Election year impact: What’s next for employee benefits?

As we approach the 2024 United States presidential election, Chris Byrd, senior vice president, health executive and, more broadly, head of Government Affairs at WEX, joined our Benefits Buzz podcast for an insightful conversation on how election years can influence employee benefits. With political campaigns often influencing policy proposals from healthcare to retirement plans, this episode dives into what employers and professionals can expect and how they can prepare for potential changes. Keep reading and check out our podcast episode below to learn more.

Election cycles and employee benefits

Election years not only flood our televisions with political ads, but also shape key discussions on employee benefits across the nation. The election cycle often brings heightened conversations around healthcare and benefits policy. During a four-year election cycle, especially in a presidential election year, proposals around healthcare and employee benefits frequently emerge, and while they may not always result in dramatic changes, employers must be aware of their potential impact.

Employers rely on understanding the “guardrails” of policy and regulatory changes to make strategic decisions regarding employee offerings. These changes also come with compliance responsibilities, and as Byrd pointed out, employee benefits—particularly healthcare—are one of the most heavily regulated areas of business.

How past elections shaped policy

From the creation of health savings accounts (HSAs) under the Medicare Modernization Act of 2003 to the Affordable Care Act (ACA) under President Obama, election cycles have repeatedly sparked discussions about healthcare reform. The ACA in particular, introduced a fundamental change to the rules governing how employers offer health insurance.

Even more recently, the Inflation Reduction Act extended enhanced subsidies for ACA exchanges, helping many Americans access more affordable healthcare options. However, Byrd said that despite these changes, the percentage of working-age Americans receiving health insurance through their employer has remained relatively stable over time.

Current election cycle: What’s on the table?

When asked about the current election cycle, Byrd noted that healthcare, while still a top concern for many Americans, is not taking center stage in this year’s political conversations. Issues like the economy, immigration, and foreign policy have crowded out healthcare as the dominant issue. However, Byrd did highlight one healthcare-related topic that continues to resonate across party lines: prescription drug costs. He suggested that bipartisan efforts to address rising drug prices could emerge, which could ultimately benefit both employers and employees by lowering costs.

One intriguing possibility is that lower drug prices could lead to a shift in how employees use tax-advantaged benefits like HSAs and flexible spending accounts (FSAs). If prescription costs decrease, employees might adjust their contributions to these accounts accordingly, potentially even increasing participation in HSA-qualified high-deductible health plans as high drug costs become less of a concern.

Healthcare mandates vs. private market solutions

The debate between expanding healthcare mandates and promoting private market solutions is another important topic to keep top of mind. Byrd outlined his predictions for the approaches of the Democratic and Republican parties below:

• Democratic approach: Likely to favor increased mandates for coverage. While this can lead to more comprehensive benefits for employees, it also means higher costs for employers, which may result in increased premiums.
• Republican approach: Emphasizes the efficiency of private markets and the use of HSAs to manage out-of-pocket costs. This approach aims to control premium costs by reducing employer liabilities and empowering employees to manage their healthcare expenses more effectively.

Preparing for uncertainty: Strategies for employers

Given the unpredictable nature of election outcomes and subsequent policy changes, Byrd offered the following advice for employers:

1. Stay informed and flexible: Keep informed of policy developments through trade publications, blogs, and expert analysis to anticipate and adapt to changes quickly.
2. Consult benefits attorneys: Having access to legal expertise can help navigate complex regulatory landscapes and ensure compliance with new laws.
3. Focus on current priorities: Despite the noise of potential changes, maintain focus on existing goals such as attracting and retaining talent, enhancing productivity, and communicating the value of current benefits packages to employees.
4. Monitor legislative progress: Pay attention to the unfolding legislative agenda post-election to better understand the direction of healthcare and employee benefits policies.

Election years undeniably introduce a level of uncertainty that can affect employee benefits significantly. However, with proactive strategies and informed decision-making, employers and HR professionals can navigate these changes effectively. By staying informed, seeking expert advice, and maintaining a clear focus on employee needs, organizations can ensure that they continue to offer valuable and compliant benefits packages regardless of the political climate.

Don’t forget to check out our Benefits Buzz podcast episode with Chris Byrd to learn more about how to prepare for potential healthcare changes post-election. 

The information in this blog post is for educational purposes only. It is not legal or tax advice. For legal or tax advice, you should consult your own legal counsel, tax and investment advisers. 

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