June 2012 • Vol. 4, Issue 6
PURPOSE OF LEGISLATIVE SPOTLIGHT
Speaking as one, we can and will make a difference.
Comments on Legislative Spotlight: Contact Ron Panneton with comments or suggestions concerning this newsletter.
Ways and Means Committee Examines Tax rules for Retirement Savings, FSAs
On April 17 the House Ways & Means Committee held a hearing to examine one of the largest “tax breaks” in the current Code: retirement savings plans.
Despite a context that caused some fear that Congress might trim retirement savings tax benefits in order to “broaden the tax base”, Members from both sides of the aisle signaled a desire to increase participation in tax-advantaged retirement plans. They see potential for some simplification in the process of tax reform, but are also wary of unintended consequences from making changes without careful consideration. Simplification suggestions that were well-received included suggestions for reducing paperwork and expanding auto-enrollment options.
The positive tone of the hearing reflects the long-standing work of NAIFA and allied groups to educate the tax-writing Members and staff about the importance of tax rules for retirement savings. But as tax reform nears, it is important to make sure that all Members of Congress are familiar with these points—and active political involvement of agents and general agents with their own representatives is critically important for achieving this task.
The Oversight subcommittee of Ways & Means also held a hearing on April 25 to examine the negative impact of prohibiting the use of FSA, HSA or HRA funds to purchase over-the-counter medicines. Chairman Charles Boustany, Jr., MD (R-LA) supports repealing this restriction, which was enacted as part of health care reform and went into effect in 2011.
Why It Matters: Tax writing Members of Congress and staff need to be consistently told of the importance of the tax rules for retirement savings.
To Learn More: Contact Diane Boyle at email@example.com.
NARAB II Introduced in the Senate
Sens. Jon Tester (D-Mt) and Mike Johanns (R-NE) have introduced the National Assoication of Registered Agents & Brokers Act (NARAB II), which would establish a federal licensing clearinghouse for insurance agents who operate in multiple states.
Currently, agents who serve clients in more than one state must satisfy all licensing requirements in each of the states in which they are licensed. NARAB II would allow producers to be licensed in multiple states by submitting one non-resident application. Once approved by NARAB, the producer would be subject to a uniform set on non-resident licensing requirements.
“NAIFA appreciates the efforts of Senator Tester and Senator Johanns to generate momentum for NARAB II,” said NAIFA President Robert Miller. “The bill would go a long way toward removing some of the regulatory hurdles that make it more difficult for insurance agents to serve the American public.”
The burden of meeting varying licensing rules can prove taxing for agents. As it is, it takes NAIFA members an average of 57 hours each year to satisfy licensing and continuing education requirments, according to a recent survey. Having to comply with different requirements in different state inflates the average for multi-state agents and discourages others from growing their businesses.
The situation also harms consumers. The NAIFA survey found that 80% NAIFA members had to abandon clients who moved to states where the agents were not licenced. A full 12% had lost more than 50 clients under these circumstances.
Why It Matters: Inflexible licensing rules disrupt the relationships agents count on to build successful businesses and to best serve their clients. Federal legislation that would retain the successful tradition of state-based insurance regulation and improve consumer’s access to and choice of professional insurance agents can only be a good thing.
To Learn More: Contact Jill Hoffman at firstname.lastname@example.org.
For more on NAIFA: