Compliance February 12, 2025

ERISA Industry Committee Outlines Latest Employer Priorities

In its letter to Congress, ERIC urged lawmakers to ‘preserve and protect’ ERISA, maintain tax incentives in health and retirement plans, and impost health care cost transparency.

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The ERISA Industry Committee sent a letter on Tuesday to members of Congress stating its positions on several policy issues that affect large employer member companies that provide health, retirement and other benefits to workers across the country.

The public letter was released on the heels of the American Benefits Council’s release of its public policy strategic plan for employer-sponsored retirement and health plans for the next five years.

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ERIC’s letter touches on maintaining the current tax incentives in employer-sponsored health and retirement plans but mainly focuses on health care-related issues, such as enhancing high-deductible health plans and health savings accounts and creating more transparency about the cost of health care and prescription drugs.

The letter was specifically addressed to Senate Majority Leader John Thune, R-South Dakota, and Speaker of the House of Representatives Mike Johnson, R-Louisiana. According to ERIC, its letter is timely, as Congress considers instructions to individual committees as part of the budget reconciliation process.

ERIC’s letter stated that it is concerned by proposals to cap the federal income tax exclusion for employer-sponsored health coverage in the hopes of paying for the extension of the 2017 Tax Cuts and Jobs Act, a priority for President Donald Trump.

“Doing so would be a direct tax increase on working families, and would be detrimental to employment-based coverage–the single largest source of coverage for millions of workers and their families,” the letter stated. “ERIC strongly opposes any changes to this tax exclusion.”

ERIC also expressed its opposition to any proposal that would weaken incentives on which workers rely to save for retirement.

“Middle class workers rely on tax incentives, longstanding in the tax code, that promote responsible savings and drive investment,” the letter stated. “Reducing the amount Americans can save in tax-preferred vehicles or changing when savings [are] taxed are counterproductive, short-sighted policies that would only undermine the success of the retirement system.”

The comment appeared intended to discourage requiring more retirement-plan contributions to made on an after-tax, or Roth, basis.

In addition, ERIC asked the House Committee on Ways and Means to consider several recommendations to improve “health care affordability and competition.” ERIC highlighted specific health savings account-related bills that the group supports, such as the Telehealth Expansion Act to provide telehealth coverage for HSA beneficiaries and the Health Savings for Seniors Act to permit Medicare beneficiaries to participate in and contribute to HSAs.

Addressing the House Committee on Education and the Workforce, ERIC urged lawmakers to “protect and strengthen” the Employee Retirement Income Security Act of 1974. The organization also stated it opposes any attempt to mandate state reporting or other administrative obligations on companies that offer ERISA-regulated plans.

“Further erosion of ERISA preemption will adversely impact labor markets, disadvantage employees based on where they live or work, cause employers to cut back on benefit coverage, and raise the cost of health benefits—ultimately pricing some employees and their families out of coverage and undermining financial health and well-being,” the letter stated.

ERIC argued that one key way to strengthen ERISA would be to clarify that third parties performing services on behalf of plan sponsors for health benefit plans are subject to the same fiduciary duty to the plan as plan sponsors. ERIC released an issue brief in September 2024 urging Congress to deem pharmacy benefit managers as fiduciaries under ERISA, as PBMs increasingly have come under scrutiny for having “opaque business practices,” among other issues.

Another of ERIC’s requests to the Committee on Education and the Workforce was to “address out of control, unjustified premiums assessed to defined benefit pension plan sponsors to pay for the Pension Benefit Guaranty Corporation’s single-employer insurance program.”

ERIC wrote that PBGC premiums are set by Congress and that it has increased premiums several times in the last 12 years. ERIC urged the Committee on Education and the Workforce to take this opportunity to reduce further premium assessments to the “maximum extent possible.”

Compliance February 12, 2025

DOL Seeks Pause of Fiduciary Rule Stay Appeal

Department of Labor had filed notices of appeal in September 2024 regarding two federal court rulings that had stayed implementation of the expanded fiduciary rule. 

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The Department of Labor Tuesday filed a motion in the U.S. 5th Circuit Court of Appeals to delay its appeals in two court cases about the department’s 2024 Retirement Security Rule fiduciary rule, saying the new administration and agency officials need time to onboard and familiarize themselves with the cases.

In the Unopposed Motion to Hold Consolidated Appeals in Abeyance, the government noted that the parties opposing the rule, often called the fiduciary rule, led by the American Council of Life Insurers and the Federation of Americans for Consumer Choice, do not oppose the motion.

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Notices of appeal had been filed by the DOL in September 2024 in U.S. District Court for the Northern District of Texas and U.S. District Court for the Eastern District of Texas, Tyler Division, with a full appeal to the U.S. 5th Circuit Court of Appeals pending after two district court rulings stayed the effective date of the fiduciary rule regulation. 

“To allow new DOL officials sufficient time to become familiar with the issues in these cases and determine how they wish to proceed, the government respectfully moves to place these consolidated appeals in abeyance, with status reports due at 60-day intervals,” the agency said.

“In the event this Court denies the motion for an abeyance, all parties jointly request a one-week extension, to and including February 21, 2025, for appellees to file their response briefs,” the filing continued.

History of the Fiduciary Rule Battle

The 2024 fiduciary rule was the DOL’s second attempt in the past decade to bring retirement investment advice, including individual retirement account rollovers and small employer-plan advisement, under fiduciary obligation. The rule had been finalized with a September 23, 2024, start date but hit legal roadblocks from complaints filed by industry firms and member organizations. 

The Northern District of Texas put a national stay on the rule in a July 26, 2024, opinion in American Council of Life Insurers v. DOL. One day prior to that ruling, the Eastern District of Texas had also granted a stay for the plaintiffs in a separate case, Federation of Americans for Consumer Choice Inc. et al. v. DOL et al. 

In 2018, the 5th Circuit, which hears appeals from federal courts in Louisiana, Mississippi and Texas, invalidated a DOL fiduciary rule in Chamber of Commerce v. U.S. Department of Labor. The DOL argued that the rule currently being challenged is different, in part because it more clearly addresses when retirement plan rollover advice and annuity sales fall under fiduciary guidance. 

U.S. District Judge Reed C. O’Connor, however, presiding in the Northern District of Texas, wrote in granting the stay that Chamber played a role in his decision. 

“As a whole, Defendants’ arguments [against the lawsuit] are nothing more than an attempt to relitigate  the Chamber decision,” O’Connor wrote. “Because the Fifth Circuit’s Chamber decision unambiguously forecloses all of Defendant’s arguments, the Court need not repeat why those arguments fail here.”

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