unveiling of the legislation and its
passage by Congress
• Technical modifications to the Act are possible in the year ahead to ensure that
the rules work as intended
January 29, 2015 Proprietary 21
PBGC Premium Hikes
2015 may provide a respite from PBGC
premium hikes
• In its 2014 Annual Report, the PBGC
recorded a historic deficit—due to a
significant decline in its insurance program
for multiemployer plans
• Premiums for multiemployer plans were hiked
as part of the Multiemployer Pension Reform
Act of 2014
• PBGC is required to provide a report to
Congress by June 1, 2016 on whether
current premium levels are sufficient to avoid
insolvency in the multiemployer insurance
program
January 29, 2015 Proprietary 22
Revenue Needs and Retirement Plan Legislation
• Congress has repeatedly turned to pensions in the last several years to
pay for additional government spending or to reduce federal deficits
− July 2012 – MAP-21 – PBGC premium hikes for single and multiemployer plans;
interest rate smoothing – paid for transportation and education spending
− January 2013 – American Taxpayer Relief Act of 2012 – in service Roth
conversions – paid for several month delay of federal budget sequestration for
FY 2013
− December 2013 – Bipartisan Budget Act of 2013 - PBGC premium hike for
single plans – replaced federal budget sequestration savings for FY 2014 and
FY 2015
− August 2014 – Highway and Transportation Funding Act of 2014 - extension of
pension interest rate smoothing – paid for transportation spending
• Spending needs in 2015
− Highway trust fund will be nearing depletion by May or June
− Sequestration cuts for FY 2016
January 29, 2015 Proprietary 23
Senator Orrin Hatch’s Retirement Plan Reform Proposal
• Senator Hatch introduced S. 1270 – the
SAFE Retirement Act – in the last
Congress
• The bill makes reforms in five areas
1. Creation of a new type of pension plan for
governmental employers
2. Reforms intended to expand private sector
retirement plan coverage
3. Simplification of existing rules for retirement
plans
4. Reforms to enhance longevity protections
5. Modifications to ERISA’s disclosure rules
• Chairman Hatch plans to introduce the
legislation again in 2015
January 29, 2015 Proprietary 24
Retirement Policy
Preston Rutledge, JD, LLM
Tax and Benefits Counsel (Majority Tax Staff)
Finance Committee, U.S. Senate
Mr. Rutledge’s statements and opinions are
his own and are not to be attributed to any
member of Congress
January 29, 2015 Proprietary 26
Contact Information
January 29, 2015 Proprietary 28
The information contained in this presentation and any accompanying documents does not constitute legal advice; consult with your legal
and tax advisors before applying this information to your specific situation.
Tami Simon, JD
Managing Director, Career Practice &
Knowledge Resource Center
Buck Consultants, a Xerox Company
1800 M Street NW, Suite 700 North
Washington, DC 20036
202.776.1004
Drew Crouch, JD, LLM
Director, Government Affairs
Knowledge Resource Center
Buck Consultants, a Xerox Company
1800 M Street NW, Suite 700 North
Washington, DC 20036
202.776.1039
Nancy Vary, JD
Director, Labor and Employment
Knowledge Resource Center
Buck Consultants, a Xerox Company
485 Lexington Avenue, 10th Floor
New York, NY 10017
212.330.1317
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