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February 2021 Issue:

117th Congress, Biden Administration Off to Somewhat Chaotic Start

On January 6, there was a riot inside the U.S. Capitol that left five dead just three days after the 117th Congress convened. On January 13, the House of Representatives impeached former President Trump on a single charge of incitement to riot. The Senate trial is now underway, with conviction unlikely. COVID-19 continues its rampage across the country, and a coronavirus aid bill is President Biden’s first priority. In short, it’s been something of a chaotic start to the new government.

Nevertheless, the new government is up and operating. Congress has agreed to a “shell” budget resolution that authorizes a reconciliation bill (more on what that means is in the story below) for enacting a new $1.9 trillion coronavirus relief measure. Relevant House committees are working on the various elements of the package with an eye to completing House approval of the behemoth bill by the end of February. The Senate plans to take up and finish work on the package—after completing the impeachment trial—prior to the March 14 expiration of many of the coronavirus aid relief provisions enacted into law late last year.

The new coronavirus aid legislation (details in story below) is patterned on President Biden’s “American Rescue Plan.” It is currently undergoing committee mark-ups (finalization of the package that will go to the House floor for a vote). It will provide federal money for COVID-19 vaccination distribution, some more aid for businesses hard-hit by the pandemic, extension of unemployment assistance, direct stimulus payments to eligible individuals, aid to state and local governments to fight the pandemic, reinstatement and expansion of the now-expired CARES Act coronavirus-related paid sick and family leave program, and an increase in the federal minimum wage.

President Biden has called for bipartisan work on his priority coronavirus aid bill (and indeed on all legislation), and there are in fact bipartisan negotiations underway. Ten GOP Senators offered a $600 billion counter-proposal on January 31. That proposal matches the Biden proposal’s funding for vaccination distribution but cuts down on money for states and local governments, direct stimulus payments to individuals, aid to schools, and federal supplemental unemployment benefits. It is, at this point, clear that this offer is far too small to be acceptable to the Administration and Congressional Democrats.

The Senate GOP proposal might have been a starting point for real bipartisan negotiations. However, given that it is less than a third of the size of the package that the Democrats want, it did not trigger serious back-and-forth negotiations. Plus, President Biden, supported by Congressional Democrats, also wants the coronavirus aid bill enacted quickly. And House and Senate Democrats are working to move the Biden proposal (likely as modified) via the budget law’s reconciliation process. That process has procedural protections built in that would prevent the bill from being filibustered in the Senate. That means Democrats are negotiating among themselves to enact a bill that may (some say likely) will not win any GOP support.

Prospects: Republicans and Democrats alike agree that it would be best to enact legislation on a bipartisan basis. However, on top of substantial policy disagreements there remains a deep reservoir of mistrust between the two parties. It is possible, especially with leadership from the Biden Administration that is committed to bipartisanship whenever possible, that this chasm built from disagreement and mistrust can and will be bridged, at least on some issues. But as of right now, it appears that coronavirus aid enacted by mid-March (the target) will move via the partisan reconciliation process.

NAIFA Staff Contacts: Diane Boyle – Senior Vice President – Government Relations, at DBoyle@naifa.org; Judi Carsrud – Assistant Vice President – Government Relations, at jcarsrud@naifa.org, or Michael Hedge – Director – Government Relations, at mhedge@naifa.org

President Biden Offers COVID-19 Aid “American Rescue Plan”

Newly-inaugurated President Joe Biden has offered a $1.9 trillion coronavirus aid package that he is encouraging Congress to enact into law quickly—by mid-March at the latest. Dubbed the “American Rescue Plan,” the proposal is President Biden’s first legislative priority this year. House Congressional committees have begun drafting the plan, with modifications.

The plan focuses on providing the resources needed to distribute COVID-19 vaccines and set up programs to inoculate as many Americans as possible as quickly as possible. It also includes a range of economic aid measures, including:

  • $15 billion in grants to businesses, with a focus on those hit hardest by the pandemic (restaurants, travel, entertainment, especially), along with an additional $35 billion in government funding to leverage into $175 billion in additional small business lending and investment
  • An extension of federal unemployment benefits through September 30, 2021 (including a federal supplemental unemployment benefit of $400/week)
  • Subsidies for COBRA health insurance coverage, through September 30, 2021, and an increase in the subsidies for health insurance purchased through Affordable Care Act (ACA) health insurance exchanges
  • An increase in the federal minimum wage to $15/hour—phased in over five years
  • A $1,400 payment to eligible individuals–eligibility rules are the subject of considerable ongoing negotiation, but currently appear to be set such that individuals earning $75,000/year or less would get the full $1,400 (double that for married couples), with a phase-out set so that those earning less than $100,000/ $200,000 would not qualify for any direct payment. This provision also includes direct payments equal to $1,400 per dependent child for those who qualify for the payments.
  • Extension and expansion of coronavirus-related paid sick and family leave rules through September 30, 2021 — the proposal would impose the paid leave obligation for up to 14 weeks of paid leave for coronavirus-related reasons on all employers, not just those with 500 or fewer employees as was the case in the now-expired 2020 Families First Coronavirus Response Act (FFCRA) program.
  • Extension of the refundable payroll tax credit that reimburses employers with 500 or fewer employees for the cost of up to $1,400/week of paid sick and family leave for coronavirus-related reasons. Even though the FFCRA mandate on employers with 500 or fewer employers providing coronavirus-related paid sick and family leave expired, the refundable payroll tax credit to subsidize those payments was extended in the law enacted last December.

Also included in the Biden proposal is a call to employers to provide hazard pay to front line workers, including back hazard pay. However, the plan does not propose a mandate or federal funding for this hazard pay. The American Rescue Plan also includes provisions to expand financial support for childcare through tax credits and childcare provider funding, an extension of the moratorium on evictions, rental/utilities assistance, housing assistance, and increased funding for nutrition and food assistance programs.

The American Rescue Plan also proposes almost half a trillion dollars to fight COVID-19, including money for the Disaster Relief Fund from which funding for supplies and protective gear is provided. Also proposed is funding for a national vaccine distribution program, diagnostic testing, aid to schools so that they can reopen by spring, salaries for public health workers for contact tracing and vaccine outreach, state and local governments, and OSHA (Occupational Safety and Health Administration) to develop worker protection standards.

Congressional Modifications: Both the House and the Senate appear likely to approve modifications to the American Rescue Plan. The modifications appear likely to expand the Biden proposal. Up first is the House Ways & Means and Education and Labor Committees’ mark-ups, scheduled for February 9 (Education & Labor) and February 10-12 (Ways & Means). Likely changes include:

  • Addition of a multiemployer (union) pension rescue plan to protect workers facing severe retirement benefit cuts to their bankrupt or near-bankrupt union pension plans
  • A two-year (2021 and 2022) increase in the Affordable Care Act (ACA) premium tax credits—the subsidies would, for two years, fully cover ACA coverage for those earning up to 150 percent of the federal poverty level and for those on unemployment
  • Subsidies for COBRA continuation health insurance coverage—the subsidies would cover 85 percent of the cost of private health insurance for those laid off during the pandemic, until September 21, 2021
  • Health care subsidies for unemployed workers who are not eligible for COBRA coverage
  • An extension through the end of 2021 of the Employee Retention Tax Credit (ERTC) Expansion of the child tax credit to include a one-year benefit that would provide $3,000 per child ($3,600 for children under the age of 6), payable monthly over three years, to parents with incomes at or below qualifying levels
  • Reduction in the phase-out formula for the $1400 direct payments to individuals so that people earning more than $100,000 ($200,000/married) would not qualify for the payments
  • Shortening the extension of unemployment benefits to through August 29, 2021 rather than the Biden proposal’s September 30, 2021 expiration date
  • Expansion of the earned income tax credit (EITC)
  • Expansion of the child and dependent care tax credit to allow families to claim a tax credit for up to half of their child/dependent care expenses

Prospects: There is considerable Democratic support for the full $1.9 trillion plan—with some Democrats calling for even more. But there are also some Democrats and most Republicans who want the package to be more tailored (and thus less expensive). Negotiations are ongoing. Currently, it looks likely that the individual payments will be more tailored to avoid this benefit going to higher-income individuals and families. It also looks likely that Congressional Democrats will substantially increase the child tax credit program.

NAIFA Staff Contacts: Diane Boyle – Senior Vice President – Government Relations, at DBoyle@naifa.org; Judi Carsrud – Assistant Vice President – Government Relations, at jcarsrud@naifa.org, or Michael Hedge – Director – Government Relations, at mhedge@naifa.org  

Partisan Reconciliation Process in Play— What That Means

What exactly does it mean when Washington insiders and reporters talk about moving legislation via reconciliation? Generally, and subject to an array of complex and limiting rules, it means such legislation cannot be filibustered, and so could pass the Senate with only a simple majority (usually, 51 votes).

Under usual rules in place in the Senate, debate on any bill continues until the Senate approves a motion to cut off debate—and a motion to cut off debate requires 60 votes to succeed. That is the “legislative filibuster” so often discussed in the press. There are exceptions to this usual rule, including the budget law’s reconciliation legislation.

A reconciliation bill—which must be authorized in a budget resolution approved by both the House and Senate—has an automatic cut-off of debate after 20 hours. Thus, there is no opportunity for unlimited debate which is what kills so many pieces of legislation that do not have 60 votes in support.

There are dozens of specific rules that limit what a reconciliation bill can contain. A reconciliation bill is a budget bill, and the limiting rules are designed to discourage creation of new policy through the reconciliation process. Congress can and does get around this “no change in policy” ground rule, but to do so lawmakers must “craft with care” to avoid violating the reconciliation rules.

 Among the most limiting of reconciliation rules are:

  • Every provision in a reconciliation bill must have more than an incidental impact on federal outlays—this is designed to make reconciliation provisions more budget focused and less of a mechanism to change or implement new policy
  • A reconciliation bill provision cannot add to the federal deficit in the out years (i.e., after the ten-year budget window)
  • Revenue impact must be calibrated year-by-year within the ten-year window
  • Nothing impacting Social Security can be included in a reconciliation bill

Any provision in a reconciliation bill that violates one or more of these “Byrd Rules” (named after their author, then-Senator Robert Byrd (D-WV)) is subject to a point of order which takes 60 votes to waive (thus destroying the anti-filibuster protection that reconciliation gives to that provision). Historically, many provisions in previous reconciliation bills have been excised in a “Byrd Bath” ahead of the floor vote due to this provision.

Reconciliation is not a new process, and it is a highly partisan one used by both parties when they are in control of both the House and Senate (and, usually, the White House). Two familiar laws enacted through reconciliation include the 2017 Tax Cuts and Jobs Act (a GOP bill) and the Affordable Care Act (ACA) in 2010 (a Democratic bill).

Prospects: Reconciliation requires unity among lawmakers in the party using it—so a reconciliation bill usually means intra-party negotiations. This is the case in this year’s Democratic reconciliation bills—starting with the new coronavirus aid legislation that is President Biden’s first legislative priority. Most Washington observers believe that the needed Democratic unity will be cobbled together for this first coronavirus aid-related reconciliation bill, but one issue at risk is the increase in the federal minimum wage.

NAIFA Staff Contacts: Diane Boyle – Senior Vice President – Government Relations, at DBoyle@naifa.org; Judi Carsrud – Assistant Vice President – Government Relations, at jcarsrud@naifa.org, or Michael Hedge – Director – Government Relations, at mhedge@naifa.org  

Congressional Democrats Reintroduce PRO Act

Key Congressional Democrats have reintroduced the PRO Act, legislation that would adversely impact many NAIFA members whose working relationships with their carriers are built on the independent contractor model. The PRO Act changes the definition of independent contractor in a way that would force most if not all of those impacted into an employee relationship with their companies.

The House bill is H.R.842, introduced with 200 cosponsors on February 4 by House Education and Labor Committee chair Rep. Bobby Scott (D-VA). It primarily revamps unionization rules, but it includes a provision that redefines an independent contractor as someone who:

  1. is free from the employer’s control in connection with the performance of the service, both under the contracts for the performance of service and in fact, and
  2. the service is performed outside the usual course of the business of the employer, and
  3. is customarily engaged in an independently established trade, occupation, profession, or business of the same nature as that involved in the service performed.

This definition is patterned on California’s “ABC test,” but does not contain the California exemption for insurance agents. Insurance agents—particularly those who also do financial planning/advising for their broker-dealers—are subject to considerable control over their activities through the Securities and Exchange Commission (SEC), Financial Industry Regulatory Authority (FINRA), State Insurance Departments, and federal retirement savings and financial advising laws. Thus, some kind of rule is necessary to prevent this “ABC test” from upending the working relationships between financial planners/advisors and their companies.

Companion legislation was also introduced in the Senate, by Health, Education, Labor and Pensions (HELP) Committee Chair Sen. Patty Murray (D-WA) and Majority Leader Sen. Chuck Schumer (D-NY). Democratic support in the Senate is as strong as it is in the House.

Prospects:  The PRO Act is a top partisan priority, strongly supported by unions and by most Congressional Democrats. It is likely to pass the House, although its prospects in the Senate are not as rosy. There, where there is power-sharing in place due to the 50-50 partisan split, strong (mostly) GOP opposition could prevent the bill’s enactment. NAIFA, in conjunction with impacted industry partners, is working to make sure that if the bill is enacted, it is amended to include a California-like exemption for financial planners/insurance agents.

NAIFA Staff Contacts: Michael Hedge – Director – Government Relations, at mhedge@naifa.org  

SBA Issues Initial Guidance on Restarted PPP Loans, Forgiveness

On January 6 and on January 19, the Small Business Administration (SBA) issued three new interim final rules (IFRs) on the Paycheck Protection Program (PPP) loan program, the new “second draw” loan program, and on PPP loan forgiveness. More guidance is expected soon.

General guidance (IFR 1): The first interim final rule (IFR), released January 6, combines most of the IFRs released by the SBA since the PPP was established last year. It clarifies that any inconsistency in the prior guidance is superseded by the current guidance based on the new PPP law that restarted and modified the PPP on December 27, 2020. It also promises more guidance, “as quickly as feasible,” on issues not already addressed in this or prior guidance. Both the old and the coming guidance include frequently asked questions (FAQs) that many PPP borrowers rely on.

A key new area addressed in this guidance is the addition of new categories of expenses that can be included in calculating allowable PPP borrowing amounts. These include covered operations expenses, covered property damage costs, covered supplier costs, and covered worker protection expenses. Also included is guidance on the modified covered period which is a basis for calculating the amount of the PPP loan that can be forgiven. The new covered period—enacted in the December 27 law—is a period that the borrower may choose between eight and 24 weeks. Also new in this guidance is information on how to reapply or request an increase in a previous PPP loan if those prior loans were returned or if the borrower accepted less than the full amount of the PPP loan for which it was eligible. The SBA must receive such a reapplication or request for an increase by March 31, 2021 and is subject to funds availability.

Guidance on second draw PPP loans (IFR 2): IFR 2 states that guidance applicable to first PPP loans is also applicable to second draw loans, except for certain specified exceptions. Key among those exceptions is the narrower eligibility rules for second draw loans. To be eligible for a second draw loan, the borrower must compare its gross receipts (a comparison of receipts from one quarter in 2020 to the same quarter in 2019). The reduction in receipts must be 25 percent or greater. Other eligibility exceptions include the streamlined substantiation requirements for loans for $150,000 or less; the statutory requirement that the borrower has 300 or fewer employees; and the aggregate $4 million cap for all PPP loans.

IFR 2 also outlines the procedures that the SBA will follow for second draw loan borrowers whose first draw loans are still under SBA review, or if the borrower has a pending loan forgiveness application. IFR 2 specifies that a pending forgiveness application or SBA review will not by themselves disqualify a borrower from a second draw loan. Finally, IFR 2 states that second draw loan forgiveness will be assessed on the same terms and conditions as first draw loans.

Consolidation of new and old guidance on PPP loan forgiveness: On January 19, the SBA issued IFR 3 which updates and consolidates prior loan forgiveness and SBA loan review rules. IFR 3 also extends this updated, consolidated guidance to second draw loans. This guidance makes clear that to get a second draw PPP loan, the borrower must have taken (or applied for) a first draw loan, and to submit a loan forgiveness application for the first draw loan. This guidance also restates the categories of expenses that can be used to calculate the requested PPP loan amount, for both first draw and second draw loans. IFR 3 also updates the full-time equivalent (FTE) reduction penalty and the salary and wage reduction penalty. It also states the SBA’s authority to adjust exemptions to the FTE penalty as it applies to offers to rehire, firings for cause, borrower elimination of FTE reduction by December 31, 2020, and certain small (under $50,000) loans.

Finally, IFR 3 specifies its authority to review any sized PPP loan at any time. Such reviews will focus, the IFR states, on borrower eligibility, the loan amount and use of loan proceeds, and whether the loan can be forgiven and if so to what extent.

Prospects:  PPP loans have proved to be especially important for many NAIFA members. These new rules, and those still coming in the near future from the SBA, will help borrowers apply for both first and second draw loans, and to get forgiveness of those loans.

NAIFA Staff Contacts: Diane Boyle – Senior Vice President – Government Relations, at DBoyle@naifa.org; Judi Carsrud – Assistant Vice President – Government Relations, at jcarsrud@naifa.org, or Michael Hedge – Director – Government Relations, at mhedge@naifa.org  

States Begin to Adopt NAIFA-Supported NAIC Model Best Interest Rule for Annuities

On February 4, Ohio finalized the National Association of Insurance Commissioners (NAIC) model rule, which includes a best interest standard, governing the standard of care owed by those advising on and selling annuities to their clients. The NAIC model aligns with the Securities and Exchange Commission’s (SEC’s) Regulation Best Interest (Reg BI).

The Ohio rule took effect February 14, 2021.

Ohio joins Arizona and Iowa, whose best interest rules based on the NAIC model were enacted last year. Delaware finalized the NAIC model rule in January. Those three states’ rules are already in effect. Rhode Island’s best interest standard rule is set to take effect at the beginning of April, and Arkansas and Michigan have finalized best interest standard rules that will take effect at the end of June.

In addition, Massachusetts and New York have approved their own standard of care rules, applicable to annuities as well as to broker-dealer conduct as a whole. The best interest standard rule is pending in eight other states, including Alabama, Kentucky, Maine, Nebraska, North Dakota, Virginia, Idaho, and Nebraska.

Prospects: Industry supporters—including NAIFA—are working to get annuity best interest standard rules patterned on the NAIC model finalized in at least half the states by the end of 2021.

NAIFA Staff Contacts: Julie Harrison – State Chapter Director, at jharrison@naifa.org, or Judi Carsrud – Assistant Vice President – Government Relations, at jcarsrud@naifa.org

Federal Minimum Wage Hike Proposal Faces Stiff Opposition, Strong Support

The proposal to raise the federal minimum wage to $15/hour (phased in over five years) is facing both stiff opposition and strong support. The proposal is included in President Biden’s American Rescue Plan. There is also legislation now pending, the “Raise the Wage Act,” that was introduced in both the House and Senate on January 26.

The Raise the Wage Act, S.53/H.R.603, would raise the federal minimum wage from its current $7.25/hour to $9.50/hour as of June 1, 2021; to $11/hour as of June 1, 2022; to $12.50/hour as of June 1, 2023; to $14/hour as of June 1, 2024; and to $15/hour as of June 1, 2025. The amount would be indexed as of June 21, 2026 and thereafter.

The Congressional Budget Office (CBO) analyzed the proposal’s/bills’ economic and fiscal impact and found that if enacted it would increase the federal deficit by $54 billion over ten

years. The CBO also found that it would cause the loss of some 1.4 million jobs by 2025, although it would also lift some 900,000 people out of poverty.

The CBO analysis is providing fuel for both supporters and opponents of a federal minimum wage hike. Supporters point to the findings that it would lift so many working Americans out of poverty, while opponents—citing the estimated 1.4 million jobs that would be lost—call the proposal a jobs killer.

CBO’s report also muddied the waters on including a federal minimum wage hike in a reconciliation bill. Its finding that enactment of the hike would add $54 billion to the federal deficit gives supporters an argument that the proposal would pass muster under the reconciliation process’s Byrd Rule that requires that any provision in a reconciliation bill have more than an incidental impact on federal revenues. But it also gives rise to the possibility that the proposal would violate the Byrd Rule that forbids adding to the federal deficit in the out years (years beyond the ten-year budget window).

Some opponents of the proposal are arguing that $54 billion over ten years is not a big enough fiscal impact to qualify as “more than incidental.” Plus, some Democrats are saying that $15/hour (even though that level is not reached for five years) is too much and/or too fast. Since Democrats will have to either win some GOP support for the reconciliation bill or get the votes of all 50 Democrats in the Senate and all but five Democrats in the House, that opposition could prove fatal to including a federal minimum wage hike in the currently-pending reconciliation legislation.

Prospects: An increase in the federal minimum wage is a top Democratic priority and has the full support of President Biden. Hence, even if it is not included in the reconciliation bill currently working its way through the process, it is a sure bet to come up again soon.

NAIFA Staff Contacts: Diane Boyle – Senior Vice President – Government Relations, at DBoyle@naifa.org, or Judi Carsrud – Assistant Vice President – Government Relations, at jcarsrud@naifa.org

DOL Withdraws from Case Claiming CalSavers Is Preempted by ERISA

The Biden Administration’s Department of Labor (DOL) has withdrawn the amicus brief submitted by the Trump Administration’s DOL that supported a challenge to the legality of CalSavers, California’s state-run auto-IRA program. The challenge is based on an argument that ERISA preempts the state program. The Biden DOL withdrawal states that the DOL “no longer wishes to participate as amicus in this case,” and that it does not support either side of the case.

The case, brought by the Howard Jarvis Taxpayers Association (HJTA), is pending before the Ninth Circuit Court of Appeals. HJTA lost at the district court level, where the court ruled that CalSavers was not preempted by ERISA because auto-IRA programs are not part of the category of employee benefit plans covered by ERISA. The Trump Administration DOL agreed. HJTA is arguing that CalSavers is an employee benefit plan and as such should be governed solely by ERISA. CalSavers is one of seven state-run auto-IRA programs.

The Biden Administration DOL withdrawal, submitted by Acting DOL Secretary Al Stewart, was not unexpected because President Biden had expressed his support for state-run retirement programs while he was running for president.

Prospects: The withdrawal by DOL as an amicus in this case may or may not influence the Ninth Circuit’s decision. NAIFA believes that private sector retirement savings programs will expand significantly with the creation of new multiple employer plans, and that states should pause their state-run plan proposals indefinitely, allowing employers to voluntarily establish their own plans or adopt into a private sector multiple employer plan with higher participation and savings rates, employer-matching opportunities and full ERISA protections for the participants.

NAIFA Staff Contacts: Judi Carsrud – Assistant Vice President – Government Relations, at jcarsrud@naifa.org

IRS Issues Final Rule on Employer Contributions to Health Reimbursement Accounts

On January 13, the Internal Revenue Service (IRS) issued final rules that clarify an employer’s responsibilities when they contribute, through a health reimbursement account (HRA), to an employee’s cost for buying health insurance through an Affordable Care Act (ACA) exchange.

The final rule, T.D.9949, provides that employees enrolled in ACA plans through an HRA, and workers who are eligible for an HRA that provides ACA-required benefits, cannot seek ACA premium tax credits. The rule also includes calculations that employers can use to determine if their contributions to employees’ HRAs are enough to be sure that their lowest-paid employees can afford an ACA exchange-based plan without using premium tax credits. Affordability is one of the requirements of the ACA, including for fulfilling ACA employer obligations through contributions to an HRA. The affordability rules are applicable to employers with 50 or more full-time equivalent employees.

Prospects: This rule is not one that is usually mentioned when discussing Trump Administration health regulations. However, it is possible that the Biden Administration will revisit it as part of its review of the ACA and Trump Administration ACA rules and regulations.

NAIFA Staff Contact: Michael Hedge – Director – Government Relations, at mhedge@naifa.org   

President Biden Reopens Federal ACA Exchanges

By executive order, President Biden has reopened federal Affordable Care Act (ACA) health insurance exchanges. The newly-reopened exchanges will accept applications for health insurance coverage (including eligibility for subsidies) from February 15 through May 15, 2021. People seeking coverage through the exchanges need not show that they were impacted by the pandemic; open enrollment is open to anyone.

State exchanges are beginning to follow suit. Already, state exchanges in Colorado, California and Washington State have announced that they will also reopen, for the same new open enrollment period as the federal exchanges. The White House said it expects the rest of the state exchanges to follow suit.

Prospects: White House spokespeople say that they will be undertaking outreach efforts to make sure people know that they can apply for health insurance—including subsidized coverage—whether or not they were impacted adversely by the pandemic. Pending coronavirus aid legislation would enhance subsidies, too.

NAIFA Staff Contacts: Michael Hedge – Director – Government Relations, at mhedge@naifa.org   

NAIFA Urges Oklahoma Senate to Reject State-Run Retirement Plan

NAIFA strongly supports efforts to encourage and incentivize workers’ participation in employer-provided retirement plans available on the private market. Private-sector plans offered by employers provide many design features that help workers plan for secure retirements. A qualified financial professional, such as a NAIFA member, can help workers with individual retirement-planning solutions and assist employers in establishing workplace plans.

State-run retirement plans, such as one currently under consideration in Oklahoma, however, create employer mandates and liabilities that may prove particularly difficult for some businesses facing economic uncertainty or hardships due to COVID-19. These plans pass the administrative and operational costs on to the employee savers, do not provide ERISA protections required in the private sector, do not allow employer matching of contributions, and have limited investment options.

NAIFA, along with the American Council of Life Insurers (ACLI) and several other organizations, has sent a letter to members of the Oklahoma Senate Finance Committee urging legislators to reject SB 527, the legislation that would create an Oklahoma state-run retirement plan.

 “It’s important for elected officials to find ways to help more workers access retirement plans,” the letter says. “However, SB 527 is not the answer. Plans under way in other states are proving to be risky for workers and a financial burden for taxpayers. And this COVID crisis is no time to impose a new mandate on employers to reduce worker wages by 3%.”

Employers in Oklahoma and across the United States have better opportunities than ever before to offer employees robust retirement plans in a cost-effective manner. The federal SECURE Act, which NAIFA strongly supported, became law in December 2020 and offers tax credits and other market-based incentives for small employers. Effective January 2021, modifications to multiple employer plan (MEP) rules make it likely that many more employers of all sizes will elect to participate in MEPs. The new law significantly reduces the expense, administrative burden, and other hurdles associated with "old" MEPs. These new incentives and rules likely mitigate the supposed need for state-run plans. NAIFA believes that waiting to see how the marketplace responds to the availability of MEPs and the new tax incentives, and until the economy is fully recovered from the consequences of the pandemic, makes sense for everyone.

“We appreciate the senators’ interest in encouraging more Oklahomans to prepare for financially secure retirements and helping employers offer plans,” said NAIFA State Chapter Director Julie Harrison. “Unfortunately, state-run plans like the one SB 527 would establish often create more problems than they solve. NAIFA is always happy to work with legislators on other policy options for promoting retirement savings in Oklahoma.”

NAIFA Staff Contact: Julie Harrison – State Chapter Director, at jharrison@naifa.org       

NAIFA Supports Replacement of Indiana LTC Insurance Program

NAIFA is encouraging the efforts of Indiana state Sen. Greg Walker and Rep. Martin Carbaugh to replace the Indiana Long Term Care Insurance Program, also known as the RWJ Partnership, with legislation (HB 1405 and SB 261) to create a Deficit Reduction Act (DRA) Partnership.

While the RWJ Partnership served a meaningful purpose in incentivizing consumers to take personal responsibility for long-term care risks, it suffers from inflexible policy and special filing requirements, as well as burdensome inflation-protection requirements, that have resulted in many insurers dropping out of the program.

DRA Partnership programs in 42 other states are thriving, as they allow companies to offer a wider range of products and simplify the filing process. Diane Boyle, NAIFA’s Senior Vice President for Government Affairs, and Carroll Golden, the Executive Director of NAIFA’s Limited and Extended Care Planning Center, sent a letter to members of the Indiana General Assembly urging them to support bills that would modernize the state’s long-term care partnership program.

NAIFA Staff Contacts: Julie Harrison – State Chapter Director, at jharrison@naifa.org   

NAIFA-VA Holds Successful Virtual Day on the Hill

NAIFA's Virginia chapter held a successful Day on the Hill event on January 29, even though Virginia’s legislative session is completely virtual at present due to COVID-19. The Day on the Hill has been a key element of NAIFA-VA's advocacy mission for many years and a way for the chapter to engage with members from around the state.

Two bills under consideration during the 2021 session of Virginia General Assembly are of critical importance to NAIFA members and their clients:

  • NAIFA-VA, along with the American Council of Life Insurers (ACLI), National Federation of Independent Business (NFIB), Retail Merchants Association, and several Chambers of Commerce, opposed a bill passed by the House of Delegates and under consideration by the Senate that would create a “Virginia Saves” state-run retirement program. NAIFA-VA had previously testified against the bill in a public hearing.
  •  NAIFA-VA encouraged legislators to allow licensed insurance agents to be recognized as resources for consumers on Cover Virginia, the state’s health care marketplace. NAIFA-VA believes the public should be informed of all options for health insurance, and agent involvement is the only way to achieve that.

NAIFA-VA’s virtual Day on the Hill session was attended by more than 20% of state Senate offices, including Sen. Adam Ebbin who sits on the Senate Finance and Appropriations Committee where the Virginia Saves bill is under review.

NAIFA-VA members also made their voices heard by answering a call-to-action through NAIFA’s Advocacy Action Center and directly contacting their lawmakers. The Virginia General Assembly remains in session, and NAIFA-VA continues to monitor the proceedings and will identify any additional proposals that may require members to take action.

NAIFA Staff Contact: Julie Harrison – State Chapter Director, at jharrison@naifa.org

NJ Bill on Insurance Lawsuits Includes NAIFA-Supported Amendment Excluding Producers

The New Jersey state Senate has passed the New Jersey Insurance Fair Conduct Act, which would permit a consumer to bring a private cause of action lawsuit against an insurer accused of an unreasonable claim denial or delay in payment of benefits.

Earlier drafts of the bill could have made insurance company employees as well as agents and advisors vulnerable to lawsuits. Fortunately, advocacy efforts by NAIFA-New Jersey successfully resulted in an amendment that excludes insurance producers from liability. Previous amendments to the legislation also limited the bill’s scope to claims against automobile insurers.

The bill now moves to the General Assembly and has been referred to the Assembly Financial Institutions and Insurance Committee.

NAIFA Staff Contact: Julie Harrison – State Chapter Director – Government Relations, at jharrison@naifa.org

NAIFA Supports Maryland Bill to Boost LTC Education

NAIFA supports Maryland state legislation that would provide consumers in the state with easier access to resources and educational materials on long-term care (LTC) planning. A NAIFA-Maryland member served on the Task Force on LTC Education and Planning that made recommendations that helped shape the bill, HB 599, Public Health – Long Term Care Planning.

The legislation would require the Maryland Health Care Commission, the Department of Disabilities, and the Department of Aging to update their websites with informative and consistent information on LTC planning for families. The materials would include the Task Force’s “Plan NOW Starter Kit,” which provides information on successfully planning for LTC with contact information for private and public options.

“NAIFA supports proposals to increase consumer conversations and awareness of the social need for long-term care supports and services,” said NAIFA Senior Vice President for Government Relations Diane Boyle in a letter to Del. Shane Pendergrass, Chair of the Maryland House Health and Government Operations Committee. “HB 0599 will help inform Maryland consumers of their planning options, and we ask that you support and take swift action on this bill during the current legislative session.”

NAIFA’s Limited and Extended Care Planning Center exists to raise awareness among consumers and financial professionals about long-term care and related issues.

NAIFA Staff Contact: Julie Harrison – State Chapter Director, at jharrison@naifa.org

NAIFA-NJ Pushes Back on Senate Bad Faith Bill

NAIFA-NJ recently put out a call to action to its members, asking them to contact their state senators to vote "No" on S-1559. The bill, the New Jersey Insurance Fair Conduct Act, would establish a private cause of action for first-party claimants against an auto insurer for an unreasonable delay or denial of a claim or for violating statutes prohibiting unfair or deceptive acts or practices.

The bill does permit the recovery of prejudgment interest, reasonable attorneys' fees and litigation expenses were removed from the bill. However, it still provides that claimants would be entitled to actual damages, including but not limited to, actual trial verdicts.

“This bill would increase the number and cost of lawsuits and force insurers to settle for unreasonable higher amounts to avoid litigation," said Julie Harrison, NAIFA State Chapter Director. "The unavoidable result of the new costs would be higher premiums passed on to the consumer. NAIFA opposes any measure that would negatively impact families who are already struggling during this economic upheaval.”

Another concern NAIFA has with S-1559 is that the bill is unnecessary. New Jersey consumers already have several ways to fairly settle UM/UIM claims, including the right to sue their insurer for breaching their contract to recover damages; the right to sue for extra-contractual damages to recover attorneys’ fees, litigation costs, prejudgment interest, and other losses they may have incurred; the New Jersey Supreme Court’s “Offer of Judgement” rule; and the ability to file a complaint through the new Jersey Department of Banking and Insurance.

The New Jersey State Senate is scheduled to vote on the bill on January 28.

NAIFA Staff Contact: Julie Harrison – State Chapter Director, at jharrison@naifa.org

NAIFA-ND Activates Grassroots to Counter LTC Proposal

North Dakota lawmakers considered a bill that would initially impose a three-year ban on the sale of long-term care insurance policies. The bill, SB 2253, has four sponsors, who wanted to use the moratorium to study the market and premium increases. Successful advocacy efforts resulted in the removal of the ban.

Members of NAIFA-ND responded to the bill by personally reaching out to their elected lawmakers to express their grave concerns.

“NAIFA-ND opposes this bill since Long Term Care is an essential part of having a solid retirement plan for individuals in our state and this country,” said Lyle Kraft, President of NAIFA-ND. “There are so many reasons for lawmakers to kill this bill, but one of the most important reasons is that many individuals will have to fall back on self-funding, which will rapidly deplete hard-earned retirement savings.”

While NAIFA-ND worked its grassroots efforts, other associations opposed the bill during a hearing on January 26, in front of the Senate Industry, Business and Labor Committee. During the hearing, NAIFA's advocacy partner ACLI described a list of ways that SB 2253 would negatively impact North Dakota consumers:

  • The moratorium would impact guaranteed renewable traditional stand-alone LTC and prohibit sales of LTC riders that accelerate life insurance death benefits to pay for LTC services. These LTC riders add great flexibility to a life insurance policy, helping policyholders manage cash flows and avoid “use it or lose it” concerns.
  • LTC coverage protects an individual’s assets in the event of a LTC event. Absent a well thought out strategy for a future LTC event to generate income to fund caregiving costs, North Dakotans could become an increased burden to state and federal social programs (i.e. Medicaid), shifting more responsibility and expense to taxpayers.
  • The moratorium could have adverse effects on North Dakotans who wish to protect themselves from LTC risks during the moratorium.  During this period, the consumer could develop a medical condition rendering them uninsurable after the moratorium period.
  • North Dakotans wishing to purchase coverage would pay higher premiums by waiting up to three years (based on issue-age premiums).

Information on long-term care solutions is available at NAIFA's Limited and Extended Care Planning Center. Residents of North Dakota can join the grassroots effort at NAIFA's Advocacy Action Center.

NAIFA Staff Contact: Julie Harrison – State Chapter Director, at jharrison@naifa.org

NAIFA-NE Supports Legislation to Boost Consumer Protections on Annuities

As the Nebraska Legislature considers LB 22, legislation that would establish an enhanced standard of care for financial professionals offering annuity products, NAIFA-NE Past-President Dave Skutnik submitted testimony in support of the bill on behalf of NAIFA’s Nebraska chapter.

Commissioners’ (NAIC’s) updated Suitability in Annuity Transactions Model Regulation and would align with the Security and Exchange Commission’s Regulation Best Interest. NAIFA worked with the NAIC to ensure the updated Model bolsters consumer protections while preserving the ability of insurance and financial professionals to serve their clients. NAIFA helped to head off other proposals that would have limited the choices and ability of Main Street investors to find needed products, services, and guidance.

“LB 22 is a workable best interest standard that preserves Main Street access to beneficial annuity information and education from NAIFA members and other financial professionals,” Skutnik said in his submitted testimony. “And, it enhances consumer protections to assure them that financial professionals act in their best interest when recommending annuity products.”

“Thanks to LB 22 and federal initiatives, all those working to save for retirement will continue to have access to information about guaranteed lifetime income from annuities,” he added. “And they can rest assured that the recommendations they receive from financial professionals will be in their best interest.”

So far, five states – Arizona, Arkansas, Iowa, Michigan, and Rhode Island – have adopted the NAIC Model. NAIFA urges the remaining states to follow suit to strengthen consumer protections and ensure that financial professionals operate under clear, consistent, and non contradictory laws and regulations.

NAIFA Staff Contact: Julie Harrison – State Chapter Director – Government Relations, at jharrison@naifa.org

NAIFA-IL Urges Governor to Veto Prejudgement Interest Bill

NAIFA-IL has sent a call to action to its members to urge Gov. J.B. Pritzker to veto a bill that sets a prejudgment interest at the rate of 9% per year on all tort actions seeking recovery for personal injury or wrongful death.

The bill unfairly penalizes insurance consumers, and NAIFA-IL is concerned that the effect of the bill, HB 3360, would be an extraordinary burden for Illinois citizens and businesses, especially on the heels of a pandemic.

“Very few states allow prejudgment interest on personal injury judgments, and the ones that do, exclude non-economic damages from the calculation,” said Julie Harrison, NAIFA State Chapter Director. “We worry this bill would result in over-compensation to some plaintiffs and make defendants financially liable for delays they did not cause.”

The bill moved rapidly between both chambers over the course of only a few days. It is unclear when the Governor plans to act on the legislation.

NAIFA-IL members can take action at NAIFA’s Advocacy Action Center.

NAIFA Staff Contact: Julie Harrison – State Chapter Director – Government Relations, at jharrison@naifa.org

NAIFA-FL Gets Behind COVID-19 Liability Shield Bills

NAIFA-FL supports two bills that provide several COVID-19-related liability protections for businesses, educational institutions, government entities, religious organizations, and other entities.

In the House, H.B. 7 was approved by the Civil Justice Subcommittee on January 13 and is awaiting consideration in both the Pandemics and Public Emergencies Committee and the Judiciary Committee.

In the Senate, S.B. 72 will be heard in the Judiciary Committee on January 25.

Under the bills, a covered entity that makes a good faith effort to substantially comply with applicable COVID-19 guidance is immune from civil liability from a COVID-19-related civil action. The bill also provides that for any COVID-19-related civil action against a covered entity, a plaintiff must:

  • Plead his or her complaint with particularity.
  • Submit, at the time of filing suit, a physician's affidavit confirming the physician's belief that the plaintiff's COVID-19-related injury occurred because of the defendant's conduct.
  • Prove, by clear and convincing evidence, that the defendant was at least grossly negligent.

The bill's liability protections would not apply to health care providers, such as hospitals, nursing homes, assisted living facilities, or other health care-related entities. The bill provides a one-year statute of limitations for COVID-19-related claims. For a plaintiff, whose cause of action has already accrued, the one-year period does not begin to run until the bill becomes effective.

As states grapple with different solutions to quell business owners’ fears of COVID-19 legal liability, NAIFA is encouraging lawmakers to pass bills that would enact liability immunity for businesses to protect them from a barrage of civil lawsuits. In at least a dozen states, lawmakers have moved to adopt their own versions of liability shields.

NAIFA Staff Contact: Julie Harrison – State Chapter Director – Government Relations, at jharrison@naifa.org

North Dakota House Committee Advances NAIFA-Supported Annuity Transactions Bill

This week the North Dakota House Industry, Business and Labor Committee unanimously approved H.B. 1160, a bill that tracks with the “best interest of consumer enhancements” in the National Association of Insurance Commissioners (NAIC) Suitability in Annuity Transactions Model Regulation.

NAIFA cosigned a coalition statement to lawmakers in support of the bill. The adoption of the Model Regulation across all states is a top legislative priority for NAIFA, which helped craft the amendments at the NAIC over the past couple of years. During this time, NAIFA worked with various stakeholders at the NAIC to develop a standard of care for annuity recommendations that would provide consumer confidence in guaranteed income products. This was also designed to thwart efforts by regulators and some advocates to write rules that would have made it much more difficult for insurance and financial professionals to serve the retirement planning needs of lower and middle-income consumers. NAIFA also worked with the NAIC to ensure the model is uniform and consistent with other federal and state standard of care rules.

“NAIFA is glad to see H.B. 1160 move through the North Dakota legislature,” said Julie Harrison, NAIFA State Chapter Director. “The Model Reg aligns well with the SEC’s Regulation BI which gets us to our goal of a harmonized standard of care for annuities across regulatory platforms.”

Five states -- Arizona, Arkansas, Iowa, Michigan, and Rhode Island -- have already adopted the Model Regulation.

NAIFA and NAIFA-ND will work together, alongside our coalition partners to continue to advocate for the bill as it makes its way through the legislature

NAIFA Staff Contact: Julie Harrison – State Chapter Director – Government Relations, at jharrison@naifa.org