The Congressional year-end funding package includes a few must-haves for the insurance industry as well as a few choice items.
1. Leaders of both the House and the Senate have included the retirement security proposals of the SECURE Act in the legislation that funds the federal government.
The ‘Setting Every Community Up for Retirement Enhancement (SECURE) Act’ will affect millions of workers in the U.S. by opening up retirement savings plans for small businesses and part-time workers, according to its crafters.
The SECURE Act is also designed to bring more insurance products with guaranteed lifetime income into retirement accounts, repeal the age limit for IRA contributions and increase the age for minimum distributions. Under the legislative proposal, plan participants get an illustration that shows them the amount of their monthly income under the retirement savings plan, possibly inspiring them to invest more funds in their accounts.The bill has been pending for awhile, now; it passed the House back in May with overwhelming bipartisan support in a 417-3 vote.
By Tuesday, insurers were expressing optimism the legislation would be on the president’s desk by Friday, Dec. 20. The measure passed in the House spending bill 290-127 on Dec. 17 and is expected to get voted up in the Senate Thursday, Dec. 19.
2. Congress’s package reauthorizes the Terrorism Risk Insurance Act for seven more years starting Jan. 1, 2020. Terrorism Risk Insurance Act (TRIA) debuted in 2002 in response to the Sept. 11 attacks the prior year. It has been adapted and extended in subsequent years and now includes domestic terrorism acts. The last extension was in 2015.
3. The National Flood Insurance Program is also reauthorized although not yet reformed, a top goal of property casualty insurers, some key legislators and federal disaster officials professionals.
4. The package repeals the 40% excise Cadillac Tax in the Affordable Care Act for employer-sponsored healthcare plans above a certain monetary threshold. These are also known as “high cost” health plans and the planned tax served to rein in healthcare spending costs. However industry and others argued that the tax would have affected a large majority of employer plans as the set thresholds are not so much high as they are standard now —the costs did not factor in the rise in medical care. The Cadillac tax was never implemented as Congress has pushed it off twice, most recently until 2022. The legislation also repeals the medical device tax.
The Insured Retirement Institute, one of the groups championing the SECURE Act, has called it the most comprehensive retirement legislation in a decade. “We have a first down and goal on the 1-yard line,” said Wayne Chopus, IRI president and CEO, in a press release Dec. 16. “Congress and the President are about to deliver a meaningful, positive benefit to millions of American workers by expanding opportunities to save for and achieve a dignified retirement.”
“The SECURE Act is the most significant legislation aimed at bolstering America’s retirement system in more than a decade. It provides for much needed access to workplace retirement plans, improved retirement savings, and guaranteed retirement income that cannot be outlived,” tweeted Phil Waldeck, CEO of the Workplace Solutions Group, at Prudential Financial on Dec. 17.