Legislative Spotlight

November 2013 • Vol. 5, Issue 11

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 Matt Laptew with comments or suggestions concerning this newsletter.

Congress Readies for Next Fiscal Issues Deadline—Tax Reform in Play

The special appointed House-Senate conference committee to resolve the differences between the fiscal year (FY) 2014 House and Senate spending plans is underway. Conferees are seeking to find a way to agree on FY 2014 funding for the federal government. Such an agreement is needed by January 15, 2014. The conference is also trying to fashion a budget agreement that would stave off another debt limit crisis—a hike in the debt limit will be necessary soon after authority for increased borrowing runs out on February 7, 2014. In addition to grappling with difficult spending decisions, the conference committee is discussing whether to include tax and/or entitlement reform provisions in its conference agreement.

The conference committee is required by the law Congress enacted on October 16 to conclude its work by December 13, although there are no consequences if it fails to do so. There remains a deep divide between Republicans and Democrats on the budget issues, but both parties would like to see an agreement that includes instructions to do tax reform and possibly some entitlement reform.

Such an outcome, though, is still very much in doubt. There is deep disagreement over whether tax reform should raise revenue to allocate to deficit reduction, or to pay at least in part for replacing sequester-mandated across-the-board spending cuts. Further, while both parties either favor (the GOP) or are open to (Democrats) enacting certain entitlement reforms, so far Democrats refuse to even consider entitlement reform proposals without accompanying new revenue. And generally, the GOP remains adamantly opposed to any kind of new tax revenue.

In the midst of these negotiations, the tax writers (principally, House Ways & Means chairman Rep. Dave Camp (R-MI) and Senate Finance Committee chairman Sen. Max Baucus (D-MT)) insist they will be releasing (and heading for committee action on) fundamental tax reform plans “before the end of the year.”

Why it Matters: As Congress continues to debate deficit reduction and approaches to tax reform, policy-makers must carefully consider the negative effect on families and workers if changes to public policy make it more difficult and expensive for people to achieve financial and retirement security. With the strain on federal entitlement programs as well as on state and local programs, now is not the time to make it more difficult or more expensive for families to plan for the long-term. Current tax treatment of insurance products is sound public policy that provides efficient ways for Americans to manage financial risks and take responsibility for their financial security.

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

Health Insurers Warn against Delay in the ACA Individual Mandate

America’s Health Insurance Plans (AHIP) and the Blue Cross-Blue Shield Association are opposing an ever-increasing number of calls for delay in the Affordable Care Act (ACA) individual mandate, or extension of its first open enrollment period.

The currently ongoing open enrollment period will last until March 31, 2014 but the website (healthcare.gov) through which individuals and small businesses can shop for qualified health insurance has been plagued by difficulties that prevent many of its potential users from actually signing up for insurance. A number of Congressional Democrats have joined in the near-unanimous GOP call for granting individuals more time before they are subject to the penalty for failure to carry qualified health insurance.

So far, the Administration is also opposing delay, agreeing with the health insurers’ worry about the impact of falling short of gaining new younger and healthier insureds needed to support current premium structures. The insurers and Administration agree that because of the new requirements limiting the use of preexisting conditions and other traditional underwriting factors, the new insureds are necessary to keep prices from spiking as a result of an insurance pool top heavy with less healthy individuals making more claims against their insurance.

Legislation to delay the mandate and/or extend the open enrollment period is pending in both chambers of Congress.  Bills include H.R. 3359, H.R. 3425, S.1671 and S.1592.  Further illustrative of how much traction the delay issue is getting in Congress is a letter urging the individual mandate delay sent October 25 to Health and Human Services Secretary Kathleen Sebelius. That letter was signed by 10 Democratic Senators.

Adding to the debate over delaying the individual mandate is the latest kerfuffle over millions of Americans receiving cancellation notices regarding their current health insurance, despite President Obama’s oft-repeated promise “If you like your health insurance you can keep it.” Most of those health insurance policies are being cancelled because they do not qualify under the ACA’s minimum essential benefit rules. Thus, carrying such a policy will not prevent an individual from being slapped with an assessment (the greater of $95 or one percent of income in 2014) for failure to carry qualified health insurance.

Why it Matters: The insurers say a delay in the expected influx of new insureds—particularly among the young and healthy—could threaten premium structures in future years.

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

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