Data & Research February 13, 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.

Reported by

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.

Want the latest retirement plan adviser news and insights? Sign up for PLANADVISER newsletters.

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.”

Data & Research February 13, 2025

American Benefits Council Advocates for Tax Preferences for Next 5 Years

In its policy guide, the national trade association emphasized the importance of protecting retirement and health plans under ERISA and maintaining the current tax incentives associated with these plans.

Reported by

Wednesday, the American Benefits Council released its public policy strategic plan for employer-sponsored retirement and health plans for the next five years—with an emphasis on the next several months, as lawmakers debate tax and economic policy.

“DESTINATION 2030: A Roadmap for the Future of Employee Benefits” is a more-than-150-page guide that enumerated 79 specific policy recommendations to support employer-sponsored plans and the “millions of American families who rely on them,” according to the American Benefits Council—a national trade association based in Washington, D.C., that advocates for employer-sponsored benefit plans.

For more stories like this, sign up for the PLANADVISERdash daily newsletter.

The 2030 strategic plan identified the five most pressing challenges facing plan sponsors today, four goals to address each challenge and policy recommendations for meeting these goals. The main challenges it identified were: improving holistic well-being; legal and regulatory uncertainty; demand for personalized and individualized benefits; increased individual responsibility; and aligning health care cost and quality.

The American Benefits Council also identified core issues impacting the Employment Retirement Income Security Act of 1974 and tax policy—one of them being to “preserve, protect, defend and enhance the current tax incentives supporting participation in employer-provided retirement plans—both the full federal tax deferral for participating employees and the tax deduction for plan sponsors.”

The concern comes as Congress is in discussions to extend the 2017 Tax Cuts and Jobs Act, a major priority for President Donald Trump.

According to the council, tax incentives for employer-provided health and retirement plans are regularly scored as “the two largest income tax ‘expenditures’ in the federal budget. Together, the exclusion from individuals’ income tax of contributions to employer-sponsored health and retirement plans represents a theoretical cost to the federal government of $6.1 trillion over the next 10 years.”

The “forgone revenue” attributable to the tax incentives for retirement plans (setting aside the future taxes collected at distribution) equaled $204 billion in 2023, according to the report. The Bureau of Economic Analysis reported that employer plans paid out $1.9 trillion in benefits in that same year. Dividing $1.9 trillion by $204 billion reveals $9.31 in benefits provided for every tax dollar spent.

“Policymakers who advocate scrapping employer-sponsored benefits—or the tax incentives making these benefits possible—should be aware of this compelling return on investment and understand it would cost far more to provide the same level of health and financial security outside of the employer-sponsored system,” the council wrote in its report.

As Congress pursues comprehensive tax reform or smaller tax measures, the council urged lawmakers to do no harm to the tax structure of employer plans, treat tax incentives for employer plans as “prudent investments” and pursue opportunities to expand the employer-sponsored system.

The council argued in the report that pre-tax retirement savings is a powerful motivator for individuals, and it encourages employers to sponsor plans that deliver “meaningful benefits” to Americans along the income scale. As opposed to after-tax or Roth retirement vehicles, the pre-tax structure allows employees to save more on a paycheck-by-paycheck basis than would be the case with after-tax contributions. This benefit is particularly important for low- and middle-income families who are very dependent on their monthly income, the council stated in the report.

“This is not money that’s lost to the government,” says Lynn Dudley, the council’s senior vice president of global retirement and compensation policy. “It’s money that’s delayed to the government, and that actually has a value to the government too. … You want some people to do Roth, and some people not. And I tend to think the proposals that you will see on the table will preserve [both pre-tax and after-tax] options.”

Beyond tax policy, the report addressed issues related to safe harbors and compliance, implementation of the SECURE 2.0 Act of 2022, retirement plan investments, defined benefit plans, small employer plans and more.

«