Legislative Spotlight

June 2013 • Vol. 5, Issue 6

LEGISLATIVE SPOTLIGHT is produced by NAIFA and is supplied to the Society of Financial Service Professionals as a collaborative effort that seeks to raise federal and state regulatory awareness for financial service professionals. The essential purpose is to facilitate understanding and a more fruitful dialogue with constituents and/or clients with regard to these important issues.

Speaking as one, we can and will make a difference.

Comments on Legislative Spotlight: Contact Ron Panneton with comments or suggestions concerning this newsletter.

House Bill Addresses Debt Limit Issue

On May 9 the House approved a largely political measure, H.R.807, aimed at avoiding at least some default if the Treasury bumps up against the debt limit later this year. The vote was 221 to 207 (eight Republicans and all Democrats voted “no”). The “Full Faith and Credit Act” would authorize borrowing beyond the debt limit amount only to make payments on existing debt and on Social Security obligations The bill is given virtually no chance of even coming up in the Senate, much less of winning Senate approval.

Economists in and out of the government are now projecting that the U.S. will hit the debt ceiling in October—which is also the start of the 2014 fiscal year and therefore when new spending authority is needed for the entire federal government. This is setting up yet another “perfect storm” for lawmakers (recall the fiscal cliff debacle at the end of 2012)—and yet again many are eyeing tax reform as the key to a compromise on both funding the government and resolving the debt ceiling issue.

Why It Matters: To the extent that tax reform is indeed the key to resolution of government funding and the debt ceiling issues the tax treatment of life insurance and health products are squarely on the table. The industry must be ever vigilant in making sure Congress understands the public policy necessity of keeping the taxation of these products intact.

To Learn More: Contact Diane Boyle at dboyle@naifa.org.

Congress and Federal Agencies Focus on Health Reform Law

Both Congress and the federal agencies (HHS, Labor and Treasury) continue to focus on implementation of the Affordable Care Act (ACA). A raft of legislative initiatives and regulatory proposals have recently emerged. They include:

  • House GOP announces another vote (38th this year) to repeal the ACA. The vote is expected to be a purely party-line vote, but as in the previous 37 attempts, the initiative is expected to stall in the Senate.
  • House GOP members are also discussing legislation, still in development, to delay the ACA’s 2014 effective dates. The bill would focus on the October 1, 2013 date by which state, federal and state-based partnership exchanges must be open for eligible individuals and small businesses to buy coverage that will be effective on January 1, 2014. The January 1, 2014 effective date for exchange-based coverage, employer responsibility rules, and the individual mandate are also candidate for inclusion in delay legislation.
  • S. 701 would redefine “part-time” as work for 40 (rather than 30) hours per week, for purposes of the ACA’s employer responsibility rules.
  • On May 8, the DOL released guidance on the notices that employers must provide to their workers about the availability of exchange-based insurance.

The guidance requires that the information be provided to all employees-full and part-time, whether or not they are enrolled in the employer’s plan, at no cost to the workers.

Notices must describe the services provided by the exchanges, contact information for the exchanges, information on eligibility for a premium subsidy, and notice that a decision to buy insurance through the exchange means that employee may lose any employer contributions to the cost of coverage (including tax benefits).

Why It Matters: The ACA’s effectiveness depends on consumers being given the correct information in a timely and clear manner, having access to affordable health care and the benefit of guidance from a licensed health producer. To the extent amendments to the ACA can improve the Act’s effectiveness, these efforts must continue.

To Learn More: Contact Diane Boyle at dboyle@naifa.org.

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