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The ongoing review of the fiduciary rule, a forthcoming regulation on health plans that could reverse years of guidance, and a new leader waiting in the wings—the Labor Department’s benefits agency looks to have a busy year ahead.
At the top of the list for the Employee Benefits Security Administration, as it has been for nearly a decade, is the fiduciary rule.
The agency will continue reviewing the Obama-era rule, which aims to cut down on conflicted advice given to retirement savers. Key portions of the rule are delayed until 2019, giving EBSA breathing room to figure out its next steps. President Donald Trump has ordered the agency to revise or rescind the controversial regulation.
A regulation related to health care might be the big disruptor of 2018, depending on how far the DOL goes with it, sources told Bloomberg Law. Years of DOL guidance could be reversed by the new regulation, which will likely make it easier for individuals and small businesses to join association health plans.
Beyond that, the agency is still waiting on the arrival of Preston Rutledge as the assistant secretary. He was approved by the Senate Dec. 21.
In response to an interview request and a series of questions about EBSA’s priorities in 2018, a DOL spokesman pointed to Secretary of Labor Alexander Acosta’s testimony at a November House hearing.
When Rutledge takes the helm at EBSA, it’s a guessing game as to what retirement and benefits issues he may want tackled other than the fiduciary rule and association health plans.
“What’s been so unique about the Trump administration is that they’ve been slow to fill the political leader positions. It’s affected what we know about the agenda on other issues,” Bradford P. Campbell, who was assistant secretary for EBSA under President George W. Bush, told Bloomberg Law.
Rutledge will bring his own ideas about what to address while at EBSA, and given his retirement expertise, he’s likely to lean in that direction. Rutledge hasn’t taken a public stance on key issues such as the fiduciary rule, but he recently told the Senate HELP Committee that the regulation should have had more input from the Treasury Department.
With Jeanne Klinefelter Wilson already in place as deputy assistant secretary for EBSA and Mark W. Dundee in as senior policy adviser, Rutledge will be “the last piece of the puzzle,” Gregory F. Jacob, former solicitor of labor and now a partner in the ERISA practice at O’Melveny & Myers LLP, told Bloomberg Law. Getting a leader in place will allow the agency to “really get their arms around everything and think through things in a methodical way,” Jacob said,
The fiduciary rule has been EBSA’s marquee issue for some time, but it has the potential to be unseated by an upcoming regulation on association health plans. AHPs provide health coverage, usually within an industry, to businesses sharing “a common interest.”
An executive order from Trump in October directed the DOL to consider expanding the conditions that satisfy the “commonality‑of-interest” requirement. Members of association health plans are currently subject to more stringent small group market requirements under the Affordable Care Act, including providing essential health benefits.
The DOL sent a regulation that will alter the definition of an employer to the Office of Management and Budget in mid-November. Just how far the agency will go is unclear, but the regulatory project has the potential to reverse years of guidance on multiple employer plans. The agency has traditionally been strict about employers joining such plans, requiring them to have a commonality of interest to qualify as a single entity.
“We don’t know how far this DOL regulation is going to go. We don’t know how much they think they can do by regulation. That has the potential to be pretty significant,” said Campbell, who is now a partner with Drinker Biddle & Reath LLP in Washington.
There’s talk that the rule will only change the definition of an employer with respect to health plans, Ann L. Combs, another former assistant secretary for EBSA under Bush, told Bloomberg Law. Combs is now a principal and head of Government Relations with the Vanguard Group. The DOL will eventually need a uniform definition of an employer across all regulations, which will be a larger regulatory project. “They may just be doing this in stages,” she said.
Without a steady stream of regulatory guidance coming out of EBSA or the Trump administration as a whole, the question turns to whether the agency might employ other methods to communicate policy, such as advisory opinions and field assistance bulletins. The Obama administration didn’t widely employ this kind of subregulatory guidance in its last few years, issuing just a handful of each.
The Trump administration seemed to continue this pattern but may have had different reasons for doing so. Lack of agency leadership may be a contributing factor in this type of guidance slowing to a halt, Erin M. Sweeney, an employee benefits attorney and of counsel with Miller & Chevalier in Washington, told Bloomberg Law. Sweeney worked at the DOL under President George W. Bush.
“Advisory opinions are formal opinions of the department and they require quite high level clearance,” she said. Without an assistant secretary, “you really can’t get them as high up as you need them to go.”
With the Trump administration’s focus on deregulation, advisory opinions might be the vehicle the DOL uses to get policy across to plan sponsors.
It has been a common practice among Republican administrations to focus on compliance assistance and see these pieces of guidance as a good way to communicate agency policy, Combs said. “I wouldn’t be surprised to see more” advisory opinions and field assistance bulletins, Combs said.
Although Trump’s EBSA may put a greater emphasis on compliance assistance, plans shouldn’t think they can get away with more, Combs said. “Regardless of administrations, throughout its history EBSA has taken a strong position on enforcement,” she said.
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