As part of an article I recently wrote for Benefit Selling regarding trends to expect in 2016, I solicited help from a handful of friends I consider among the smartest professionals in the industry. As expected, I received great insights, advice and warnings to pass along. Due to article length constraints, I wasn’t able to share everything that was shared with me. However, each has graciously agreed to share their ideas with you here on our blog.
Leading off this series of guest blogs for us is Janet Trautwein, CEO of the National Association of Health Underwriters. Under Janet’s leadership, NAHU has risen to political prominence and is the go-to source for many in DC when it comes to health insurance related issues.
In Janet’s own words
Keeping in mind that 2016 is a presidential election year, when it comes to any big legislative or regulatory achievements, the rule of thumb would normally be to not expect much. However, several factors exist currently that might signal some opportunity for change.
Health insurance benefits and taxes
First, we have a new speaker of the House, Paul Ryan. He is very interested in overall reform of our tax system and this is likely to mean a very serious look at the tax exclusion on employer paid benefits. This is not the deduction employers have for the benefits they provide, but rather it is the fact that the amount an employer pays is not considered taxable income to the employee. Given the cost of health coverage in today’s world, this could be a significant new tax liability for many people.
Ryan would like to use savings to provide some form of uniform tax credit or other tax benefit that would apply regardless of the place of purchase. For people who don’t normally owe income taxes, this is not a big deal, but for those who do pay income taxes and who have employer paid health insurance benefits, this is a potentially significant new tax liability since a credit would likely not be as big of a tax break for most people as the current exclusion.
Health care reform revisions
In the same vein, brokers should take a good look at the health reform proposals of all of the candidates in detail, and not assume that either party’s proposal is better or worse for them. Republican candidates are likely to offer some version of removal of the tax exclusion or capping it, as we’ve already seen in Jeb Bush’s proposal.
New regulatory items
We are likely to see some safe harbors created relative to the Cadillac tax and at some point this year, we will have regulations relative to the non-discrimination rules for fully insured plans. We are hopeful that the non-discrimination rules will be a “lite” version of the rules that apply to self-funded plans, and we think this is a likely outcome.
Relative to the Cadillac tax, the safe harbors will provide some relief, but the only real solution is either repeal or significant modification of this provision of the ACA via legislative action. It’s an item that may be possible this year in spite of it being an election year due to the tremendous public outcry on both sides of the aisle.
The main message for brokers: This is the year to really pay attention to the details - there are significant compliance responsibilities but also some opportunities for fine-tuning that will make a big difference for you and your clients.